Bell's Real Goal is Foreign Ownership
Bell’s decision to throttle the connections of its rival ISPs has been getting some attention this past week, and rightly so. But whats been missing from the discussion is the big picture.
Why is Bell trying to shutdown the wholesale based ISPs?
The reason is not economic. The small independent ISPs represent only a fraction of total subscribers. Furthermore, Bell still makes money from these subscribers and if Bell forces them off their network they certainly aren’t going convert to become Bell subscribers. More likely they’ll go to Rogers.
How about a bandwidth crunch? Bell insists that a small portion of the users, if left un-throttled will consume a disproportionate amount of bandwidth. But Bell also admits that it has more than enough capacity on its network at the moment so this can’t be the reason.
No, in order to understand what is really going on with Bell you have to consider the much larger picture.
Just one week after Bell began tampering with the internet connections of smaller ISPs, it filed a leave to appeal with the Federal Court of Canada to overturn a decision made by the CRTC which continues to allow access to wholesale services.
It might seem like Bell’s goals are straight forward. It wants competitors off its network and if the CRTC won’t do it, they’ll ask the courts to do it. In the mean time they’ll disrupt the network so badly the competitors will be forced to leave or go out of business.
But why the sudden heavy handedness? To understand that aspect of the story you have remember the other major event that just took place.
The Ontario Teachers Pension fund and some major US investment capital firms just got approval for the purchase of BCE.
These investment funds don’t buy companies so they can get involved in the day to day operations. They buy for one reason only, to sell.
Of course, in order to sell you need a buyer and therein lies the problem. Canada’s investment rules currently prevent foreign investors from purchasing Bell so it would seem the market for a company that size is limited.
Not so fast. Ever since the conservative government got elected they’ve been quietly stating that Canada’s foreign ownership rules need to be relaxed.
And so here is how the pieces of the puzzle fit together.
Ontario Teacher’s Pension Fund needs foreign ownership rules relaxed so it can chop up BCE and sell the parts for a profit. In order to get the rules relaxed the government needs a compelling event to demonstrate that foreign investment is needed to facilitate competition.
Bell provides the compelling event by demonstrating that it is effectively a monopoly. This sways public opinion against Bell opening the door for the government to dismantle foreign ownership rules.
In short, by appearing to become it’s own worst enemy, Bell accomplishes the goals of its owners.
Ultimately though, relaxing foreign ownership rules will be good for Canada. Unlike content providers such as television and radio, there is no cultural significance telecommunication infrastructure. Canada may well need to be concerned about the cultural content that flows over this infrastructure but maintaining Canadian ownership of the infrastructure shouldn’t be a worry.
