Canadians: Is Verizon Just the Devil You Don’t Know?

If Verizon is serious about entering the Great White North, the Canadian Government certainly looks to be supporting the company, standing firm on its current foreign investment rules. Many consumers are eager to believe that any new player in the country is a good thing; we’ve been dominated by the Big Three for far too long. More competition equals better deals is the belief. But does it really?

First, let’s look at the situation. In Canada, we have three main national wireless carriers: Bell, Rogers, and Telus. Bell and Telus, affectionately known as Belus, share networks, leading many to argue that we have two real competitors. Scattered about are several regional players added to the mix.

In 2008/2009, in came three new players that ambitiously hoped to shake things up by offering services across Canada, including affordable plans and no contracts. And they did make tiny waves, helping to improve some aspects of service and pricing in Canada. But Public Mobile, Mobilicity, and WIND Mobile, simply cannot compete with the Big Three. To say it’s not a level playing field would be an understatement. It’s the sad reality of the situation. However, U.S. carrier Verizon, which has four times the subscribers of all three national carriers combined, certainly can compete.

Conveniently for Verizon, foreign investment and wireless telecom rules were recently revamped in Canada in hopes of accommodating those new players (Public, Mobilicity, and WIND), and opening the floodgates in Canada to new competition. Some of the current rules include that any new company with less than 10% market share can be purchased by a foreign investor; an existing Canadian carrier cannot purchase one of the new carriers within the first five years of operation (year five would be 2014); and new entrants are open to bid on more spectrum blocks than the incumbents. It’s clear these rules were made to help new carriers better compete. But it leaves the door wide open for Verizon to jump through those loopholes. It’s like giving the 400-pound heavyweight an opportunity to fight the reigning champ while the latter is blindfolded, with his hands behind his back.

Let’s make this clear: I’m not saying Verizon shouldn’t enter Canada and that it wouldn’t help the situation. What I am saying is that the incumbents do have a point. Rules are rules, but they were clearly meant for a reasonably-sized player to enter the market, and gain a small advantage to help it kick start business. It’s almost laughable to think that Verizon needs a boost to get off its feet in Canada.

That said, Bell, Rogers, and Telus, have been reaping the benefits of dominating a market for far too long. Many would argue they’ve used the opportunity to take full advantage of the situation, hiking up prices, gouging customers with added fees, confusing us with pages and pages of fine print, and locking customers into three-year contracts. Any other “new” carrier that’s entered the market has been nothing but a farce: Virgin, which is now 100% owned by Bell; Fido, a Rogers brand, and Koodo, a Telus partner, are just a few examples. Is Verizon’s entrance a final revenge play for Canadians to say “screw with us for so many years and this is what you get!” It’s ironic how the Big Three were in favour of adjusting foreign investment rules when they thought no company in its right mind would want to buy a Mobilicity or WIND anyway. (In fact, Telus attempted to buy the former, but that deal was quickly squashed by the Canadian government.)

It’s clear through sentiments expressed on blogs and in online commentary that Canadians are fed up, and cheering on the Government to say “yes” to Verizon. Yet oddly enough, the Big Three have gone wild with a public campaign urging Canadians to keep the big bad wolf, Verizon out of Canada, and support our good ol’ Canadian pride; the Canadian companies that have invested so much in the business. It’s just unfair, they cry. (Funny enough, the Big Three laughed at WIND and Mobilicity years ago when they, too, cried that the current situation was “unfair.”)

Whatever happens, Canadians need to heed one warning. While it seems ever likely that Verizon will find its way to Canada, understand that Verizon is a massive, multi-billion dollar company. While the company would represent fresh, new blood in Canada, it’s not going to have the same fighting mentality as a WIND or Mobilicity that’s entering the ring for the first time and passionately wants to make an impact in any way possible to get on the radar. Verizon is a corporation that wants to make money, and lots of it. And it sees Canada as a hot market to do so.

Don’t’ get me wrong: Verizon will come to play, and play hard. But it will do this on its terms. Even if the carrier comes to market with comparably-priced offerings rather than undercutting the Big Three, chances are that Bell, Rogers, and Telus will up their game in order to retain customers, and keep them from jumping to Verizon. And we’ll all benefit from that.

But when all is said and done, and the initial hype dies down, Verizon may not be the angel here to save you. It could just become Canada’s fourth carrier that’s just like the rest. The devil you don’t know.