Many northerners got an early Christmas present this year: telephone competition.
In a CRTC ruling this week, Northwestel’s monopolistic bubble was popped.
Actually, the CRTC’s policy document reads more like a parent chiding its lazy teenager along the lines of: “You make $70 million every year on that nice job we gave you and we give you a $20 million allowance, but you don’t do anything to help around the house!”
The regulator stops just short of calling the company lazy and irresponsible. But the CRTC’s Leonard Katz did say he was “disappointed” in Northwestel.
It kinda makes you feel bad for the company.
Okay, not really. After all, Northwestel clearly brought this on itself.
Four years ago the CRTC stopped scrutinizing Northwestel’s operations as closely as it had previously. It gave Northwestel some room, hoping a taste of independence would make the company more responsible to it customers, that it would seize the incentive to upgrade and improve its network to modern standards.
It was like that moment in a teenager’s life when the parent removes a curfew, or helps with the purchase of a car. It’s that, “I trust you — please don’t screw it up” moment.
Well, Northwestel screwed it up.
Certainly the company managed to double its revenues in that time.
But, more to the point, the company also consistently failed to satisfy the CRTC’s quality of service requirements, with outages that “occurred consistently”.
What’s worse, they didn’t reinvest their growing revenues into their telephone business.
Equipment throughout Northwestel’s operating area just got older, much of it remaining in service well past its expected lifespan.
Technologies and services that are commonplace in the rest of Canada, like call display, are still unavailable to many northerners.
So where did all that money that Northwestel made go? The CRTC points out that it went to shareholders, or was invested into unregulated services, like cable TV.
In other words, Northwestel improved service in areas of its business that experienced even seminal competition, and let grow decrepit the portions of its business protected by the CRTC monopoly.
That alone pretty much makes the case for telephone competition.
So this week the CRTC stormed into the basement where Northwestel was toking on the couch and playing XBox. And the regulator promptly kicked its teenaged monopoly out of the house.
“Go find a job and get your own place to live. See what the real world is like, you bum.”
But the real world is a scary place to a child accustomed to having everything delivered on a silver spoon.
If a rich allowance and a job at your parent’s office that you can’t be fired from are all you’ve ever known, suddenly being forced to actually work for a buck can be astonishingly difficult and disorienting.
And that is the position Northwestel finds itself in: actually having to work for telephone business.
No longer is it, “all your base are belong to us,” with customers.
The company must now convince us that they’re better than everybody else.
They’ll probably have to do it cheaper, too.
No matter how good Northwestel convinces us they might be, we’re not all going to stick with them. How will Northwestel adapt to having only half of us as customers, maybe less?
This is not only a business change for Northwestel, though. Perhaps more importantly, it’s also cultural.
The entire mindset and behaviour of the company must shift, on macro and micro levels.
Northwestel draws its core identity from being the government-consecrated Telephone Company of Northern Canada. But now it’s just another competitor in a potentially crowded marketplace. This strikes at the very relevance of the company itself.
Without its monopoly, what does Northwestel mean — why does it even exist?
But, for better or worse, the company does indeed exist and will do so for the foreseeable future.
Assuming it manages to come to terms with its new identity as just-another-phone-company, how will it also transition from the coddled Chosen One to a street fighter in a potentially crowded game?
To compete is not in the DNA of the company, but everyone at Northwestel must learn that skill. And fast.
It will be a very, very difficult time both for Northwestel as a company and the people who make it work. Both must adapt to a business environment that they are painfully unfamiliar with.
Then as revenues dip, as they surely will, and more layoffs occur, what effect will that have on the spirit and morale of a company that has grown fat, comfortable and smug knowing only state-sanctioned stability and growth?
So, yes, on the one hand, it’s a happy Christmas. Northerners will soon enjoy better telephone service at lower rates with the opportunity to choose who we buy it from.
But on the other hand, like the teenager that is Northwestel, some – perhaps even many – employees of the company will be dusting off their resumes and looking for work.
Northwestel I could care less about.
But lets all hope that the people affected by this company’s adolescent failures are able to persevere through what will surely be a difficult time.
Originally published in the Yukon News on Friday, December 16, 2011.