U.S. wireless giant Verizon’s declaration it’s not interested in entering the Canadian market appears to have dashed consumer hopes for cheaper cellphone rates and left Ottawa seeking a new white knight to inject more competition.
“Verizon is not going to Canada,” CEO Lowell McAdam told Bloomberg Monday, adding speculation that it would was “way overblown.”
Some analysts had predicted Verizon would take a long, slow approach to any move to buy one or more of the junior Canadian wireless companies that have struggled against the country’s big three dominant telecom firms.
If the biggest U.S. telco has abandoned a northern venture – and isn’t merely playing a waiting game to gain maximum advantage – it sends the federal government back to the drawing board on how to engineer the the improved competition it has said is required.
“It leaves us back where we started in the swamp with no solution,” SFU business and marketing professor Lindsay Meredith said.
The status quo is exactly what Telus, Bell Canada and Rogers want, he said, but a fierce public relations battle waged this summer by the big three and Ottawa means the issue is unlikely to go away.
Nor, Meredith predicted, is public demand for reform and dissatisfaction with high mobile rates.
Up in the air is what happens in an auction of wireless spectrum set for January, which had been dangled by Ottawa as a lure for a new foreign entrant, who presumably would buy a small firm like Wind Mobile or Mobilicity.
“The only scenario that could possibly unbalance things is for somebody with a lot of money to come in and start backing those little guys,” Meredith said.
“I’d call Vodafone. I’d keep the heat on.”
Vodafone is the British wireless firm that is selling its U.S. interests to Verizon for $130 billion. Verizon’s McAdam said the deal wasn’t a factor in its decision against coming to Canada.
Industry Minister James Moore has said the federal government’s policy will be good for consumers, regardless of whether Verizon comes north.
Meredith said there was no guarantee Verizon – which wouldn’t have been able to bundle wireless with home phone or TV services – would have offered the cut-rate prices telco-hating Canadians had dreamed about.
He noted U.S. retailer Target arrived this year, but not with lower U.S. pricing.
But he said Canadians “finally” got a real debate on the issue, crediting Prime Minister Stephen Harper’s decision to push for change.
But he said the “relatively quiet” Harper government didn’t push the issue of unfair pricing hard enough and allowed the telecom firms to recover from what had seemed a winning cause for the Tories.
Most resonant for the telcos, he said, were their claims that Verizon price gouges in the U.S. and that it would unfairly tap into Canadian-built infrastructure, while Canadian firms don’t have the same access to U.S. networks.
“The telcos were making ground on the issue without even talking about pricing,” Meredith said. “The other side did bugger all from a strategic marketing standpoint.”