Telecommunications is one of the most stable industries of the twenty-first century due to its growing relevance in the globalization era. It has become a basic need, and it is for this reason that the sector was cushioned from the adverse effects of the 2008-2010 financial crises in the Americas. However, compared to Brazil, the Canadian telecommunications market is more advanced and has more restrictions for entry of new industry players.
Government Control and Interference in the Canadian Telecom Sector
Just like in Brazil, government control and interference is also rife in Canada. This is obviously attributed to the vital role that the sector plays in sustaining the country’s economy and as an infrastructural pillar in other government services such as security provision and healthcare. This year alone, the key industry figures were embroiled in a bitter telecoms war involving the key telecom industry players on one side facing off against the Canadian government over obscure industry regulations that the government continues to impose. Some of the contentious regulations included the proposed auction of a general cellular waves popularly referred to as spectrum and the impending July’s implementation of the Canadian Radio-television and Telecommunication Commission’s new national Wireless Code. The government’s spectrum policy is also said to be very inconsistent and impractical in its application. Such are the challenges that the Canadian telecom sector faces as a result of government interference.
Restriction to market entry for foreign firms
The Canadian government also has a restriction to market entry policy especially to foreign firms who would want to have a share of the Canadian telecom market. Already, the American Telecommunication company, Verizon Communications Inc has been prevented by the government from coming into the market to take over some of the underperforming carriers. Verizon has already declared that it is reviewing its decision to expand into Canada.
Price control Regime
Although the Canadian government has deliberately kept off from determining cellular services prizes, the government through the CRTC – Canadian Radio Television and Communication is set to review the roaming rates that are charged amongst the competitors as consumer’s roam within the various networks. In December 2013, the Industry Minister intimated that the government will be bringing in amendments to the communication Act to set ceilings on the roaming charges that are normally set for the consumers. The government could also go further and preset the rates chargeable to buyers who purchase airtime for resell.
Challenges for Phonetask in Canada
The key challenge that Phonetask is faced with as it prepares to invest in Canada includes that of possible government interference and the possibility that the company will be venturing into a region with more sophisticated and advanced telecom systems and services compared to its current operational base in Brazil. Whereas Brazil is looking at a limited fourth generation network as its most modern telecommunication facility, Canada has an unparalleled fourth generation network across the country. Also, Brazil – the headquarters of Phonetask will obviously struggle to match the professional requirements required to run the Telecoms sector in Canada across vertical industries. This might prove to be a costly affair for Phonetask.
The only plausible method through which Phonetask can have a pie of the Canadian Telecom sector is through a silent piecemeal acquisition of stocks of the existing telecommunications company. Going at it alone at this time is not an option. The acquisition can be done either directly or through proxies with the final target being the ownership of a controlling stake.
Christine, D. (2014, January 02). How Canada's Telecom War Turned Ugly. Retrieved June 22, 2014, from Financial Post: http://business.financialpost.com/2014/01/02/how-canadas-telecom-war-turned-ugly/?__lsa=259c-b791
Surtees, L. (2013, June). Canadian Telecom Market Drivers and Strategies. Retrieved June 22, 2014, from IDC: http://www.idc.com/getdoc.jsp?containerId=IDC_P491
Thomas Reuters. (2013, April 17). Brazil launches 4G wireless service with few smartphone options. Retrieved June 22, 2014, from Reuters: http://www.reuters.com/article/2013/04/17/us-brazil-telecom-smartphones-idUSBRE93G0NY20130417