Continentalizing Canadian Telecommunications: The Politics of Regulatory Reform (review)

Telecommunications, the essential infrastructure of today's information-based economy, has evolved worldwide in recent years from public utility monopoly (most often government owned) to private ownership and competition. This has been a most difficult transition, as the monopoly was pervasive, well-entrenched, and replete with cross-subsidies, such as those from long distance to local and from business to residential. Moreover, because telecommunications is a network industry, it proved to be extremely difficult to determine rates for access to incumbent controlled bottleneck facilities which cannot economically be reproduced by new entrant competitors.

While it has been relatively easy to introduce competition into the long-distance, wireless, and terminal equipment markets, there has been considerable delay and difficulty in opening up the local distribution market to competition. Many still consider the local market a 'natural monopoly,' i.e., more efficiently provided by a single supplier. And beneficiaries of monopoly-era cross-subsidies, particularly residential subscribers, have understandably fought hard to retain the privilege of subsidized local service.

Vanda Rideout gives one perspective on the story of the Canadian experience in the evolution from monopoly towards competition. She believes that big business and government have collaborated in a neo-liberal agenda to disadvantage residential subscribers, those living in remote or rural locations, and the unionized employees of the traditional telephone companies. In her view, far from protecting the public interest, regulators have been the dupes of concentrated business interests.

What is ignored in this book is that competition has by any measure been an overwhelming success in the telecommunications sector. Initial concerns back in the mid-1980s that it would lead to a new class division between information rich and poor grew out of the confusion surrounding the breakup of AT&T by the competition law authorities in the US and not from any inherent flaw in competitive markets. Despite her claims of exorbitant increases in local rates leading to massive dropoffs from local residential service, she does not back this up with credible evidence. Indeed, the evidence shows exactly the opposite of her contention, increasing penetration rates with greater competition. As well, it is myopic at best to focus only on local rate increases, as the vast majority of residential subscribers partake of many other services, particularly long distance, all of which have become more available and far less expensive with competition.

Why then do we have a book which runs contrary to observable reality? Rather than take a fresh and unblinkered look at what competition hath wrought, Rideout relies uncritically, and to far too great an extent, on the now outdated analysis of Vincent Mosco and Robert Babe grounded in the 1980s, which postulated the inevitable failure of competition from a left political perspective. This preconception is fast-forwarded to today with a highly selective regard for the facts.

This is not to say that there are no problems with competition, but by and large they are not the ones identified here. As suggested at the outset of this review, the transition to competition has been fraught with complexities and has presented regulators with many intractable problems. Rather than see conspiracies against the public interest at every turn, it would have been better if the author had been prepared to deal with the real down-to-earth issues of telecommunications regulation on their own merits without such strongly preconceived views of a sinister neo-liberal agenda.

Rideout has a totally pessimistic view of government as presently constituted. Yet the striking success of a unique mixture of competition and federal, provincial, municipal, and community support has led to Canada's being a real winner when it comes to critically important broadband access. Here, despite our daunting geography and dispersed population, penetration rates are among the highest in the world. This indicates that a much more optimistic view of the possible benefits of government-business collaboration is...