Habs fury over Rogers breakdown could complicate their merger hopes

The Rogers Building, the green corporate campus of Canadian media conglomerate Rogers Communications, is seen in downtown Toronto, Ontario, Canada July 9, 2022. REUTERS/Chris Helgren

TORONTO, July 10 (Reuters) – Rogers Communications (RCIb.TO) has complicated its chances of securing antitrust approval for a C$20 billion telecommunications merger after Friday’s massive outage put highlighted the dangers of Canada’s effective telecommunications monopoly and sparked a backlash against its dominance in the industry.

The Rogers network outage disrupted almost every aspect of daily life, cutting off access to banking, transportation and government services for millions, and hitting the country’s cashless payment system and the center of calls from Air Canada (AC.TO).

Consumers and opposition politicians have called on the government to allow more competition and enact policy changes to limit the power of telecom companies. Rogers, BCE Inc (BCE.TO) and Telus Corp (T.TO) control 90% of the market share in Canada.

Small Internet and wireless providers rely on their infrastructure network to provide their own services.

“The reality is that in Canada there is a serious monopoly on our telecommunications,” New Democratic Party leader Jagmeet Singh said in a TikTok video as he launched a petition to stop Rogers’ merger plans and “breaking these monopolies”.

“The impact of this outage clearly shows that this monopoly cannot continue,” he added.

Disruption to internet access, cell phones and landlines has prevented some callers from reaching emergency services through 911 calls, police across Canada said.

“Due to the Rogers outage, millions of Canadians were unable to call 911 yesterday. Hospitals could not call staff. There was no way to call families so they could say goodbye to their loved ones at the end of life,” tweeted Amit Arya, executive director of the Canadian Society of Hospice Palliative Care Physicians.

Rogers, which blamed a router malfunction after maintenance, said Saturday it would credit affected customers and invest more in its network and technology. He did not say whether the outage could impact the merger process.

Friday’s outage came two days after Rogers held talks with Canada’s antitrust authority to discuss possible solutions to its stalled C$20 billion ($15.34 billion) takeover of Shaw Communications (SJRb .TO).

Canada’s Competition Bureau blocked the deal earlier this year, saying it would stifle competition in a country with some of the highest telecom prices in the world. The merger is still awaiting a final verdict.

The disruption could prompt the Competition Bureau, which typically assesses mergers by their impact on price, to take a closer look at other considerations such as quality and service, consumer rights groups have said. consumers.

“This is a ‘non-price effect’ (argument) – i.e. the concentration of ownership and control of critical infrastructure makes the failure of basic service delivery increasingly central,” said John Lawford, executive director of the Ottawa-based company. Public Interest Advocacy Center (PIAC), which argued against the merger at the Competition Bureau.

But Vass Bedner, executive director of McMaster University’s public policy program, said the outage was a separate issue from Rogers’ merger plan.

“I don’t think this issue will impact the merger because I don’t know how the Competition Bureau can factor in the risk of a larger outage,” Bedner said.

Michael Geist, a professor at the University of Ottawa who focuses on internet and e-commerce law, said the outage “must be a wake-up call for a government that has fallen asleep on digital policy.”

“Blame for Friday’s outage may lie with Rogers, but the government and (Canada’s telecommunications regulator) should be held accountable for the lack of response,” he wrote on his blog.

On Friday, Canadian Industry Minister Francois-Philippe Champagne called the outage “unacceptable”. High cell phone bills were a hot topic during recent Canadian elections.

The outage, which began around 4:30 a.m. ET (0830 GMT) on Friday before service was fully restored on Saturday, cut off a quarter of observable internet connectivity in Canada, monitoring group NetBlocks said.

The outage was Rogers’ second in 15 months with an external software update that ended service primarily to consumer customers last year.

Reporting by Divya Rajagopal; Written by Amran Abocar; Editing by Chizu Nomiyama

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