Why Canadian Cable Companies and Telecoms Are in Trouble

The article "Why Canadian Cable Companies and Telecoms Are in Trouble" by Sean Michael, assists readers to understand the business of cable companies and Telecoms and the reasons for why the Canadian firms are not in a decent position in the market. Presently, foreign ownership restrictions in Canada are protecting Canadian firms from real foreign competition. However, if the Conservative majority government has their way, the Canadian telecom and media companies such as Rogers, Bell, and Shaw, will face severe problems and threats to their businesses. Liberalization will further accelerate the destruction of the telecom business model in Canada, while new developments in internet video technology are adding on to their threats.

Currently, a major threat to the Canadian firms is web-based companies such as Netflix. Netflix has been able to provide customers a better television service for a cheaper price than most cable and DVD rental services. Also, many people are beginning to watch live events and shows such as sports from the internet, which decreases the number of customers for cable companies. Because of this, in order to protect their businesses, companies have increased prices and charge $2 to $5 per gigabyte used by consumers. This method has been increasing revenue growth for Rogers and Bell. Allowing foreign competition into the Canadian market will be extremely dangerous to the existence of these Canadian firms. Apple TV, Google TV, Amazon Prime, and Hulu have plans to aggressively expand their business into Canada, which interfere with Canadian broadcasters. Also, in the mobile communications market, Canadian firms have been able to gain large margins from overpriced wireless and data plans. After Canada allowed Globalive into the market, Canadian firms have started dropping their prices in order to compete in the market.

Broadcasting and telecommunications industry in Canada has taken a major hit, and have been exposed to potential threats to the existence of several businesses. So far, these companies have not had any competitive pressure from anyone, largely because of the protection from foreign ownership restrictions. Web-based firms and live streaming websites from the internet have done enough damage to Canadian firms, and then allowing foreign competitors into the market will be drastic for them. Although Canada's overall economy will prosper, the growth in the Canadian firms will likely deteriorate.

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