Why wireless and digital media competition is dying in Canada

compNetflix enters Canada and Rogers responds by lowering data levels.  WIND Mobile, Mobilicity and Public Mobile enter the Canadian wireless marketplace and Rogers announces Chatr Wireless.

One can hardly blame the communications giant for taking action to protect their business interests.  If it was against the law to undertake these steps Rogers would be fined and even sued.  However, these are steps that are perfectly legal under the current system governed by the Canadian Radio-television Telecommunications Commission (CRTC).

Will Netflix survive in Canada under conditions that “limit” the amount of data a consumer can use?  Will Canada’s newer mobile companies be able to compete with the Big 3?  

I asked two of Toronto’s young entrepreneurs to chime in with their thoughts on the current wireless and digital media landscape.  Here are there uncensored thoughts:

Adam Ben-Aron is the co-founder of Toronto-based start-up MyCityLives.com:

Wireless providers in Canada are one of those things that really have no reason to be better than they are.  Until recently there were only three companies providing these services to the entire Canadian population. Between this lack of competition and the massive infrastructure cost to provide services in a country the size of Canada, it’s really not surprising that I’ve never talked to anyone in Canada who’s happy with either the plan or customer service they receive from the wireless provider. 

It has gotten to the point now where if my service provider does something right the first time it’s actually surprising. Unfortunately I think that this is just one of those things in Canada that we might just have to accept. For a new (international or domestic) company to try and get in the wireless game in Canada they’ll have to go through too many CRTC hoops and to set up enough signal towers to provide good coverage across the country. This is just too high a cost. I’m sad to say it, but I think this is one area (and probably the only one) where we’re at a disadvantage living in Canada.

Guy Gal is with Toronto-based The Biz Media:

My issue is with digital media competition. Rogers Wireless is just one component of the media conglomerate that is Rogers Communications. Their market position is unlike Bell or Telus, it’s much more diversified and comprehensive. They want to lead in every media space, and increasingly, that space is becoming digital. As media becomes digital, it also becomes a threat to Rogers bread and butter business, cable/television services. Here’s a service where Rogers has little to no overhead, but charges premium because it owns the infrastructure that separates us from that content. They decide to flip the switch, on or off.  Digital media is supposed to change all of that, it’s supposed to free us from television switch operators and let us interact with content freely online.

Here’s the problem: Rogers also owns significant online infrastructure, in much the same way as they do with TV. And they leverage both of those to protect the other. Such is the case with the recent bandwidth change on the news that Netflix is coming. My perspective is that this is a monopoly move.

Where this really begins to hurt is when it stifles innovation in the digital media space. Rogers wants it all in house, so every time new technology emerges they either acquire it for use inside their own sandbox, bury it, or keep it outside of Canada. And that’s going to mean that Canada will lag behind in our digital media development, invention and innovation. The US will move past cable years before we will, and consumers will pay less. The US will adopt the internet as the standard platform for content distribution way before we do. This also means that digital media companies, on striking gold, will take that state-side, because Canada is anti-competitive. And that hurts our country and our people, and it only benefits Rogers stakeholders.

Adam and Guy have had their say.  Now it’s your turn.  What are your thoughts on Rogers’ actions?  How about the “outdated” CRTC system?