Political Economy and Alternative Mobile Phone in Canada - Research Paper Example

Political Economy and Alternative mobile phone in Canada Introduction Political Economy Originally, the term political economywas used to refer to the study of trade and production in relation to government, law and custom. It also involved the study of distribution of national wealth and income. Moral philosophy was the mother of political economy. It was developed mainly to help in the study of economies of various states. The term economics came to replace political economy in the late 19th century. This was fueled by the influence of an economics textbook by Alfred Marshall in the year 1890. Many years before this, a mathematical methods proponent William Stanley Jevons, advocated for the brevity of economics hoping that it would become “the recognized name of science.” (Jevons, 1965). In the present day political economy is synonymous to economics. Depending on the context of use, it may be used to refer to many different things. These include; the advice offered to the public or the government on economic policy as a general or specific proposal, Marxian analysis or applied approaches of public choice originating from the Virginia school and the Chicago school. As from 1970, there was a rapid growth in mainstream literature resulting in the expansion beyond the economic policy model (Mill, 1965). Planners maximized on the utility of individual representatives in an effort to examine the influence of political forces on economic policy choices. This was mainly focused on political institutions and distributional conflicts. It is now available as a study area in several universities and colleges. In the cotemporary world, political economy refers to different related approaches to the study of economics and other related behaviors. This ranges from combination of other fields with economics to the use of a wide variety of fundamental assumptions challenging the earlier economic assumptions. Literature Review; Canada’s Telecommunication Industry Telecommunication industry in Canada has faced a lot of criticism for being less competitive. Critics of the wireless sector have suggested that there is need for additional regulation to enhance more competition, lower prices and improve the quality of services. Such criticism has given the federal government a justification for the interventionist spectrum of allocation policies and advocacies for additional regulation of the industry (Ricardo, 1911). The biggest challenge is how to analyze competition in the telecommunication industry. The analysis of this industry brings conflict between dynamic and static vision of the competition. Supporters of the static vision will generally side with the government in the prevention of monopolistic pricing that would kill competition in the industry. On the other hand, dynamic competition model lays emphasis that competition should be a process instead of being a fixed state of affairs. The point out that the static competition model ignores the crucial role played by the entrepreneur in the process of competition. There is a misplaced negative perception by the interventionists about the telecommunication industry in the country. The citizens enjoy one of the most sophisticated and advanced networks, are the biggest users and pay above average prices as compared to other industrialized countries. Ignoring all these, from the year 2008, the federal government has come in to create more competition (Marx, 1967). A fourth player was introduced into the mix to compete with the “big three” players; Rogers, Bell and Tellus. Rules have been set up governing the auction of the new spectrum. This is done in such a manner that the big players are awarded a certain percentage of the frequencies and setting aside a portion for new market entrants and regional providers. This approach failed in 2008 since during the auction, none of the new comers was successful in the long run. This was a very big mistake because for an auction process to function properly there should be a fair and level playing field. Optimal allocation of resources is distorted by set-aside rules. This mistake is frequently realized very far down the road when a breaking point is reached in the business venture and further sustenance is not possible (Ricardo 1911). The government should eliminate the barriers preventing the real and dynamic form of competition from taking place instead of micromanagement of the competition. Two such barriers prohibit the transfer of assets hence more efficient resource allocation. These are; I. Restriction of foreign ownership. II. Restriction of spectrum license transfer. Sight of the ultimate goal (dynamic and efficient industry) has been lost by the federal government. It should instead set up rules for all the players in order to allow efficient entry of new players in to the industry. Such rules would encourage sustainable competition in the telecommunication industry hence consolidating dynamism for the great benefit of all consumers in the country (Mill, 1965). “We want to see at least four players in all markets across the country. [...] I think we have seen some evidence elsewhere to suggest that the oligopolistic tendencies of the industry tend to break down a little bit as you move from three to four.” -Stephen Harper, February 20, 2014. Mobile Network Operators in Canada The following are the mobile network operators in Canada (descending order); 1. Rodgers Communications 2. Telus Mobility 3. Bell Canada Enterprises 4. Wind Mobile Corperation 5. SaskTel Mobility 6. Videotron Mobile 7. MTS Mobility 8. DAVE Wireless 9. Bragg Communications 10. TBay Tel 11. Ice Wireless In Canada mobile connectivity is increasingly becoming a basic necessity for the economy and society at large. It is an integral part of job-seeking, running businesses and being in touch with friends and family. Everyone in the developed world is going wireless, leaving landlines in the favor of mobile devices. However, Canada has recorded slow progress behind countries like United States of America in the shift to mobile phones from land lines. It is growing in fixed subscriptions while doing very poorly in terms of mobile subscriptions in every one hundred inhabitants. Mobile phones provide an easy access to the internet but in Canada the high costs of both data and handsets greatly limits this access. The 2011 CRTC Communications Monitoring Report indicated that new entrants into the market would increase the number of wireless subscribers. Since the prices would be very competitive, the revenue collected per subscriber decreases. This indicates that the more choices available in the market, the more the economy is stimulated thus discouraging client exploitation. The dissatisfaction experienced by the citizens is growing at an alarming rate. There was a significant increase in the ratio of complaints relating to wireless services offered as noted by the Commissioner for Complaints for Telecommunications Services (CCTS). This was up to 62 percent in 2010-2011 from 31 percent in 2007-2008. As can be clearly seen from this study, the Canadians are experiencing; restrictive contracts, disrespectful customer service and price gouging. This situation is likely to remain the same so long as the dominant share of the market is held by Telus, Rodgers and Bell. The citizens have few alternatives since the independent and affordable cell phone providers cannot reach the new customers effectively. This is because the market favors the three incumbents. The government policy has provided a favorable environment for the incumbents to take advantage and entrench to their present positions gaining a very large share of the wireless spectrum. Rather than regulating and providing a level playing field and immunity for the customers, the policies literally allow only the three companies to regulate the market. This situation avails limited choices for Canadians, and the incumbents have no incentive to be innovative to improve the services and rates. This in turn limits the Canadians from fully utilizing the potentials of cellular technology. The cell phone has become so dysfunctional hence resulting in punitively high prices and poor service. This industry has therefore become a dead weight and burden to the economy. Public Opinions A research carried out by OpenMedia.ca called “Cell Phone Horror Story”, collected views from Canadian across the country. The participants were reached through; 1. Online advertising 2. Social media; Facebook, Twitter, Reddit and Pinterest 3. Websites band blogs 4. Traditional media outreach 5. Email. They were requested to vote for the “horror story” that best described their experiences with the wireless companies. Voting was based on the following; 1. Price-gouging by charging highly 2. Locking into restrictive contracts 3. Disrespectful customer service correspondents when seeking assistance Specific experiences survey was done to get the detailed description of the specific experiences. OpenMedia.ca received a lot of public opinion and participation with two thousand eight hundred and fifty nine responses plus many others afterwards. Recommendations Following the analysis of the responses gained from the Canadians, there are four main areas that need to be prioritized for improvement; 1. Real choice is needed by Canadians. Analysis of the data indicated that 35.26 percent of the people want to a wide variety of providers to choose from. The limited number of companies offering the service means that they have to live with the poor services provided by the incumbents. The policy makers can come to the aid of the people by; cultivating spectrum of fairness policies, ensure wireless neutrality, mobile marketplace through wholesale, unlocking hardware and public empowerment to avoid restrictive 3-year contracts. 2. The citizens need reliable and respectful service. This was the request by 63.45 percent of the respondents. They complained of being mistreated by service providers and getting poor services. This can be addressed by; facilitation of open roaming, suspension of service charges when hardware malfunctions, protection against punitive disconnections and empowering the citizens to practice self-choices for services. 3. Need for fair contracts. 36.11 percent of the correspondents had this as their priority. Recommendations here are; consensual changes to contracts should be mandated, cancellation, extension and expiration of contracts should be done fairly and early notifications in case of additional fees. 4. Transparency was the main concern of 46.66 percent of the respondents. There is need for clarity in contracts, bundled services and advertised prices. References Jevons, H. S. (1965). The theory of political economy. New York: A.M. Kelley. Marx, K., & Engels, F. (1967). Capital: A critique of political economy. New York: International Publishers. Mill, J. S., & Ashley, W. J. (1965). Principles of political economy: With some of their applications to social philosophy. New York: A.M. Kelley, bookseller. Ricardo, D. (1911). The principles of political economy & taxation. London: J.M. Dent & Sons. Ruskin, J., & In Hubenka, L. J. (1967). "Unto this last": Four essays on the first principles of political economy. Lincoln: University of Nebraska Press. Read More