Market competition and the distributional consequences of mobile phones in Canada

Abstract

The aim of this paper is to better understand how competition based telecommunication policies function as a mediating variable in the distribution of socio-economic consequences of mobile phones using the case of Canada. Many observers characterize the Canadian market as being uncompetitive, and argue that this lack of competition has affected Canadians in terms of access. Thus, even though almost all Canadians have access to land-line services, mobile phone penetration is still relatively low. This could be relevant as mobile services are more likely to include data and other advanced applications. As it is, access is influenced by age, income, and education. Gender is also relevant particularly with the use of more advanced devices and services. The urban and rural divide is of concern particularly where remote communities can benefit from having mobile phones. In addition, the lack of effective competition can negatively affect the competitiveness of domestic businesses relative to foreign competitors. One of the implications of the Canadian policy towards mobile phones is that while its approach was to limit regulation (regulatory forbearance) in order to develop competitive markets, those markets did not necessarily emerge. Regulatory forbearance thus contributed to a particular pattern of distributional consequences. This article argues that competition needs to be aligned with the overall goals of telecommunications policy. To do this, a country needs to define not what degree of competition is required but rather under what circumstances government intervention is needed. It might be satisfactory to have only few players in one national context but not in another. Defining the scope of intervention is perhaps most related to the tasks of identifying benefits and costs of access and how these are distributed.