Canadian Telecom Embraces Mindless Consolidation With Yet Another Major Megamerger

from the growth-for-growth's-sake dept

We've noted repeatedly how the United States has an unhealthy fascination with the growth for growth's sake mindset. That's best exemplified by our near-endless adoration of megamergers in sectors like telecom, which result in extremely harmful monopolization and consolidation problems that are extremely obvious, but we choose to ignore anyway. Time after time after time in telecom (and banking, and airlines, and...), companies promise a universe of investment, job creation, innovation, and synergies in exchange for merger regulatory approval. And time after time after time, reality shows that these pre-merger promises are meaningless and harmful... unless you're one of the few investors or executives who benefit.

Despite the steady drumbeat of market, employment, and consumer harms from such mergers, we insist on learning nothing from the experience here in the States; the job and competition killing Sprint T-Mobile deal being just the latest in a long line of examples of companies promising all manner of job growth, competition, and innovation, right before the exact opposite happens. With no meaningful penalty whatsoever, unless you're a consumer or employee.

While you might think things are different up in Canada, often they're even worse. This week, two of the nation's biggest telecom giants, Shaw and Rogers, announced they'd struck a new $26 billion deal that would dramatically reduce overall competition in the already not-particularly-competitive Canadian telecom market. The announcement is rife will all manner of dodgy claims of amazing "synergies" and job creation:

"Rogers to maintain and grow local Shaw jobs so that teams across Alberta, British Columbia, Manitoba and Saskatchewan will continue to serve customers and support local communities."

And:

"New technology and network investments will create up to 3,000 net new jobs across Alberta, British Columbia, Manitoba and Saskatchewan."

Of course this sort of job creation and retention never actually happens. What almost always does happen is the merging companies put on a good show for about a year to pretend nothing is really going to change. Then, once the press and policymakers stop paying attention, a massive stream of pink slips arrive as redundant positions and headquarters are inevitably eliminated.

It's not really something that's debatable; it's more akin to physics. The deals create massive new debt pressure that's only relieved by trimming rosters, and usually, trimming investment. The end result: Americans and Canadians alike pay some of the highest prices for fixed and wireless broadband in the developed world. So while Rogers and Shaw are promising that the deal will create jobs and is necessary to help fund 5G deployments, the reality is the deal will inevitably result in stunted deployment and fewer new jobs. How do we know? Because this has happened after every major telecom merger for going on forty years now.

One of the reasons we keep making the same mistakes is thanks to regulatory capture and blatant corruption. But another major culprit is the press, which routinely stenographs these announcements without including any historical context. Case in point: dig through these news reports on the Rogers Shaw deal, and try to find any that clearly spell out the historical human costs of monopolization and consolidation in any specific way. They literally don't exist. This Deadline's report on the deal can't even be bothered to mention the word "competition." Just mindless repetition of baseless claims of "synergies":

"Both companies are family founded and publicly traded on the Toronto Stock Exchange but have significant U.S. shareholders. Shares are both jumped Monday on the deal news. The scale created by the combination will allow for infrastructure expansion critical to drive growth and technology adoption and attract new consumer and business customers, the companies said. It will remain one of the biggest employers in Western Canada."

Most press reports on these US and Canadian mergers are pure stenography. And few if any of the outlets that hype pre-merger promises can be bothered to circle back around to report on the very real human impact of these deals. There's just no money in it. Wash, rinse, and repeat. Over and over and over again.

Filed Under: antitrust, canada, competition, mergers, telecom
Companies: rogers, shaw

Canadian Cable Companies Make A Mockery Of Government's Push For Cheaper TV

from the forced-innovation dept

So far, the Canadian government's attempt to force innovation and lower prices on the Canadian TV industry doesn't appear to be going so well. As previously noted, the government has demanded that all Canadian cable TV operators begin offering a so-called "skinny" bundles of smaller, cheaper channels starting this month, and the option to buy channels "a la carte" starting in December. But this being the cable industry, companies are finding all manner of ways to tap dance over, under and around the requirements.

Bell's solution is to offer a skinny bundle, but hide it from the company's customers. And while most Canadian operators last week unveiled discounted base bundles starting at around $25, they've saddled the options with all manner of fees to ensure that once a customer actually gets their bill, their prices remain as high as always. DVR rental fees, home gateway rental fees, HD fees, "digital service fees," fees for additional channel packs (since the core pack is intentionally left sparse), and installation fees all quickly demolish any proposed savings.

And companies like Rogers have generously gotten ahead of the December requirement for individual channel purchases, by offering sports channels a la carte -- but at the rock-bottom price of $18 a piece:

Ahead of the Canadian rollout, major cable operator Rogers Communications began offering two sports add-ons — TSN and Sportsnet — at $18 each, bringing a sports fan's bill to a minimum $61 a month, not much below the $66 a month for a similar sports-included package that has 230 more channels.

The same thing is happening over at Shaw, where customers will be paying a pretty penny to nab the channels they actually want:

Prices for Shaw’s pick-and-pay channels, which include A&E, CNBC and Fox News among others, range between $3 and $5 per month. More popular channels, like AMC, Bravo and CNN, are only available if you purchase them in $6-$8 channel bundles. Premium movie channels, meanwhile, are priced at $18 per month.

So a move that the CRTC insisted would usher in an "era of choice for Canadian television viewers," appears to be doing nothing of the sort, with most of the bundles designed specifically to make them as unappealing as possible. One Bell employee tells the CBC the company's intentionally making the new bundles "unbuyable," while "just sort of giving the CRTC the finger." And while Canadian Law Professor remains optimistic that the CRTC's gambit will work, it remains unclear precisely when or how this is supposed to happen.

Granted it's early, but whether or not the CRTC's push for flexible options actually works will depend largely on whether the regulator is willing to call the industry's bluff on below-the-line fee shenanigans, something North American regulators as a whole aren't known for. And as with the attempt to disrupt the lowly cable box here in the States, one's left wondering if it doesn't make more sense for regulators to give up on trying to "fix" a TV model that's slowly-but surely dying, and focus any serious regulatory efforts on making sure there's broadband competition so that these same companies can't use usage caps to hinder Internet video competition.

Filed Under: a la carte, canada, hidden, tv
Companies: bell, rogers, shaw

Canadian Telco Claims Netflix & Google TV Should Be Regulated As Broadcasters

from the ah,-protectionism dept

A few years back, you may recall, we covered how some content creators in Canada were looking to expand broadcast regulations to the internet. If you're not aware, Canadian law requires that broadcasters fund and promote a certain amount of Canadian-based content. The reason for it on television is so that Canadian television isn't dominated by American programming -- and the idea here was that there was a similar "threat" online. Of course, unlike television, there is no limit to how much content is available, and artificially trying to force ISPs to fund and promote Canadian content just doesn't make any sense.

However, now, it appears that at least one company, Shaw -- who is both a broadcaster and an internet provider in Canada -- is trying to bring this issue back in a way, claiming that Netflix and Google TV should be subject to similar regulations. Of course, both of these aren't really broadcasters. They're service providers. But that issue seems lost on Shaw. It's especially bizarre in the case of Google, which isn't offering up its own content at all, but merely an interface to access other content online. If anything, this shows the rather obvious and hamfisted manner by which Shaw seeks to burden new technologies that might compete with it for attention.

Filed Under: broadcasting, canada, regulations
Companies: google, netflix, shaw

Is It Defamation To Mock Your Competitors' Promotional Campaign?

from the so-says-Shaw dept

It's amazing what a little competition can do. Apparently, up in Canada, cable company Shaw started running a promotion a few months ago where they dropped the price of 15Mbps broadband, 200 channels of TV, or voice service to about $10. However, apparently, this was (conveniently) only done in places where Shaw was going head to head with competitor Novus. In response, Novus put together an amusing marketing campaign, using all sorts of social media, encouraging Shaw customers in other regions (where they couldn't get this phenomenal deal) to contact Shaw to ask why not. It's a bit cheeky, but it makes the point: Shaw appears to be dumping its product in areas where it competes with Novus to cause trouble for Novus via predatory pricing.

Now, I'm all for competition, so I don't necessarily think that such pricing is a bad thing (though, people should be aware that it's unlikely that those prices can last), but that also means that the ad campaign by Novus is fair game as well. Not to Shaw, apparently. The company has now sued Novus for its marketing campaign, claiming that it's defamation. It's difficult to see how it's defamation to point out your competitors' own promotional pricing, but perhaps I'm missing something. Or maybe Shaw just figures that the defamation suit itself will get more publicity for its $10 offer. Marketing via lawsuit? Still, it seems that in going to court, Shaw may open up some legal doors it's best to avoid. A quick stroll through some online sources suggests that Canada does, in fact, have laws against predatory pricing. Getting this whole campaign more attention might also end up drawing the attention of some regulators, too...

Filed Under: broadband, canada, dafamation, predatory pricing
Companies: novus, shaw