Rogers-Shaw merger leaves Wind founder disappointed, but not surprised
Anthony Lacavera sees three takeaways from the deal: It will be very bad for consumers and generally bad for jobs, but will be good for spurring 5G infrastructure
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When Anthony Lacavera saw that Rogers Communications Inc. was buying western rival Shaw Communications for more than $20 billion earlier this week, the telecom industry veteran was a little disappointed but not surprised.
Lacavera, after all, founded Wind Mobile in 2008 as an upstart wireless provider, and battled against regulators and Canada’s big three telcos for years before Shaw finally absorbed Wind and rebranded it as Freedom Mobile in 2016.
While the emotional connection to Wind has diminished, watching the budget-friendly carrier go the way of the big three still brought a twinge.
“The oligopolies are so strong in Canada,” Lacavera said. “I was disappointed. It’s just so unfortunate that the country I love is dominated by these oligopolies and does not have a competitive market.”
Lacavera sees three takeaways from the takeover of Calgary-based Shaw: It will be very bad for consumers and generally bad for jobs, but will be good for spurring 5G infrastructure.
The deal is one of the biggest takeovers in the Canadian telecom industry in years and it will provide Rogers, which has a heavy presence in Ontario and some Atlantic provinces, with access to Shaw’s footprint in the West, where it is a major provider.
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The deal is set to close in early 2022, Rogers CEO Joe Natale told analysts on Monday. It will likely draw heavy scrutiny from regulators, in part because of Freedom’s transfer to Rogers, which has left many, including Lacavera, worried about how customers will fare.
“I think that prices most definitely are going to go up,” Lacavera said from his Toronto home on Tuesday. “Now consumers are back to the consolidated picture that we had before Wind entered and that means fewer players, which means higher prices and weaker customer service.”
That Rogers made a point of promising customers that prices for Freedom Mobile customers would not increase for three years said it all for Lacavera.
“I think it’s very telling (that) right in their press release, they felt the need to say that,” he said. “I think in a normal competitive market, you would never have to say something like that, because of course, if there’s a competitive market, prices are not going to go up.”
As part of the merger, Natale said 3,000 jobs would be added in Western provinces, but Lacavera said that with synergies, especially where the two businesses overlap in cable and landline, more jobs could be lost.
Rogers did not respond to interview requests by the time of publication.
The only upside the former CEO of Freedom sees in the deal is the investment — currently set at $2.5 billion by Rogers — that will be put into ramping up the country’s 5G infrastructure.
Some agree with Lacavera on the 5G front, saying the merger will push Rogers into the lead of Canada’s race to build the next generation of internet connectivity.
“For us to be globally competitive, we need strong 5G infrastructure in this country,” said William Mitchell, a professor of strategic management at the University of Toronto.
It's just so unfortunate that the country I love is dominated by these oligopolies and does not have a competitive market
If we fall behind, Mitchell said, we fall behind Korea, China, Japan and the U.S. and our economy suffers because we cannot compete technologically.
Despite his hope in bolstering 5G infrastructure, Lacavera worries that many Canadians will struggle to afford prices set by any of the Big Three to access their 5G networks because of their oligopolistic nature.
However, he doesn’t blame the companies. He said Rogers, Bell and Telus have excellent management teams that run their companies really well.
“The decisions that they make, to limit competition, to stifle innovation, to keep prices high and keep competitors out, those are smart business decisions,” he said.
Lacavera instead blames regulators and their inability to enforce policy implemented in 2007 which addressed spectrum allocation, how to govern disputes and the sharing of cell towers.
Lacavera said the government, over the years, never updated the rules as technology advanced and was never equipped with the right authority to enforce the policy. Now, there’s opportunity.
“Let’s figure out how to create a policy framework that encourages competition but resolves some of the shortcomings of the old policy,” he said. “At the same time, let’s create a mechanism for enforcement. That is the most important thing. Just enforce the policy.”
Financial Post
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