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Ottawa to Hold Auction of the Wireless Spectrum

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Tom Peters suggested that for many big companies the words "We’re No Worse Than the Other Guy" could be the company motto emblazoned in gold letters over the entrance.

He was describing banks but according to a recent survey on customer service the cell phone companies are the lowest on the totem pole.

Politicians like to take popular decisions. So it was no great surprise to hear yesterday’s announcement from Ottawa that it will hold an auction of the wireless spectrum in May 2008. This could mean more competition and lower cellphone rates for Canadians next year. Industry Minister Jim Prentice said that about 105 megahertz of spectrum will be sold to bidders. Forty megahertz will be set aside for newcomers to the industry. Not surprisingly Telus described this as “deeply disappointing” news. I am sure that Bell and Rogers would feel the same way.

The three of them of course form an oligopoly.

An oligopoly exists when a few companies dominate an industry. This concentration often leads to collusion among manufacturers, so that prices are set by agreement rather than by the operation of the supply and demand mechanism.

Canadians pay more to use their cell phones and this is particularly so for broadband data transmission rates. Undoubtedly this has held back the development of the Mobile Web in Canada. This is particularly disastrous for an industry that should be one of Canada’s strengths.

Not surprisingly this news has been greeted with applause by many. What the oligopolists do not realize is that poor customer service creates rebels. After all as someone has suggested, bad news travels 10 times as fast as good news. Many consumers are just waiting to get the cell phone service they deserve. Any well-funded newcomer who can deliver the cell phone goods will find an army of evangelists waiting to spread the word.

Related:

News: Ottawa’s wireless auction could cut cellphone rates

News: Ottawa opens up wireless industry to more competition

Forum: Canadian Cellphone market will be opened to more competition

Blog: Bring on the Cellular Auction

Blog: Cautious Optimism With Wireless Auction Plan

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Ottawa to Hold Auction of the Wireless Spectrum
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