Telecom Foreign Investment: It’s Customers vs. Shareholders

2012 will see a lot of debate on the question of increased foreign investment into Canadian telecommunications carriers.

Small players and consumers like the idea of increased foreign investment because the inevitability of increased competition will drive prices down and quality of service up. Corporations don’t like it because it draws value away from their existing shareholders, as pointed out in a recent Globe and Mail article (Telecom firms under pressure to keep up with smartphone obsession):

Incumbents, though, oppose an asymmetrical reform of foreign investment rules, arguing it would benefit foreign investors at the expense of Canadian shareholders.

That’s the heart of the problem with Canada’s telecommunications carriers: a focus on shareholder value over customer satisfaction. (It’s definitely the problem with our northern carrier.)

However, keep this quote from Roger L. Martin’s “Fixing the Game: Bubbles, Crashes, and What Capitalism Can Learn from the NFL” in mind:

“We must shift the focus of companies back to the customer and away from shareholder value. The shift necessitates a fundamental change in our prevailing theory of the firm… The current theory holds that the singular goal of the corporation should be shareholder value maximization. Instead, companies should place customers at the center of the firm and focus on delighting them, while earning an acceptable return for shareholders.”

Imagine if Canadian telecommunications carriers put investors in the back seat and began to focus on customers instead. Because isn’t the the foundation of economic theory: a happy customer?