Rogers’ acquisition of Shaw shouldn’t be able to happen

There are three actions to take to stop something like this from happening again

Rogers - one of the big three - shouldn’t get even bigger. Photo courtesy of Rowanlovescars via Wikimedia Commons

by Emma Jean, Staff Writer

On March 15, it was reported that Rogers Communications had signed a deal to purchase Shaw Communications for a whopping $26 billion. That not only leaves three national cellular providers in Canada —  Bell, Telus, and Rogers —  but less than 10% of the country using any other provider. Unless the perspective comes from a high-stakes investor with financial gain from this big merger, this is bad for everyone. 

As it is, Canadian consumers pay some of the highest prices in the world for their cell phones, internet, and television; in other words, their telecommunications. Compared to almost all countries across Asia, Africa, Europe and North America, Canadians pay the most for all of the above. This coverage leaves many rural areas with minimal or non-existent coverage. Because these three companies only compete with each other, there’s no need to lower their prices or spend more to expand their coverage if they all can raise their profit margins as a result. To stop these kinds of deals from happening, there are three things that need to be done in the short, intermediate, and long term. 

In the short term, action can be taken to stop this merger from taking place at all. This deal only passes if the Competition Bureau, which regulates Canada’s antitrust laws, allows it to. While it’s hard to say whether they will allow it, conventional wisdom suggests that Rogers and Shaw wouldn’t have signed the deals if they thought it would be shot down. However, as the consumers who will be affected by this, that doesn’t mean that we can’t fight like hell to stop them. Writing a complaint to the competition board insisting that the increased prices, poor coverage for rural areas, and horrible precedent is not something we need could be key to stopping this deal from happening. It could be a long shot but, if done in large numbers, it also could be the best shot. 

Looking at the intermediate picture, it’s important to consider how to prevent a deal like this from happening again. If this purchase goes through, it’s because the current laws that prevent the domination of a few companies and collusion in the private market are inadequate. Each time any attempt to break up the big three telecommunication companies happens, the same consolidation happens over and over again — like a never ending game of Pac-Man. As several independent cellular providers entered the market in a government-backed attempt at competition in 2008, each one was bought up by either Telus, Rogers, or Bell. The only exception in this case is Freedom Mobile who was bought by Shaw, but they may now be bought by Rogers. It’s a scary Russian nesting doll game of who’s going to be raising cell prices and cutting Will Arnett’s advertisement checks next. 

No matter what action private telecommunications businesses take to create more competition, it’s just going to end up like this again and again — unless Canada creates stronger federal antitrust laws. These would stop only a handful of companies from running essential services, but would actually be enforced by the competition bureau. If stopping the Rogers/Shaw merger is the battle, changing and enforcing antitrust laws is part of the larger war. 

If appealing to the Competition Bureau and stepping up Canada’s antitrust dealings are the small and intermediate solutions, it’s time for the big. What if Canada created a nationalized cell provider? It would be owned by the federal government and operated using cellular infrastructure already built and publicly owned, offer accessible plans for anyone who wishes to use them, and actually reach all of Canada. It’s an idea that puts a lot of (likely naive) faith in the federal government to do what it promises, and do it well. But it’s one that would create an unbuyable competitor that would force private companies to compete with truly affordable prices. It would also acknowledge telecommunication services as a crucial part of daily life, consistent with the COVID-19 guidelines that declare it an essential service. It’s an idea that’s picked up steam in academic circles — sometimes suggesting that all telecommunications be nationalized — and it’s one worth taking seriously and fighting for when the time for policy formation comes. 

Some would argue that the best solution here is to allow American telecommunication giants to compete with Canadian ones. But the last thing we need is for huge companies to get even larger. That’s part of what got us into this problem in the first place. 

Rogers buying Shaw is awful for almost everyone and is a symptom of a much larger cause. Let’s start treating it by making some serious changes to what the telecommunication industry can legally do to ensure it doesn’t happen again.