I won't argue with the point of the article, which is Canadian telecoms, not unlike their larger US counterparts are adept at using regulation that was originally meant to regulate them, as a way to keep out competition.

It's the opening line that I question; "BEING a vast and sparsely populated country, mobile phones are important in Canada."

Sparse population is exactly what you DON'T want if you're building a cell system. Each cell site has a fixed cost to build and operate. The more subscribers use that site, the more profitable it is. If a cell tower has, say, a 5 mile operation radius, in much of Canada outside of the big cities, that radius would circumscribe two or three homes and perhaps a short stretch of a little-used country road. Once you've built cell service in the big cities and along the major inter-city highways, you're done. People in the "vast and sparsely populated" areas have to make do with POTS wires or satellite phones, unless the government proposes to subsidize rural cell service.

So, it was a nice smooth opening line, attempting to connect what everyone knows about Canada (it's so BIG and EMPTY) with its low rate of cell phone usage, but the argument fails technically.

Gotta counter D. Sherman here, in that despite it's wide geography, most of Canada's population lives in urban areas, but has the tendency to wander about those vast expanses in the summertime.

Thus, the only operators who cover a large amount of the country are the oligopolies that comprise the Big Three, while the startups like WIND and Mobilicity cover only the urban areas.

The problem with the big three, particularly Rogers, is the vast amount of effort they put into charging more money while providing zero value add. Rogers billing system is setup such that it requires many of its customers to call in monthly to have the "extra charges" removed (for long distance or minutes that are included in its plan). It also modifies the functionality of the handsets it sells, so that it can later turn on features of the phone for a monthly charge (data sharing, for example, on the iPhone).

The actions of the big carriers are legally dubious at best, and a major drag on the development of Canada's "intelligent" economy.

A couple of corrections:
Canada's wireless penetration rate has not been at 60% for a number of years. The CRTC put household pentration at 74.8% (CRTC Communications Monitoring report 2010) while the Merrill Lynch Global Wireless Matrix 2Q2010 puts it at 70%. There are no granular studies of Canada's urban wireless penetration rate but it is widely believed to be in the 95% range.

Public Mobile was the first company to legally challenge Industry Minister Clement's decision to overturn the CRTC ruling that Globalive was not Canadian controlled. Public Mobile is a new entrant and not one of the "big three".

If you consider a market that has three competitors with roughly equivalent market share a monopoly then, the UK, France, Germany, US and Japan must also be monopoly markets. Canada now has 6 network based carriers with national aspirations. It's a very interesting market.

An indication of the anti-competitive wireless telecom market in Canada is the fact that it is nearly impossible to purchase an unlocked mobile device. Compare this fact to the ease with which a consumer in Europe may achieve the outright purchase of an unlocked mobile device and then he or she may then proceed to choose a wireless carrier based on price and service.

Another indicator of an anti-competitive market in Canada is the cost of mobile devices: prices vary little between wireless service providers (through whom most sales are controlled or made). One rarely sees heavy discounting on outright sales for "end of model" when a device is being discontinued unless tied to the ubiquitous three year contract.

With all due respect to "Hear2see" the comment about unlocked wireless devices in Canada is not true at all. Almost all the carriers will unlock them for their customers.

Canadian consumers love the deep discounts they get on their handsets and many choose optional term contracts in exchange for deeper discounts - the longer the term, the deeper the discount. It is very common to see smartphones like the BlackBerry Bold, BB Curve, Samsung Fascinate, HTC Desire, and Motorola Milestone selling for $0 with a term contract. The Apple iPhones are also deeply discounted with the iPhone 4 selling for $159 and the iPhone 3GS as low as $19.95. Canadians have also been able to purchase the iPhone from 3 different carriers for the past 2 years while consumers in the US could only buy their iPhone from 1 carrier up to just a few months ago.

The other common misperception in Canada is that wireless prices are higher in Canada than other parts of the world. However, the leading international pricing studies do not bear that out:

The Merrill Lynch Global Wireless Matrix 2Q2010 says Canadian RPM is $0.10 versus an average of $0.13 in Europe and $0.19 in Asia-Pacific. The OECD Communications Outlook 2009 says Canadian wireless costs are 26% cheaper than the US for a medium user basket.

Complaining about wireless services is just as much a national pasttime in Canada as it is in the other countries around the world.

"Some are suggesting that Mr Clement simply amend the Telecommunications Act, rendering their objections worthless."

But therein lies the tale: Harper has a minority government, so he cannot amend the Act. The court accused Clement of basically amending the Act without going through Parliament, which, really, is the most Clement could hope to do. A previous court decision which gave the government broad powers to interpret laws was somewhat undercut with this decision. It may be that things that are obvious in a majority government situation - why can't the government interpret Acts broadly if it has a majority and could just amend the Act if it wanted to anyway? - don't apply so much in a minority government situation.

My favourite part of this article comes in the last paragraph. It reads, "The big three, fearful of losing their monopoly....". Has the author looked at the masthead? 3? Monopoly? This article is so replete with inaccuracies that it calls into question the legitimacy of this organ. What has happened here is that capital fleeing Egypt in advance, of well Egypt repatriating it, decided Canada was a good laundering place. Finding a minority Government that was trying to be less Conservative and more populist, the capital was able to find a home through intense lobbying by the Egyptian firm. The Courts saw otherwise for the moment, quashing the Minister of Egypt's (can't think of a better name) lobbied decision. We shall see how this turns out. Perhaps the Minister of Egypt should just lift these accursed ownership restrictions instead of trying to avoid them. Then, perhaps he could become the Minister of "Industry" again, instead of a shill for carpetbaggers. I guess that wouldn't make good copy though for the Economist.

I think Mr. Aubry has identified the forces that are really at play here. Canada's desperate minority government manipulating the truth and the law to court favour with potential voters and an Egyptian billionaire moving his assets out his country ahead of the impending collapse of a dictatorship in which he was a beneficial insider. A perfect match at just the right time.

Sadly the biggest casualties in all of this are the truth and Canada's reputation as a stable and predictable country in which to conduct business.

3 operators for Canada is way to little... Lithuania (population 3,3m) has 3 operators (with infrastructure) and 2 more which sell service and rent the infrastructure from the others. Result - penetration is 150-160%. I pay 2$ per month for which i can talk 2-3 hours and 200-300 messages(loalty programs) which is enough for me. Usualy it is $0.01-0.05 per minute.

Ofcource density of population is a factor, but still - it has 10 times the population. And as someone already mention, most of them live in urban areas where the density is more less the same as in Lithuania.

Question for Ecoe:

I wonder if you have any thoughts on why Lithuanians have such a high penetration of cell phones? It seems odd that every man, woman, child and newborn baby needs 1.5 cellphone accounts. Some articles suggest the supranormal European penetration rates are due to the combination of costly intercarrier roaming charges and the late arrival of affinity plans - which drives consumers to arbitrage their accounts between multiple carriers to keep costs down.

In Canada, virtually all carriers offer unlimited evening and weekend calling and many also offer unlimited affinity calling plans which mitigates the need for multiple wireless accounts. The larger carrier' networks are truly national so roaming charges are extremely rare within Canada.

You can own a cell phone in Canada for $2 a month as well but it will be a prepaid account as opposed to the much more popular postpaid accounts.

In Canada, there are currently 6 facilities based national carriers, another half dozen or so facilities based regional carriers and another dozen resellers across the country. Canadians have upwards of two dozen different carrier brands to choose from.

Mike R

How on earth are Canadian mobile phones cheaper then other countries? I'll list off the ways that no only are phones more expensive then other countires but they come with many more restrictions, which means you ahve more added costs

1. For a start a basic Data plan with a basic handset is $60 per month.

2. You get charged for incoming calls, and you get charged long distance rates if the cvall is from outside your area code. (most countires all incoming calls are free no matter where its from)

3. You have long distance charges if you use your phone our side of your area code, no where else does this happen, in all other western countries you get charged the same rate anywhere in the country

4. You comment on subsidized handsets is a joke, that happens in all countires. However normally you get the handset for a very small price if you lock into a 2 year contract, in Canada you have to lock in for 3

I'm an australian currently living in canada and i couldnt belive how expensive mobile phones were in comparriosn to Australia. and any arguement about low population desity doesnt hold as Austaralia's is even lower

To Mike R.: The answer is simple: a)a lot of people have personal and work phones (if company buys bulk of phones, the mobile phone itself is for free (for every sim card you buy) if you sign a contract for 1-2 years plus they get better prices than the individual plus conversations between employees of the company is free of charge; b) you touched some truth here - a lot of people have few personal phones from 2 providers (mostly teenagers and students), but not because intercarrier chargers are high (the ones listed ARE intercarrier), but because you actually talk and send messages for free if you are in the same provider. And the roaming fees - my provider has agreement with providers in Latvia and Estonia so i actually pay NO roaming fees even when i cross between these countries.