Canadians have long noticed that their mobile phone bills are higher than those in most other counties. Bell Mobility, Rogers Wireless, and Telus Mobility have successfully carved up the most of the market, and the profits too. I know that my (un-named wireless carrier’s) bill is scary high.
The Canadian Government has come to believe that three carriers means high pricing for consumers. They saw that in many countries with four strong wireless providers, the additional competition drove down wireless prices to consumers. The Government wants a fourth carrier in most Canadian markets too. Hence, the CRTC has been rigging the wireless spectrum auctions to encourage a fourth competitor in as many Canadian markets as possible. Will this strategy work?
On August 6th, Wind and 3 Italia, the third and fourth largest wireless carriers in Italy, announced plans to merge. Revenues to Italian mobile operators have reportedly fallen 40% since 2011. Hence, carriers have been cutting back on capital investments in newer 4G rollouts. Some experts say that the fourth carrier drives price competition to levels where capital must be cut back. It still remains to be seen if Italian regulators will approve the merger.
We have seen consolidation in other European countries too. In 2012, the Austrian subsidiary of 3 Italia parent, Hutchison Whampoa bought the Austrian nits of Orange of France. The German unit of Telefonica took over the German wireless unit of KPN of the Netherlands. Telenor of Norway and TeliaSonera of Sweden would like to merge their Danish operations.
The industry structure of four wireless providers has not seemed to be sustainable in Europe. Can it be sustainable in Canada?