Social Policy in Ontario

Canadian Internet lags behind the rest of the developed world

Posted on June 27, 2011 in Inclusion Delivery System

Source: National Post — Authors: Jesse Kline

NationalPost.com – fullcomment
Jun 27, 2011.   Jesse Kline

The Organization of Economic Cooperation and Development (OECD) has released data comparing Internet connectivity in the developed world and the results do not look good for Canada.

The data shows that Canadian Internet users pay some of the highest prices in the OECD, for slower connections than in many other places. In terms of price, Canada ranked 28 out of 33 countries for connections ranging from 2.5-15 Mbps and 23rd of 28 countries for connections over 45 Mbps.

Average Internet speeds in Canada continue to be slower than in many other places and we remain one of the only countries where Internet service providers (ISPs) put caps on the amount of data that can be transferred in a given period. These results mirror a2009 study prepared by Harvard University for the Federal Communications Commission, which ranked Canada 25th out of 30 countries in terms of price and 20th in terms of speed.

The problem is that the Canadian ISP market is effectively a duopoly, with services being provided by the incumbent phone and cable companies in most major centres. In 2006, Canada’s four major ISPs accounted for 63% of the retail market. For the C.D. Howe Institute’s new Competition Policy Council — which released its first report late last week — the solution is simple: Decrease the barriers to competition in the telecommunications sector.

Foreign companies are currently limited to owning 20% of the shares of a telecommunications common carrier. The council recommends that foreign ownership restrictions be fully lifted for new and incumbent telecommunications and broadcasting companies. Such a policy change would open the Canadian market to foreign competition, which would help drive down prices and increase the level of service Canadians enjoy.

As an economist, Stephen Harper knows the best way to lower prices for Internet connectivity is to encourage more competition. Removing the government-imposed restriction that helps keep our marketplace uncompetitive would be a common sense solution to the problem; the kind of solution one would expect to see from a government that believes in the free market. Unfortunately, the Tories have shown time and again — from blocking a foreign takeover of Potash Corp. to protecting dairy tariffs in trade negotiations — that they favour protectionist policies that benefit special interests, over those that would benefit the Canadian people.

< http://fullcomment.nationalpost.com/2011/06/27/jesse-kline-canadian-internet-lags-behind-the-rest-of-the-developed-world/ >

Tags: economy, globalization, participation, standard of living

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