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Verizon Entry to Canada Could Spark Shift Toward Single North American Communications Market

Reports that U.S. telecom giant Verizon may be preparing to enter the Canadian market has sparked considerable speculation on the likely impact of a company with a market cap greater than Bell, Rogers, and Telus combined. While much of the discussion has centered on wireless pricing, the more significant development may be the shift toward a single North American communications market.

Canada and the U.S. share much of the same communications infrastructure - the same North American numbering plan (calling codes), closely aligned spectrum policies, and easy access to broadcast signals along the border - yet for decades the two systems have been separated through regulation. Foreign ownership restrictions, Canadian content requirements, and simultaneous substitution policies (which lead to the annual complaints about missing U.S. commercials during the Super Bowl) have all ensured that the two markets remain distinct.

In recent years, new technologies have slowly chipped away at the communications divide. For example, there may be modest differences between U.S. and Canadian satellite radio services with several Canadian-specific channels, but the vast majority of available programming and devices are the same.  

Internet-based video services represent another significant blurring of the Canada - U.S. line. With two million Canadian Netflix subscribers, those hoping for a Canadian competitor to Netflix are missing the reality that the Canadian Netflix is Netflix. There are some differences in available content, but that too is diminishing, particularly as Netflix invests in its own original programming.

The prospect of a Verizon entry into Canada would put a single communications market into overdrive. On the telecom side, Verizon could use its Canadian network to change the approach to roaming in North America altogether since it would be uniquely positioned to offer a single U.S. and Canadian network.

The company could move to eliminate roaming fees for U.S. and Canadian customers, while offering cost-competitive U.S. and Canadian roaming together for international providers establishing wholesale roaming agreements. Such a plan would obviously be attractive to the corporate sector as well as regular cross-border travellers, leading to the gradual elimination of roaming and long distance charges for calls throughout North America.

On the broadcasting side, Verizon holds exclusive U.S. rights to both the National Football League and the National Hockey League.  Those rights are currently held by BCE in Canada, but a Verizon entry into Canada could shake things up. Verizon could presumably complicate the BCE rights by offering free access to NFL and NHL games to Canadian customers when they travel to the U.S.  More interestingly, it could make a play for joint U.S. - Canada rights in the future, moving closer to an elimination of the geographic divide on content rights.

Verizon could also pursue changes to broadcast distribution regulations, which are viewed as a major hurdle for foreign entrants since non-Canadian companies are unable to offer competitive bundles that feature wireless and television services.  Given the government's obvious support for a strong foreign wireless entrant, Verizon would be well positioned to promote the removal of the current restrictions.

Later this year, the Canadian Radio-television and Telecommunications Commission will examine the regulatory framework for television services.  CRTC Chair Jean-Pierre Blais has acknowledged that it is time to ask whether the assumptions that lie behind Canadian regulatory policies still hold true.

With satellite radio and Internet video already close to a single market, regulatory reform to longstanding policies such as simultaneous substitution a possibility, and the geographic lines on telecom, content, and broadcast distribution all increasingly blurred, the big question may be whether Canada is closing in on a common North American communications market.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at