The federal government’s complaints about a lack of telecom competition ring hollow when the Liberals have done little to remove barriers to competition, a policy expert says.
Aaron Wudrick, director of the Macdonald-Laurier Institute’s domestic policy program, said Industry Minister François-Philippe Champagne’s goal of lower prices for mobile plans isn’t going to happen on its own.
“In a market economy, if you want prices to be lowered, you make sure that there aren’t barriers to competition. They didn’t do that. They just said, we want you to lower prices. This is not how things are supposed to work in a market economy,” Wudrick said.
Wudrick was responding to Champagne’s complaint that “Canadians still pay too much and see too little competition.”
Champagne told CBC that last year, he issued a policy directive to the CRTC to prioritize competition, affordability, and consumer rights in its decisions.
This criticism comes as Rogers Communications and Bell announce significant price hikes for their wireless services, defying Ottawa’s 2019 promise to bring down prices.
When Champagne approved the Rogers-Shaw Communications merger in 2023, he mandated lower customer costs as one of nearly 12 enforceable conditions. At the time of the merger, Rogers CEO Tony Staffieri pledged that prices would go down for customers.
“While prices for some wireless plans have declined by more than 22% over the past year, the planned price increases to certain month-to-month plans that have recently been announced go against the direction we set at a time when Canadians are struggling to make ends meet,” Champagne said on Thursday.
Wudrick explained that it should come as no surprise that the promises made by the Liberal government did not work out. Trudeau’s promise to bring down prices by 25% was “ill-advised” to make in the first place, noting the difficulty of calculating such a specific number.
“They made a silly promise that they were just going to, by fiat, somehow manage to lower prices,” he said.
“What’s even more bizarre is this government seems to be contradictory on the issue of competition. They keep talking about how competition is good and want more competition, not just in telecoms, but in things like grocery. Yet, they spend all this time vilifying and attacking businesses and then wonder why no one wants to go into these sectors.”
Wudrick pinpointed the root of the issue as legal barriers against foreign competitors in telecom, leading to an oligopoly dominated by Bell, Rogers, and Telus.
He suggested that opening the market to foreign competitors, allowing real competition in telecom could be the solution. Companies from the OECD, Canada’s reliable trading partners, should be able to come to Canada and do business in the telecom industry.
“That’s the answer. Everybody knows that’s the answer. But the reason nobody wants to touch it is because that might be bad for Bell and Rogers and Telus, and they won’t like that. That’s the reason we don’t have real competition. That’s the reason Canadians are paying high prices for telecom,” said Wudrick.
Looking ahead, the lawyer expressed pessimism about the government’s potential actions, foreseeing more threats and regulations that could paradoxically deter competition.
While a free market is the solution, Wudrick explained that no business wants to sign up for a sector that will be used as a political football.
“The government is basically slitting its own throat when it starts attacking businesses in a sector and then complains that nobody wants to compete in that sector,” he said.
The Liberal government is down in the polls. It is aware that the high cost of living and the high prices are problems, according to Wudrick.
“So they need to wave their hands a lot and make it look like they’re very concerned about it. They won’t do anything about it. They want to be able to promise magic. They want to be able to promise lower prices with no downside. That’s not possible, so we’ll just hear more empty rhetoric,” he said.