Two More Steps For Telecom Conglomeratization in North America?

There were two separate reports that seem quite interesting when put together. In general, the number of players in the telecom market in both Canada and the United States shrank. In reference to past behaviour of telecom companies, one wonders, even though it may be good in the stock markets, is this really good news for consumers?

Telecom companies have had it quite easy in North America. In Canada, for the most part, it’s either a duopoly or a triopoly in different areas. In the United States, it’s a similar thing. While there are other theories to suggest that the reason that broadband speeds are no where near as good as in places like Sweden of Japan is simply due to geography, another theory is that it’s all because of lack of competition. Both theories are highly plausible – watching the debate surrounding NC broadband, which is a story about starting municipal broadband, lends plenty of credibility to the second theory we are talking about.

Still, internet connections and mobil phones are different technologies, right? Right. However, it doesn’t mean that price inflation cannot happen in the mobile market thanks to lack of competition. Activities like phone locking and roaming charges are among a list of grievances some mobile consumers have with telecom companies. This is, in one way, what makes these two stories intriguing at the very least.

A report on the CBC notes a major deal between Bell and Virgin Mobil. The report says that Bell has finally acquired the last remaining share of Virgin Mobile in Canada. While the company will still operate under the same name, it’ll now be under control by Bell Canada. From the report:

The Virgin brand has been operating in Canada since 2004 on the Bell Mobility network. The brand will remain independent of other Bell brands, although the companies will share a network and retail distribution.

“I believe the acquisition of Virgin Mobile Canada and continuing licence of the Virgin Mobile brand to Bell will help to expand the Mobile business more quickly and allow even more Canadians to enjoy the unique wireless service and product experience Virgin created,” said Richard Branson, the chairman of The Virgin Group.

Bell said that at $142 million, the price represents a lower cost of acquisition per subscriber than Bell Mobility’s current average. Bell also said the deal will have limited impact on Bell Wireless financial results this year.

“The softer economy has led to more cautious consumer spending and reduced business investment,” said George Cope, president and CEO of BCE and Bell Canada

Barely a day later, a report posted on Reuters said that CNBC report suggested that AT&T is close to a deal to acquire most of Verizon’s Alltel devision. Stock markets were up both days.

It’s unclear what all this means, but one thing is certain, fewer people have more control of the telecom market pie. If the telecom corporations are already taking advantage of the market thanks to either a duopoly or a triopoly, one must wonder how bad could things get if it gets to the point where there will be more cases of an area having a telecom monopoly. What happens if you don’t like a telecom company and that company happens to be the only one in your area?

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