Why Canadian Cable Companies and Telecoms Are in Trouble?

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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 outlook for the Canadian companies does not look too well. Currently, Canadian firms have been protected from real foreign competition with the help of foreign ownership restrictions. However, if the Conservative majority government has their way, the Canadian telecom and media companies such as Rogers, Bell, and Shaw, will face serious problems and threats to their business. Liberalization will further accelerate the destruction of the telecom business model in Canada, while new developments in internet video technology add on to their list of problems. A major threat as of now 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 is what 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. When Canada allowed Globalive (controlled by Egyptian firm Orascom) into the market, pricing has been dropping significantly in order to remain as a top competitor in the market. Canadian telecommunications and broadcasting industry has...
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