Competition best for wireless industry? Maybe not - Globe and Mail, March 27
The Harper government’s bid to stoke competition in the wireless industry was criticized by upstarts as still too protective of established players such as Rogers Wireless.
“It’s a total disaster,” Wind Mobile chief executive Anthony Lacavera said. “It gives the illusion that the competitive marketplace has been strengthened, but it will be a catalyst for consolidation and new entrants will be starved of frequencies.”
According to new research, consolidation of new entrants is precisely what the federal government should be aiming to achieve. The Royal Economic Society is holding its annual conference at the University of Cambridge this week. Among the papers presented is one by Yan Li and Catherine Waddams of the ESRC Centre for Competition Policy and the Norwich Business School at the University of East Anglia. Rather than a free-for-all, they conclude the optimal wireless industry includes no more than four or five companies.
...They determined that increased competition has an obvious positive effect on productivity and innovation. But the strongest results came not from widespread competition, but from oligopolies.
“The most robust finding is the positive effect on both levels and growth in firm efficiency of competition, which has profound implications for the design of markets,” the authors write. “In an area which is sensitive both from a political and business perspective, governments and regulators should encourage active rivalry between four or five firms, but extending such competition to more entrants may have little, or negative impact on the productivity of the participants.”