CRTC
Undeniably, significant changes have occurred within the communication industry in Canada in the recent time. CRTC is an abbreviation that is used for “Canadian Radio-Television and Telecommunications Commission”. This body replaced the Board of Broadcast Governors which was in place from the late 1950s-1968. CRTC was established in the late 1960s by the Broadcasting Act. The responsibilities of this body within the same industry are limited to regulating as well as supervising the entire broadcasting system in Canada together with AM and FM radio, pay-TV, television cable, as well as specialty services. To be more precise, it is the responsibility of CRTC to award, modify, or renew licences, keeps an eye on the performance of licencees as well as to institute broadcasting policies and regulations. The responsibility of regulating the activities of all the company in the telecommunication industry in Canada was added to its other responsibilities in 1975, (The Canadian Encyclopedia, 2011).
Arguably, the regulation and supervision role of this body is very crucial in the economy of Canada. To begin with, it reduces tendencies of emergence of monopolies within the telecommunication industry. From the consumer point of view, monopolies are not friendly as far as pricing and quality of services are concerned. Due to lack of competition, monopolies are reluctant to improve the quality of their services and goods but at the same time, they usually charge high prices for these same goods and services, (Armstrong, 2010). Based on the assumption that high prices will reduce demand within the market, consumption of goods and services within the telecommunication industry would decline in case of monopolies in this industry. This is an implication that in general, the growth of the economy of Canada would reduce significantly, based on the fact that consumption is one of the contributory factors of Gross Domestic Product which is used to measure economic growth of a given nation.
Notably, Bell Canada operates in an oligopoly market structure. From an economics point of view, an oligopoly market can be defined as a market in which there are few large sellers which are supplying identical or similar products within the same market, (CBCnews, 2007). Like the monopolistic competition, they lie between a pure monopoly and perfect competition market structure; but, in the case of monopolistic competition, the sellers deal with differentiated products. Bell Canada is one of the largest few companies within the telecommunication industry in Canada. One of the characteristics of an oligopoly market structure is that the large players have the ability or considerable control within the market. The other characteristic is that, players within the market are interdependent of each other in that, actions of one player will affect the actions of other players. Therefore, the move of one firm will determine the move that will be taken by the other firms in this market. Based on this claim, it can be observed that being one of the players in the market, Bell Canada is in a position of controlling the market by altering prices of their products. In fact, it has been stated that Telus and Bell Canada can set their own prices without considering the reactions of the other firms in this market.
Undoubtedly, Bell Canada is capable of making profits both in the short-run and in the long-run. In the short-run, the company will be making supernormal profits based on the argument that there are view firms in this market. However, the free entry as well as exit attribute of the oligopoly market will allow more players to enter into the market to enjoy profits that are being enjoyed with Bell Canada. With time as more players enter the market, the company will start losing customers; hence, a decline of their profits. In the long-run, the company will start making normal profits as there will more players. With time, some firms may not be able to cope with the competition resulting to their exit. Arguably, Bell Canada will not exit the market as it is in a position to make just enough profits for its survival at this point, (CBCnews, 2007).
In most cases, the beneficiaries of this kind of regulations are the consumers, government as well as the new and smaller companies in this industry. By regulating the activities of these firms, consumers are assured of favorable prices, (CBCnews, 2006). This is based on the fact that, companies will be limited in setting their own prices as they wish. Due to the fear of losing customers to other rival companies, each company will try to use the strategy of producing quality products in the markets so as to maintain as well as to attract potential customers. It is obvious that this is a benefit to the consumers as they will be enjoying quality products at a relatively lower price. The government will be benefit in the sense that, they will be in a position to monitor the direction of the state of the economy. Through regulations, they can be able to stimulate consumption in order to facilitate investment which in turn will have remarkable changes in the rate of growth of the economy, (Edwardson, 2008). On the other hand, the regulations will help new and smaller companies in this industry to establish themselves in the market. For instance, the bigger market players may decide to outdo the new and smaller players by taking advantage of the economies of scale. In this case, they might decide to produce more and sell at a lower price to attract more customers, which is risky to the new and smaller firms in the market.
Bell Canada does not support the suggestion of deregulation made by CRTC. According to Bell Canada, this would be a perpetration of the already existing policy as well as a limitation of the interests of the customers. Instead of deregulation, CRTC should only reduce their regulations but allow market forces to take control of the market, (CBCnews, 2006). This would be beneficial for a company like Bell Canada based on the fact that it is capable of affecting the market by setting their own prices. Precisely, the company will be in a position to determine its strategies of becoming the market leader without worrying of the strict requirements of CRTC. Finally, Bell Canada should support deregulation in the local telephone market. Arguably, this will be beneficial for both the firms as well as the consumers in this market. From the consumers’ point of view, this will initiate competition among the producers which might lead to a reduction of prices and an improvement of the quality of the products in the long-run. On the other hand, firms like Bell Canada will benefit significantly as they will be able to acquire a greater market share, without the regulations.
References
Armstrong, R. (2010). Broadcasting Policy in Canada. Toronto: University of Toronto Press.
CBCnews. (2007). CRTC Denies Bell Phone Deregulation. Retrieved on 29th May 2011 from
http://www.cbc.ca/news/story/2007/09/11/tech-bell.html
CBCnews. (2006). No Phone Deregulation until Competition has 25% market Foothold: CRTC.
Retrieved on 29th May 2011 from http://www.cbc.ca/news/business/story/2006/04/06/crtcphone-060406.html
The Canadian Encyclopedia. (2011). CRTC. Retrieved on 29th May 2011 from
http://www.thecanadianencyclopedia.com/index.cfm?PgNm=TCE&Params=u1ARTU0000855
Edwardson, R. (2008). Canadian Content: Culture and the Quest for Nationhood. Toronto:
University of Toronto Press.
