Thursday, November 05, 2009

Canada’s Cell Phone Monopoly

...and why you can’t get an affordable cell phone plan in Canada

BASICS #16 (Nov/Dec 2009)

by Derek Rosin
On Thursday October 29, regulators in Canada barred Globalive, an Egyptian-owned cell phone company, from operating in Canada.

Globalive was promising to charge lower fees for cell phone services, but the Canadian Radio-television and Telecommunications Commission (CRTC) barred them, arguing that the degree of foreign ownership makes it illegal for them to do business here.

The whole Globalive story is worth taking a look at because it gives us an example of exactly how capitalism operates in this country, not to mention why our cell phone bills are so high. Today, Canada’s economy is controlled by what amounts to monopolies – massive conglomerates or associations of businesses that are massive enough to carve up markets amongst themselves and therefore drive up the price of their commodities to maximize profits.

In the telecommunications and wireless business world, Canada’s “Big Three” monopolies are Rogers, Bell (BCE), and Telus. Together, and with the brands they control (Solo, Koodo and Fido are also owned by these Big Three) they dominate Canada’s $12.7 billion cell phone market. And it’s not like Rogers, BCE and Telus are small, weak firms needing government protection. They are massive enterprises, with tens of thousands of employees and are collectively worth around 50 billion dollars!

As monopoly capitalists, they are guided by dynamics of competition and collusion. First, there is competition between one another over market share and customers. We all know this – it’s hard to turn on the TV or go to a movie without being clobbered by their various ads.
But second, and just as important, is their collusion with one another to protect their larger interests. None of the Big Three would want or allow competition to get so fierce that it would erode their healthy profits. This is why there aren’t many substantial differences in the plans offered by the various companies. And be sure that not one of the Big Three would allow a new competitor like Globalive to come on the scene and drive down the price of cell phone plans.

How this fight played out shows us a second aspect of today’s monopoly capitalism: the role of the state and government. The state, and its numerous bureaucratic bodies like the CRTC, play an important role in the current system by regulating capitalism, primarily to serve the interests of the big monopoly capitalists.

The Big Three all came out in force to the CRTC’s hearings to demand that Globalive be barred from Canada. Working together, they argued against Globalive’s representatives, claiming that the upstart’s structure did not constitute Canadian ownership. And they won. This victory means that the Big Three will continue to make mad cash off Canadian cell phone users, who currently pay the highest fees out of any developed country.

Now Globalive will have to turn to government to try and settle this inter-ruling-class conflict. They are appealing the CRTC’s ruling directly to Stephen Harper’s cabinet.