http://www.vancouversun.com/Foreign+ownership+restrictions+change/3125970/story.html
Summary:
This article talks about the changes in foreign ownerships for Canada in the telecommunication industry. Currently, regulations state that foreign firms are not allowed to own more than twenty percent of shares regardless of the companies' size. Industry leaders plan to relax the regulations so that it would not be as strict as it is now. There are also speculations that this will bring in billions of dollars in revenue after easing the regulations. With these new "rules," the top three companies in Canada (Bell Canada, Rogers Communications, Telus Corp.) will each be equal and have no advantages over any other company. Industry Minister Tony Clement, also decided to free-up regulation for smaller and newer companies such as Wind Mobile and Mobilicity. Clement ended by saying that Canada is one of the most "restrictive" countries when it comes to regulations.
Connection:
This article deals with the concept of foreign ownership. Foreign ownership occurs when foreign residents invest in Canadian assets and financial securities. In this case, it would be the Telecommunication industry. Foreign Ownership can benefit Canada in many ways. In employment, it is proved that one-tenth of all jobs in Canada are from foreign investments. Foreign-controlled companies also tend to be more orientated to world markets than Canadian-owned firms. Rob Bruce, president of Rogers', stated that "If it's opened up, it should be opened up for everyone." This statement adds to the fact that no company should have an advantage over any other.
Reflection:
I think it is great that the regulations are not being as strict for these phone companies. As seen in the article, billions of dollars can be earned just because of the ease of the regulations. It is also beneficial for the smaller companies such as Wind. Many people are planning to switch their phone plans to Wind because of the cheaper costs for their phone plans and they do not have to worry about any hidden fees. This is excellent for Wind as they are a smaller franchise compared to Rogers, Telus, and Bell. The larger companies tend to add hidden fees just because they can earn more money from the large consumer base they have, but I am sure many people will decide to switch to more "honest" companies instead.
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Foreign ownership will not add to competition it will simply result in larger individual companies comprising a tighter oligolopy. Never forget that price competition is the product of bankrupt business minds. The whole business has to be restructured as follows 1) Common carriers selling local loops and bandwidth to wholesalers. 2) The Wholesalers will sell telephone, internet and cell services to individual businesses and consumers. The Common Carrier business will be tightly regulated with an assured ROI if they play an ethical game. The Common Carriers will under no circumstances be allowed to offer ISP services or telephone services or cell services to consumers. The fragmented Cell services infrastructure has to end, there should be one and only one Cellular services provider coast to coast, tightly regulated with an assured ROI if they play an ethical game. The base level infrastructure provider will sell to wholesalers who will provide all the value added services and deal directly with individual businesses and consumers. The days of the all things to all people common carrier are over, it is time to move on. The sleazy, slimey behaviour is now out on the mainstream media. The Conservatives will have to stop the smoke and mirrors act and actually deal with the problem. The voters are getting increasingly disillusioned with the old Liberal red herring being dragged out as an excuse for inaction against fraud and corruption in the Canadian business community.
ReplyDeleteI agree that foreign companies can be beneficial because it creates more job opportunities. For a company like Wind joining the oligopoly in the wireless industry, cell phone plans would start out cheaper so that Wind can establish a position in the market by taking some of the market share from other companies. I don’t agree with you that Wind is necessarily a more “honest” company because like all wireless providers, they are all about profit. In my opinion, Wind will eventually raise their prices so that they can survive in this industry. It wouldn’t be profitable if Wind continues to provide such cheap plans.
ReplyDeleteI also agree that foreign ownership in Canada is beneficial to the economy. It can possibly create more job opportunities. It also adds competition to the wireless industry. For example, with Wind joining the oligopoly, the three major wireless providers, Rogers, Bell, and Telus will have to be more considerate of their prices because Wind will most likely be offering better deals to get their company stable in the wireless industry. When Canada lessens the restriction to newer and smaller companies, the three major service providers will almost have to reevaluate their marketing strategies, lowering prices and promoting better deals, so they can make sure newly started wireless providers like Wind won’t be taking away all their market shares. In other words, like what Calvin said, the top three companies in Canada will each be equal and have no advantages over any other company.
ReplyDeleteThe new regulations on foreign telecommunication companies will definitely be beneficial to our economy. Currently, Rogers is the leading service provider in the West and Bell leading in the East. Since they are the leaders in the market, they are known to charge hefty prices for some of their phone plans, especially Rogers. With the introduction of new companies such as Wind mobile, who claim to have no hidden fees in their phone plans, companies like Rogers, Telus, and Bell will have to improve their products to stay in the competition. Foreign companies might provide more jobs for Canadians, but if the government is too lenient on new regulations, we might face a market dominance from foreign telecommunication companies in the future.
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