Should Canada's cellular network be nationalized?

[dre]

I think this is a better way to do cross country comparisons:

http://www.iphoneincanada.ca/carriers/canadian-wireless-carriers-have-the-highest-margins-worldwide-report/

And in terms of revenue per user the US is equal to Canada.

In terms of profit margin Canada and the US are in the top ten.

Australia is the only country which I would say has comparable geographic issues so the question is what are they doing differently. I found this report:

http://www.oecd-ilibrary.org/docserver/download/5jxt46dzl9r2.pdf?expires=1460342578&id=id&accname=guest&checksum=74AA0EF3EE0C2E2DF3C5DBD090AEC5D0

It appears that there are only 3 providers in Australia too so the number of companies is not the reason for the difference.

In fact the report above makes the point that:

So maybe a simple comparison of prices is not reasonable.

Do you have a more wholistic method to measure value delivered for price paid?

Population density is a red herring. Cellphones companies provide no service to more than 90% of our geographical area. For data on population density to be meaningful you would need to only consider the density in areas that actually have service. If you did that you'd see that Canada presents no real geographical challenge that countries like France, Russia, Netherlands, etc don't also have to deal with.

[Rupert S. Lander]

It needn't be welfare. It could be paid for by a levy placed on Canada's telecom providers, much like how phones for US welfare recipients are subsidized by a fee paid by the telecom providers. Or it could be a joint venture using money and expertise from private telecom corporations. Considering how during their "Fair for Canada" campaign the Big 3 wrapped themselves in the flag and talked about how they were building Canada, I would think they'd be proud to be partners in such an initiative.

-k

As I stated earlier, I think the cell towers being owned by the provinces is far and away preferable to them being owned by Ottawa. Politically I realize that's complicated by the Constitutional reality of the feds having sole jurisdiction to enact nationalization in this sector.

My preference, idealistic as it is, would be for each provincial Crown Corporation to be empowered to levy network access fees for all of a particular provider's subscribers that access their province's particular network in a particular. These fees would then be passed on to the subscribers in a plain and transparent manner. In a case where a subscriber was in multiple provinces for a billing period, Ottawa could mandate that the provincial fees be assessed proportionally according to the subscriber's usage that month. I would also suggest that the network access fee have some proportionality to the fees charged by the provider, so that low-intensity users are not burdened with fees that are excessive with respect to their usage.

[Wilber]

Population density is a red herring. Cellphones companies provide no service to more than 90% of our geographical area. For data on population density to be meaningful you would need to only consider the density in areas that actually have service. If you did that you'd see that Canada presents no real geographical challenge that countries like France, Russia, Netherlands, etc don't also have to deal with.

Of course density is a factor, Tokyo/Yokohama has the same number of customers in a 50 mile radius as there is in all of Canada.

A city like London has over 60% of the population of Ontario as customers.

[dre]

Of course density is a factor, Tokyo/Yokohama has the same number of customers in a 50 mile radius as there is in all of Canada.

A city like London has over 60% of the population of Ontario as customers.

I never said there isn't denser markets. But Canada only has a low population density because it has vast swaths of area where nobody lives... The these are irrelevant to this topic since no service is provided there. If you just count the parts of Canada where people live and where service is provided we in the middle of the pack in terms of density. Providers in France or Russia would have a better case... but service in France is 75% cheaper than ours and Russia is 40% cheaper.

The real problem here is that the supply side structure is not conducive to offering customers good prices, and the regulatory has failed in its role as advocate for Canadian consumers.

More on the population density red herring...

Canada has about 30 million wireless subscribers. The US has about 300 million. Since Canada is a larger country it might SEEM like the market in the US is denser. But its not... Carriers in the US provided coverage to about 20 times the area to get only 10 times as much customers.

Bottom line... we have shitty prices and shitty service because we have sloppy, poorly run companies in charge of the infrastructure, and new participants in the market are stuck having to buy service from the same shitty companies most Canadians are forced to.

Edited April 11, 2016 by dre

[eyeball]

Except we know that many people receive services who don't pay any taxes and never will. That will always be the case but currently there are 800,000 taxpayers in BC who are exempt from paying MSP premiums in addition to those who pay no income taxes at all, how much farther are you prepared to subsidize these people?

As far as no end in sight or when whoever allowed our economy to be hollowed out, undermined and shipped offshore is lined up against a wall.

Until such time as the economic playing field is deliberately tilted towards those 800,000 instead of being deliberately tilted away from them I'll have zero sympathy to arguments about how harmful social welfare is to the economy. Absolutely none whatsoever.

[kimmy]

Of course density is a factor, Tokyo/Yokohama has the same number of customers in a 50 mile radius as there is in all of Canada.

A city like London has over 60% of the population of Ontario as customers.

Yeah, but I believe that the amount of infrastructure required is to some degree a function of how many subscribers are being served. A large rural area, at least on the prairies, can be served with a single cell tower (it's more complicated when there are mountains to consider...) because the small number of subscribers by means you can make the cell very geographically large before you enclose enough subscribers that you start to run out of unique channels within the cell.

By contrast, a dense urban area with a lot of subscribers in a small area, you can't make your cell very large before it encloses enough subscribers to use up all the channels. So you have to put lots of small cells (and therefore lots of infrastructure) in a dense urban area.

As Dre points out, Canada's low population density is largely a function of having vast swaths of territory that have no people or cell coverage anyway. It's not like Bell and friends are tasked with spending money to provide cell infrastructure for Baffin Island. If you look at Canada's wireless coverage maps, they look remarkably similar to Canada's population density maps.

-k

[Wilber]

I never said there isn't denser markets. But Canada only has a low population density because it has vast swaths of area where nobody lives... The these are irrelevant to this topic since no service is provided there. If you just count the parts of Canada where people live and where service is provided we in the middle of the pack in terms of density. Providers in France or Russia would have a better case... but service in France is 75% cheaper than ours and Russia is 40% cheaper.

The real problem here is that the supply side structure is not conducive to offering customers good prices, and the regulatory has failed in its role as advocate for Canadian consumers.

Not really, Tokyo/Yokohama has 3 times as many potential customers as greater Toronto and Montreal combined.

France has twice Canada's population in an area the size of Saskatchewan.

[dre]

Not really, Tokyo/Yokohama has 3 times as many potential customers as greater Toronto and Montreal combined.

France has twice Canada's population in an area the size of Saskatchewan.

So what? Canada's providers only provide a strong signal to an area about half the size of Saskatchewan. The number of subscribers per area covered is not all that different.

Like I said this is a red herring from companies that are good at making excuses and trying to prevent competition... but really bad at providing mobile access.

[cybercoma]

The fact is the people who want these things either don't have money to pay more taxes or don't want their own taxes raised. They expect other people to pay for their demands.

I pay more in taxes than some people make In a year and I'm perfectly fine with paying more if it means people's health will be taken care of.

[Bryan]

I pay more in taxes than some people make In a year and I'm perfectly fine with paying more if it means people's health will be taken care of.

Send it in then.

[cybercoma]

The lack of significant differences between the Big 3 providers' products or services or prices. The lack of any significant innovation in terms of products and service plans being offered. Every time I take a look to see if somebody has come up with something new to make me consider shelling out for a real cell plan, the answer is always the same. They're clearly all very happy with how things stand and aren't interested in rocking the boat.

-k

The fact that they make identical changes and implement them at the exact same time?

[cybercoma]

Except we know that many people receive services who don't pay any taxes and never will.

So what? They don't pay because they couldn't afford to, whilst keeping the lights on and putting food on the table, or they're retired and have no taxable earnings, or they're disabled and they're unable to work or their benefits outweigh their earnings. What exactly is supposed to be so enlightening about the fact that some people don't pay income tax? Because they pay sales tax, excise taxes, fuel taxes, service fees (e.g., license fees, registration fees), etc. If they own a home, they pay property taxes. So what's your point?

[cybercoma]

Send it in then.

Government suddenly covering those additional things we mentioned?

[Bryan]

Government suddenly covering those additional things we mentioned?

They'll have lots of money to cover it when asked, instead of not being able to afford it being the meme.

[blueblood]

Did you give up your laptop/desktop when you got a phone?

Actually i did. The phone does everything i want out of a computer. No sense in having two. I dont program anything so a phone does the job

[blueblood]

Send it in then.

Precisely, if people are advocating for higher taxes and that govt knows how to spend money best, there is nothing stopping them from sending more money to the govt.

[Wilber]

So what? They don't pay because they couldn't afford to, whilst keeping the lights on and putting food on the table, or they're retired and have no taxable earnings, or they're disabled and they're unable to work or their benefits outweigh their earnings. What exactly is supposed to be so enlightening about the fact that some people don't pay income tax? Because they pay sales tax, excise taxes, fuel taxes, service fees (e.g., license fees, registration fees), etc. If they own a home, they pay property taxes. So what's your point?

Perhaps you should read the post I was responding to.

[SpankyMcFarland]

It's one industry where I desire no CanCon at all. If foreigners can do it better, let them in pronto. We need more competition, not less. Some of the high price may be down to geography but a cosy local oligopoly ain't helping matters.

BTW why does arch capitalist Terence Corcoran so vociferously defend the appalling status quo?

[Rupert S. Lander]

As I stated earlier, I think the cell towers being owned by the provinces is far and away preferable to them being owned by Ottawa. Politically I realize that's complicated by the Constitutional reality of the feds having sole jurisdiction to enact nationalization in this sector.

My preference, idealistic as it is, would be for each provincial Crown Corporation to be empowered to levy network access fees for all of a particular provider's subscribers that access their province's particular network in a particular. These fees would then be passed on to the subscribers in a plain and transparent manner. In a case where a subscriber was in multiple provinces for a billing period, Ottawa could mandate that the provincial fees be assessed proportionally according to the subscriber's usage that month. I would also suggest that the network access fee have some proportionality to the fees charged by the provider, so that low-intensity users are not burdened with fees that are excessive with respect to their usage.

On second thought, a "network access fee" might not be the right terminology or approach. Instead, just let each Provincial CC bill each provider X number of dollars each month based on their subscribers' actual aggregate use of their network.

Each provider would then be able to come up with plans for subscribers that take all of the variables into consideration.

I believe democratic forces, in the long run, would be sufficient in most if not all provinces to deter governments from excessively gouging subscribers or being grossly negligent in providing service. I know this because at least across the AB-SK border where I live, the now-re-elected MLA's heard alot of "we like the work you guys have done in providing cell service to rural areas but there's still more work to be done." Isn't it funny how that would keep coming up in a provincial election campaign when the province already effectively owns the cellular infrastructure?

Meanwhile, enough providers would enter the market (I imagine Shaw would make a big splash while MTS and Sasktel would expand beyond their home provinces, to start) so that free market forced would properly keep providers' profit margins in check.

[TimG]

I believe democratic forces, in the long run, would be sufficient in most if not all provinces to deter governments from excessively gouging subscribers or being grossly negligent in providing service.

This is a grossly naive view that has no basis in historical fact or knowledge of how government works.

In the long run competition between private providers is the only path that leads to better value for consumers.

Edited April 11, 2016 by TimG

[Rupert S. Lander]

This is a grossly naive view that has no basis in historical fact or knowledge of how government works.

The actual basis for my view is a first-hand, on-the-ground comparison of the current quality of cellular service in rural Alberta compared to the current quality of cellular service in rural Saskatchewan.

To be blunt, service in rural East Central Alberta sucks whereas service in rural West Central Saskatchewan, the terrain being similar and the population density either the same or lower, does not suck nearly as bad, if at all. And, no, I do not partake in any illicit drugs.

Oh, did I mention how much cheaper the rates in Saskatchewan are?

Edited April 11, 2016 by Rupert S. Lander

[TimG]

The actual basis for my view is a first-hand, on-the-ground comparison of the current quality of cellular service in rural Alberta compared to the current quality of cellular service in rural Saskatchewan.

One does not draw conclusions about how to best run a cellular network based on quality of service in rural areas which also happen to have the ideal geography for cell towers. Most of the people in the country live in cities and in areas where the geography creates challenges for cell providers.

[Argus]

You seem to be suggesting that once the government owns the network infrastructure they'd have no incentive to maintain and upgrade it. I disagree. That sort of logic would also imply that the government has no incentive to maintain and improve roads and transit systems. Whereas clearly they have to maintain some respectable level of service,

But they get to define what is respectable. Look at health care wait times. After spending tens of billions since Paul Martin 'fixed health care in our time' we find out that most of that money went to improving the salaries, benefits and mini empires of those who work in health care, and the wait times are hardly improved at all.

[dre]

This is a grossly naive view that has no basis in historical fact or knowledge of how government works.

In the long run competition between private providers is the only path that leads to better value for consumers.

No, this is just a silly simplistic half truth. Talk about grossly naive!

[Rupert S. Lander]

One does not draw conclusions about how to best run a cellular network based on quality of service in rural areas which also happen to have the ideal geography for cell towers. Most of the people in the country live in cities and in areas where the geography creates challenges for cell providers.

The terrain of EC Alberta is just as ideal for cell service as that of WC Saskatchewan, yet there are dead zones everywhere besides the Trans Canada - not just in valleys. This is about as apples-to-apples of a comparison as you are going to get.

But they get to define what is respectable. Look at health care wait times. After spending tens of billions since Paul Martin 'fixed health care in our time' we find out that most of that money went to improving the salaries, benefits and mini empires of those who work in health care, and the wait times are hardly improved at all.

They can define what is respectable, but the public can call BS. Like any other government service, if the government is derelict in its duty to provide good cell service their MLAs are going to hear about it. If you don't believe me, I suggest that you ask any rural Sask Party MLA. It would seem that, as relatively good a job as SaskTel has done providing service compared to its neighbours, there are a fair number of constituents who think they could do better still. And that's not a bad thing.

Edited April 11, 2016 by Rupert S. Lander