It would be better if Internet infrastructure were publicly owned.
Now before I get tagged with the ‘commie-pinko’ epithet for what may at first appear to be a counter-market prescription straight out of Marx and Engels’ Communist Manifesto, allow me to explain not only why I would suggest such a course of action, but how such a move could actually cure a market failure that acts as an impediment to Canada’s economic improvement.
What Canada really needs is one really fast, really efficient system that responds to demand for increases to service speed and capacity. As it stands right now, our service providers are causing our country to fall behind internet speed leaders such as South Korea, which currently tops the charts. Our telecommunications operators are more concerned about controlling bandwidth as if it were a scarce resource than expanding the infrastructure to meet domestic need and global standards. The average Canadian’s internet speed in Mbps is one-fourth that of the South Koreans. Currently we’re ranked about 37th in the world.
As Brent mentioned in his blog “Tubes and Television” companies such as Bell, Rogers and even Telus hold a natural monopoly on telecommunication service because of the nature of the transmission networks they own. It is difficult for other providers to enter the market because it would be too costly and needlessly wasteful to duplicate the infrastructure. Further, as publicly traded companies, they do what will maximize their returns and serve their bottom-lines. In this case that involves “traffic shaping” and the use of data caps on competitors who lease these companies’ lines. Both of these reduce Canada’s overall speed and capacity. Doing that which maximizes profit takes precedence over taking action that would serve Canada’s national interest.
What does this mean on the ground? Every time you check your email, every time you download or upload a file, every time you open your web browser, [insert any other thing you do with the Internet here], any time you do any of these things, you are doing them slower than someone else in the world. Though we may be faster than developing countries, we are nowhere near the top of the ladder among OECD countries. The major failure here is that our domestic companies cannot carry out their on-line business transactions as rapidly as some of their international competitors and this not only puts them at a disadvantage relative to some of those competitors, but it could serve as a disincentive for international companies to conduct business here as there are places with faster internet elsewhere.
If the infrastructure were owned by Canada, it would obviously break the natural monopoly held currently by the incumbent telecommunications operators. But it would not by that token undermine competitiveness, in fact it could provide more fertile ground for it. The current state of affairs has small Internet service providers renting space in the bigger companies’ infrastructure. The same could be done were the infrastructure owned by Canada, except in this case, these smaller companies would not have to worry about being reined in by the owner of the infrastructure because for the public, it’s not about serving the bottom line, but doing what’s best for Canada.
With a Canadian owned infrastructure there would be motivation to serve local needs that might not otherwise be met, improve mobile networks’ range and scope and most importantly it would allow for competition that would lead to increases in speed and capacity. These changes would in turn improve business communication and information transfer, which would allow Canada to recover its lost competitive advantage. The internet is a resource that is only limited by the strength of its information carrying infrastructure. Canada needs to take action to ensure that its firms and its citizens do not face an unnecessary barrier to fast and efficient communication in a competitive global economy.