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Lack of competition pushes up cost to use the Internet

Canada is among the world’s leaders when it comes to restrictive foreign ownership rules, and the digital realm is no exception.

Many of the close to 90 per cent of Canadians who subscribe to home Internet plans will begin to see their monthly bills go up next month by, it appears, $2 to $9 a month.

It could be more and if you’re on a locked-in plan you might not feel the impact right away. But you will feel it eventually.

Some of it will be just because costs the companies incur – wages, employment premiums, carbon taxes, etc. – have to be passed along to subscribers if companies are going to maintain or attain the profit levels they require.

Another factor, not insignificant, is that companies continue to pour billions of dollars into expanding and upgrading their networks to meet Canadians’ voracious demand for high-speed, high-quality Internet. According the Canadian Radio-television and Telecommunications Commission (CRTC), average monthly high-speed data use increased 30 per cent from 2016 to 2017.

Bell, according to a recent CBC report, is dealing with a 500 per cent increase in Internet usage by its subscribers over the past five years. Internet, according to the CRTC report, is by far the fastest-growing communications vehicle in Canada – as it has been for many years.

So, in a way, it all makes sense: if you use more of something you’ll wind up paying more for it, right?

Well, maybe not. Some people, like yours truly, consume data as if it was among the necessities of life. Others watch a couple of Netflix shows a month and send a few emails. There are plans designed for all levels of usage but it is and alway has been the high-volume users who drive the growth in the industry.

These increases will lead to another round of demands for governments and the CRTC – which appears to have reinvented itself as some form of consumer affairs bureau – to “do something” about these increases. Appeals will be made on behalf of those on fixed incomes and on the downside of life’s advantages for mandated low-cost plans. It will be pointed out that school children now require Internet access to do basic homework and the cost of those subscriptions should be covered by provincial welfare agencies.

Companies will seek to address these issues.

The CRTC will proceed with its heavily-boycotted plan to introduce a code of conduct for Internet providers. It will probably appear very snazzy but will have no ability to punish violators in a meaningful way. It also risks creating a number of new obligations that will just result in – you guessed it – higher costs for the providers that they will pass along to consumers.

But what no one is likely to address is the fact that one of the major reasons Canadians pay high rates for their telecommunications services is that it maintains a big, beautiful wall designed to keep what I can only assume people believe to be untrustworthy foreigners out of the country.

The reasons for this are historic and likely made sense at the time. But the fact remains that while Canadians may view themselves as cultural globalists who embrace diversity as a strength, when it comes to broadcasting and telecommunications and the desire to keep closed borders, we’re not all that different from how so many of us view U.S. President Donald Trump.

The Organization for Economic Co-operation and Development (OECD) has noted for years that Canada is among the world’s leaders when it comes to restrictive foreign ownership rules.

We have rules “in telecoms and broadcasting which are intended to support Canadian cultural objectives but which also reduce competitive pressures,” said the OECD in its 2016 report. It also pointed out that greater competition could increase the quality of networks and reduce costs to consumers.

There are plenty of other domestic barriers to competition that could – and hopefully will be – addressed by the government or the CRTC if Canadians don’t want their wall breached.

But at the end of the day, the answer to your high telecom and Internet bills will only be addressed through more competition and not by a heavier hand from the regulator.

Troy Media columnist Peter Menzies is a former newspaper publisher and vice-chair of the CRTC.

© Troy Media