American telecom giant Verizon Communications Inc. is pondering the idea of entering the Canadian cell phone market to offer customers more choice and better value for their mobile service. The speculation is getting the attention of Canada’s leading mobile companies that are already offering better deals on their data packages in anticipation of the move. They are also voicing concerns about the foreign mobile providers entry into Canada. They say current policy on foreign ownership is flawed. In particular, Rogers Communication Inc. Chief Executive Officer Nadir Mohamed, says the current policy should be scraped before any new player enters the market. Here’s how the situation is unfolding and what the potential impact of Verizon in Canada will be.
What’s Worrying The Big 3?
Telus Corp, BCE Inc. and Rogers, commonly known as the “Big Three” in the mobile phone space, have dominated the Canadian market for the last two decades. This has resulted in consumers paying some of the highest cell phone rates in the world and having to adhere to strict contracts. Verizon already has 100 million customers – three times the size of Canada’s population. A company with that kind of influence could mean big changes and profit losses to the Big Three as they would be forced to adjust pricing to remain competitive.
What Would Change With Verizon’s Entry?
If Verizon becomes a key player in the Canadian mobile phone space, users would see more competitive pricing and be able to take advantage of better deals. This could also extend to handsets and smartphones. The Big Three are already offering data sharing plans to their customers, a scheme Verizon started last year in the U.S. where customers in one household can use one data plan for all their mobile devices.
Rogers CEO Questions Canadian Foreign Business Policy
Nadir Mohamed, CEO of telecommunications giant Rogers, wants Ottawa to change its policy on foreign ownership of Canadian telecommunications. Right now the policy limits any foreign company from buying a mobile carrier that has more than 10 per cent market share. That means Verizon can bid only on smaller mobile companies such as Mobilicity and Wind Mobile to get a foothold in our market.
Would Canadian Mobile Become More Affordable?
According to a recent report on Canada’s mobile phone market, Canadians pay some of the highest prices for some of the worst cell phone service in the industrialized world. Titled Time for an Upgrade, the report goes on to say “Canada’s cell phone market is dysfunctional and in desperate need of an overhaul. Government policy has allowed three incumbent service providers – Bell, Telus, and Rogers – to control almost 94 per cent of the cell phone market.” Problems in the report range from lack of notification of new fees, poor coverage, and bad customer service. A new player in the mobile company could be the challenge the Big Three need to clean up their act – lower mobile phone costs and increase accessibility for all Canadians.