How Justin Trudeau and George H.W. Bush conspired to keep your cell phone bill at $45

How much do you pay for your cellphone, cable and internet per month?

Do you want to know what the average monthly cell plan is like in Seattle? Have a look. It’ll curl your toes. Count the companies competing for space on that page. That’s how you’re being screwed.

This all started in the 1980s.

Thanks to Ronald Reagan’s folksy charisma, neoliberal economics were all the rage for our cousins down south in the ’80s. The legacy continued long after Reagan had been replaced by his vice-president, and in 1988, Brian Mulroney and George H.W. Bush pounded out the Canada-U.S. Free Trade Agreement (CUFTA).

The North American Free Trade Agreement (NAFTA) would come later when Mexico wanted in.

Now some 30-odd years later, there have been meetings between a disturbingly orange United States president and our own vapid pinup Prime Minister to brainstorm an updated version called the United States-Mexico-Canada Agreement (USMCA).

There is a lot unresolved about that trade agreement, but Justin Trudeau’s dug his heels in some places and it’s clear who’s going to continue being screwed.

Spoiler: It’s still us.

Politically, Canada is usually decently stable on the international stage, but there are places where we’re ass-backwards. Enter former NAFTA Chapter 21.

Cultural industries means persons engaged in any of the following activities:

(a) the publication, distribution, or sale of books, magazines, periodicals or newspapers in print or machine readable form but not including the sole activity of printing or typesetting any of the foregoing;

(b) the production, distribution, sale or exhibition of film or video recordings;

(c) the production, distribution, sale or exhibition of audio or video music recordings;

(d) the publication, distribution or sale of music in print or machine readable form; or

(e) radiocommunications in which the transmissions are intended for direct reception by the general public, and all radio, television and cable broadcasting undertakings and all satellite programming and broadcast network services

Chapter 21 was meant to protect Canadians from American cultural imperialism by ensuring that no American telecommunications agency can set up shop here, sell us our news and dictate our culture to us.

The idea was to keep politically motivated publications like Fox News and Huffington Post from setting up shop here. It didn’t work. The U.S. took us to task at the World Trade Organization about split-run magazines back in the ’90s, and now we have Huffington Post Canadian edition and would have had Fox News North up here if we could stop laughing long enough.

(Legislators apparently don’t understand that we can make own decisions about what cultural content interests us. We’ve said we don’t want Fox News up here and it’s not here, plain and simple. And we didn’t have to consult Ottawa at all.)

Since Chapter 21 has failed in its official purpose, the only feasible explanation for Trudeau’s grandfathering of Chapter 21 into the USMCA is to appease Quebec so we don’t give them political fuel to make a run on separatist sentiment.

Also, so they can protect their rights to what remains of their language, Celine Dion and their terrifying Bonhomme snowman.

But by limiting market access to foreign culture industries (and their telecom verticals), it’s also had the unintended consequence of making the Canadian-based telecoms the only game in town for cell service, internet and phone. That’s why your cell bill is so high every month. Because you have no other choice.

The USMCA isn’t alone on the protectionist field: it’s just the one we can deal with right now.

The massive telecommunications conglomerates had a few legislative champions—NAFTA, the Telecommunications Act of 1993, its predecessor the Radiocommunications Act and the Broadcasting Act of 1991—all of which predate the modern internet, and two of which curtail foreign ownership and close off market entry to non-Canadian companies.

This level of protectionism lets our small-fish telecommunications companies grow to the size of their fishbowls and lord their relative size over everyone else.

Add vertical integration, a few choice mergers, and the protection of the Canadian Radio-television and Telecommunications Commission (CRTC)—which proved itself to be a thoroughly toothless (and clueless) regulatory body in this era—and the limitations to market access, and there’s the recipe for oligopolistic control of the telecommunications and media sectors.

Wikipedia describes a cartel as:

A group of apparently independent producers whose goal is to increase their collective profits by means of price fixing, limiting supply, or other restrictive practices. Cartels typically control selling prices, but some are organized to force down the prices of purchased inputs.  Cartels usually arise in oligopolies—industries with a small number of sellers—and usually involve homogeneous products.

Now we can’t exactly call the telecommunications companies here a cartel, because cartels are illegal and our government would never knowingly give the green light to anything illegal. Right?But what we can say is that there’s no real incentive for the big three telecoms to compete with each other. And maybe there is a good incentive to fix minimum pricing, and restrict access to new market entrants based on proprietary infrastructure.

Maybe we can’t call them a cartel because technically we’ve relaxed the regulations on foreign ownership a bit.

One could easily point out that Freedom Mobile (formerly Wind Mobile), at least circa 2008, was a foreign-owned company (full disclosure: they’re now owned by Canadian telecom Shaw Communications), even as its billionaire owner Naguib Sawiris had to fight a legal battle to continue backing the project. Even though he won that battle, he gave up in 2013 and said he’d never invest in Canada again after the federal government blocked him from buying MTS Allstream citing national security concerns.

No, totally not a cartel.

Especially not when that same year, U.S.-based Verizon Communications (VZ.NYSE) started looking into the Canadian market with interest, sending the media oligarchs up here scurrying to hide behind Prime Minister Stephen Harper’s apron strings.

Bell exec George Cope actually said it would be “profoundly unfair” for big whale Verizon to enter into the pond populated by Canadian guppies.

No surprises there. Of course, they don’t want to compete with a real company with real organic growth prospects when our industry has been insulated against bigger fish for so long. It’s another example of how Canada is completely ass-backwards. We need that competition or we’re not going to grow. No growth means high prices, quality reduction and ultimately, stagnation.

The last time anyone looked into this was a report issued by the Competition Bureau of Canada:

“In the Bureau’s view, mobile wireless markets in Canada are characterized by high concentration and very high barriers to entry and expansion. Furthermore, Canadian mobile wireless markets are characterized by other factors that, when combined with high concentration and very high barriers to entry and expansion, create a risk of coordinated interaction in these markets. Given these factors, the Bureau’s view is that incumbent service providers have market power in Canadian retail mobile wireless markets.”

Nice, right?

When there’s no competition and no choice for the consumer but capitulation, companies don’t have to give a shit about their service. You’ll be back, they assume. And you will, because where are you going to go?

So stop switching cell companies when you’re tired of getting kicked around, and write your MP a letter asking them what they’re doing about this situation. Use the word “cartel” if you want: I won’t mind.

 

—Joseph Morton