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Gunfight at the Telco Corral… Canadian Style

Free-marketers won the day in Canada, yesterday.  Industry Minister Maxime Bernier declared that there is no need to regulate local telephony service in markets where there is sufficient competition.  That means most Canadian cities, except in rural markets.

On Monday, Industry Minister Maxime Bernier gave BCE (Bell Canada), Telus and the country’s other incumbent telcos the power to set their own prices, as long as there is sufficient competition in the local area.

Let the price wars begin.

Consumers will be the big benefactors here.  Until now, cable companies have priced their products based on a “rational pricing” model.  The thinking has been that since their competition is regulated, all they have to do is price a little under the competition, and maximize profits.  With this ruling, the gloves are off.  Expect prices to fall as the telco’s and cable providers go to the mat for market supremacy.  It’s only a matter of time before some trigger happy cable exec ignites a gunfight with an offer like “get telephone with your cable for just $10/month more”. 

The most vulnerable to this ruling are the alternative competitive voice providers that have popped up in recent years.  The internet service providers who offer voice, or small carriers like my local favorite Unlimitel or the slightly bigger fish like Vonage.

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