RE: RE: On foreign ownership of telecomPrime Minister Stephen Harper drives me crazy more than just occasionally. But I agree with his friendly attitude to freer trade. More competition is coming to the Canadian wireless market. The key questions are how long will that take and how will incumbents like BCE fare?
Is it just a small number of firms that maintains higher than normal margins in the Canadian telecom sector? Or is the ability of these firms to differentiate the service that explains the healthy margins? In the CPU sector--a manufacturing activity--it only took two firms to devastate profit margins (AMD and Intel).
So will international entry be sufficient to evaporate the economic rents currently earned by Canadian wireless providers? Unlikely IMO. The threat of entry will help lower prices. Service may improve. But the nature of the beast and the apparently limitless arrival of new add-ons will continue to facilitate consumer-confusing differentiation.
Moreover, Canadian providers have sunk considerable investment into fixed-cost infrastructure. It should be relatively easy for them to starve out new entrants.
It will be fascinating to watch BCE and other Canadian incumbent wireless service providers delay GlobeAlive as long as possible.