Canada Moves to Block $16 Billion Telecoms Merger in World’s Priciest Market

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Spring may finally be here, and the snow has melted away, but regulators in Canada want to put a blockbuster merger on dry ice.

On Saturday, Rogers Communications and Shaw Communications, two of Canada’s major telecommunications companies, announced the country’s Competition Bureau will sue to block their proposed $16 billion merger. If you have ever been a cell phone customer in Canada, you know why.

We Stand on Guard for Three

If asked about the most expensive place in the world to have a mobile phone plan, you’d probably never guess it was The Great White North. . That’s right — mobile data consultancy Rewheel has repeatedly found Canada to be the world leader in smartphone bills, and by a significant margin.

Analysts and academics have pointed to a blindingly obvious reason for this: lack of telecom competition. Three companies — Rogers, Bell, and Telus — represent almost 90% of mobile phone revenues in Canada, which critics have termed an effective oligopoly. If Rogers were to acquire Shaw, a smaller competitor active in the western part of the country, regulators fear a bad situation could get worse:

  • Rewheel’s latest study, from October 2021, found the minimum cost of a 4G monthly mobile phone plan with at least 100 gigabytes of data included was $123 in Canada. That is miles more expensive than second-place South Africa, at $90. In the US, that number is about $75. Having a cell phone plan in Canada costs roughly 13 times more than it does in France. So much for the Canadians’ right to liberté from an unhealthily uncompetitive environment.
  • Critics allege the effective oligopoly has not only driven up prices, but also disincentivized the big firms (which engage in “likely restrictive and anti-competitive” network sharing, according to Rewheel) from spending on innovation or upgrades. Earlier this year, PricewaterhouseCoopers ranked Canada 14th among 25 countries for broadband speeds, and criticized Canada’s slow 5G rollout.

Anticipating pushback from regulators, when announcing merger plans last year, Rogers and Shaw promised to spend $2 billion on 5G networks, $800 million on rural high-speed internet, and $2.3 billion to maintain existing networks — but only after the merger is completed. It wasn’t good enough, and now they will face the wrath of the Competition Bureau in court.

That’s Amore: An investigation found that loading an hour of Netflix using a Canadian mobile-data plan costs $12.55 on average. In Italy, not only is the weather better, but that same hour of Netflix costs… 43 cents.