Canada is one of the countries with the highest cellular prices. Their carrier and internet charges are expensive. This significantly impacts the country’s GDP because it limits interpersonal and B2B communication. In its attempt to make life easier for its citizens, Canada has struck the biggest telecom deal in its history.
Ottawa recently approved the takeover of Shaw Communications Inc. by Rogers Communications Inc for CAD 26 billion (USD 19 billion). These are two major players in the Canadian telecommunications market, and their merger has implications. They will determine the market price for these communication services as they join forces and gain market share. Moreover, the government will have more control over market prices as this merger is permitted on certain conditions set forth by the state.
The History of This Deal
Shaw used to own Freedom Mobile, and in June 2022, it was set to be transferred to Videotron. Owned by Quebecor Inc, Videotron bought Freedom Mobile for CAD 2.8 billion. Shaw itself was to be bought by Rogers in 2021, but the transfer kept getting postponed for one reason or another.
Now that it’s finally happened, this has made Rogers, Bell Canada, and Telus Corp the main players on the field. The deal is to be completed by the first week of April. Known as the Big Three, they have the most market share and control over prices. It’s especially important, then, that the government has an understanding with these corporations for coordination of socioeconomic, corporate, and legal matters.
Industry minister François-Phillipe Champagne has reassured citizens that the companies will be compelled to abide by the conditions of keeping their cellular rates reasonable. The aim is to increase competition and control phone and internet costs. There are 21 conditions set that Rogers has committed to that aim at driving down prices.
One of these conditions is that Rogers must set up a second headquarters in Calgary and create 3000 jobs. This headquarters and its jobs must be maintained for the upcoming 10 years.
There are also plans to introduce another player in the market to increase the competitive spirit.
Videotron, which operates Freedom Mobile, must lower their prices by 20% and upgrade their network within two years. They must spend CAD 150 million over this span to make these changes. For 10 years, they’re also forbidden from selling Freedom Mobile’s license.
Heavy Fines to Ensure Compliance
The goal is to lower prices, and Champagne has ensured these companies make it happen. If Rogers breaks any of their promises, they are to pay a fine of CAD 1 billion. Videotron will be fined CAD 200 million if they don’t comply.
With these conditions, Champagne has promised to “be like a hawk on behalf of Canadians.” Keeping a glaring eye on these organizations might make communication faster, cheaper, and more competitive in Canada.