Nationalize, don’t just Canadianize the Telecoms

In June 2012 the Conservative federal government made changes to the Telecommunications Act to allow foreign telecom companies to buy domestic operators that own less than 10 per cent of market share. The social democratic NDP and many labour unions found this “very problematic”.1 When the plans of Verizon, an American telecom giant, to purchase Wind, a small operator in Canada, became public in June 2013, the shares of the big three “Canadian” firms (Bell, Rogers, and Telus, which have a combined 90 per cent share in Canada’s market with 26.9 million wireless subscribers) tumbled. But the stocks bounced back when Verizon indicated it would not be entering Canada after all2. The debate intensified over the upcoming new wireless 700 mHz spectrum (high speed internet) auction. That’s when each of three Canadian giants can bid for 25 per cent of the spectrum, but others can buy up to 50 per cent.

Canadian bosses and workers reacted with rage. Thousands of unionized workers marched in protest3. The Canadian Federation of Pensioners declared its concerns over the fate of Canadian telecom giants’ revenues; pensions are invested there. 4The telecom giants ran a “Fair for Canada” campaign with full page adds in newspapers. They argued that Canadian jobs in the sector would be lost, rural communities’ access to wireless will drop, and Canadians’ privacy will be at risk if a foreign cell phone provider dominates the domestic market.5 But the government claimed “More choice, lower price, better services”6, encouraging more competition in the telecom industry with its own campaign titled “Consumers First” 7.
Both sides are wrong, but for different reasons.
It is true that the Canadian telecom market is dominated by giant firms. This is hardly a surprise since there is monopoly control over most of the telecom markets in the world. Inviting Verizon, a gigantic corporation with enormous capital, to enter the Canadian market would not foster, but rather would impede competition.
‘We would not allow that to happen’ the government might claim. But if the government has that kind of power over these firms, then why doesn’t it use it to reduce consumer prices and foster investment by trimming the profit margins of the domestic “big three”? Or if it really prioritizes consumers’ welfare over the corporate interest, it could follow the socialist course of producing telecom services for people’s needs not for private profits.
Protection’ against the ‘foreign’ firms is what makes the Canadian telecom market peculiar8. ‘The barriers of entry’ facing foreign corporations should be preserved. But much more should be done to build a truly beneficial industry. Nationalist sentiments that favour Canadian firms over American ones are wrong-headed for several reasons.
First, workers (a majority of the population) and bosses (less than 1 %) have conflicting interests. Firms, be they Canadian or American, aim to maximize profits. They intend to give the workers less, and make the consumers (who are mostly workers) pay more. It may be true that many Canadian pensioners’ financial interests are now tied to the shares of “the big three”. However, doesn’t this ongoing process prove the need for an independent pension fund, which is controlled by the pensioners themselves —rather than workers’ earnings being invested in corporations that they cannot control whatsoever?
Secondly, Canadian and American bosses are linked to one another through a myriad of investment ties. Since the end of World War II, multinational corporations have dominated. US firms began building branch plants or subsidiaries inside Canada in order to bypass tariff restrictions—which, by the way, taught the US firms how to enter the European market, a process which is dubbed ‘Canadianization’ by some Marxists.9 Today, the US is the largest foreign investor in Canada and U.S.. investors hold 54.5 percent of Canada’s total internal investment stock.10 US and Canadian capital are inter-connected to such an extent that it is difficult to find a purely “Canadian” firm. The “nationalist” bourgeoisie that social democrats and Stalinists wrongly present as a strategic ally for the working class does not exist. The interests of the Canadian bosses lie in collaborating with their American counterparts to accumulate capital around the world. Canada is not a “neo-colony” but an imperialist state, one that is a junior partner of US imperialism.
Last but not least, communication is a right! Isn’t it ironic that many who see people’s revolts as “Twitter revolutions” decline to make the case that the wireless industry, on which all social media depends, should be publicly owned and managed? Nationalization, not Canadianization of the telecommunication industry is the way forward for a sector that should serve popular needs, not the priorities of private profit making. — by Y. Fikret Kayali
Digital Globe