Canadian Business Competitiveness

As the focus of much of my career, telecommunications is close to my heart. The business of telecommunications services in Canada, not products, stands out as an anomaly. Competition is poor, prices are high, customer service lags, and our home-grown businesses compete poorly on the global stage. These are all related.

In this CBC article (Sept. 10) about the state of the telecommunications business in Canada, this quote caught my attention:

Moreover, the safe and easy Canadian market has also kept the likes of Bell, Rogers and Telus from expanding outward to become globally competitive companies, like Britain's Vodafone Group PLC, Spain's Telefonica SA or Germany's T-Mobile, all of which are multinational empires.

"Nobody is stepping out into a world setting because they're doing quite well here in Canada, thank you," Milway says. "None of them have been able to take this Canadian base and become a world leader like [BlackBerry maker] Research In Motion."

When you have it safe in your home market, and our oligopolistic telecom market is fairly safe, competition is unnaturally constrained. Businesses operating in that sector lose their competitive edge; like any skill it must be used or it is gradually lost. Like animals in a zoo, these businesses' existence is safe, but they would have a hard time surviving should the cage doors be opened, whether to wander out into the wider world or to have outsiders wander in.

If our corporations can't compete domestically they absolutely can't compete globally. World-wide there are now many telecom corporations that have sharpened their teeth after years of brutal, and sometimes fatal, competition. Canadian telecom companies are comparatively slow to respond to threats - they are too comfortable and complacent.

Letting in a few competitors would make for some positive change. First, consumers would benefit from effective competition, which should improve pricing and service selection. Second, the incumbents could start down the road of improving their domestic competitiveness. Third, in the longer term, Canadian businesses would have the skills to expand globally.

On a practical level I do concede that cable and conventional telephony are not often multi-national in scope due in large part to the dependence on building out a wired infrastructure. Since this is not true of wireless service it is eminently suitable for open competition, despite some doubts I expressed regarding the coming round of wireless competition in Canada.

The other exportable business is the selling of expertise. Bell Canada did do this in the past (BCI) but they could not sustain its viability. I don't believe it would be successful if tried today since I doubt they have anything unique to offer foreign operators.

Our largest corporations could be the country's biggest asset in increasing our society's prosperity, if they would accept competition or if the government made them accept it. This goes beyond telecom to also cover commodities and banking. Miners, drillers and wood harvesters could move up the value chain, but most often do not. Banks could expand internationally today, and while they do so they are not as aggressive as they might be. They are also comfortable with a regulatory environment that discourages outsiders from operating here.

Overall I don't find the present situation encouraging. I say we need to open the door to more competition to strengthen our businesses and economy. Let the weak businesses fail.