Canada Won't be Able to Support 4 National Telecoms Carriers – Rogers CEO
By Esther Tanquintic-Misa | May 26, 2014 2:31 PM EST
Guy Lawrence, new chief executive of Rogers Communications Inc., strongly believed Canada won't be able to support a fourth national wireless carrier because of the gigantic costs involved in maintaining and operating all of them.
Canadian federal government has long been vocal in having four strong competitors in every region of the country.
"I'm not saying the government is wrong. I'm not saying that they should change their policy. My personal view is that it is difficult to see a scenario where a fourth carrier will be successful," Mr Lawrence said.
In a report commissioned by the Competition Bureau and released early this month, it said Canada will gain $1 billion if there were a fourth national cellphone carrier because participating carriers will be forced to increase the wireless penetration rate while working to always lower incumbent prices.
However, a separate study by the Montreal Economic Institute said the presence of a fourth national carrier will be "wasteful."
"It may be preferable for financial resources ... to be concentrated in the hands of a few strong players willing to invest in new technologies and services rather than scattered among several small and feeble competitors trying to survive by selling at prices barely above marginal costs," the report said.
For the four-carrier policy to work, the federal government first need to invest in building, updating and running a modern communications network.
"What you saw in Europe was a number of different countries who pursued the four-carrier option for a period of five to seven years. It was politically very popularist and they were happy to follow that," Mr Lawrence said. he used to headed the U.K. arm of Vodafone, a multinational communications company.
"What you clearly see now, and I cite Germany and France, is that they've started to realize that given the capital complexity involved in these companies, it is very difficult to support a fourth carrier."
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