The monopolization that has plagued electricity and airline deregulation may next affect the telecommunications industry, a leader in the field says.
Garry Truderung, president and COO of AT&T Canada, told the Calgary Chamber of Commerce last week that “unless some of the rules of the battle change, customers in Canada will lose, in the long run, as competitors are knocked out the ring.”
As evidence, he cited the fact that six new entrants have failed in the last nine months.
AT&T is Canada’s biggest alternative to the giant telcos Bell and Telus, although its focus is almost exclusively in the business sector.
In terms of size, Bell and Telus dwarf the relative-newcomer (Telus earned $1.7 billion last quarter vs. $388 million for AT&T Canada).
The biggest problem, according to Truderung, is that access to the infrastructure that bridges the so-called last mile to businesses, “is a near monopoly at 96 per cent.”
“In fact, we are the single largest customer of Bell and Telus,” he told the chamber.
“And the rate we pay for access is either the retail rate paid by the same customers we are trying to sell to or a purportedly cost-based rate that has been frozen (at a markup) for four years.”
His suggestions for improvement include charging fair wholesale rates for use of the incumbent networks, and the relaxation of Canadian ownership restrictions so his capital-intensive business could raise money internationally.
With the CRTC re-examining the way local telephone service is regulated, and having implemented some modest competition-friendly changes, the balance may be shifting.
“The economics of telecom have been reversed. It used to be that high long-distance rates subsidized local service. Today, monopoly local services are supporting other services where prices have fallen.”
