Canadian anger at Rogers’ failure could complicate his 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

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TORONTO, July 10 (Reuters) – Rogers Communications (RCIb.TO) complicated its chances of winning antitrust clearance for a CA$20 billion telecoms merger after Friday’s massive outage exposed the dangers of Canada’s effective telecoms monopoly and sparked a backlash against its industry dominance.

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

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

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Smaller internet and mobile service providers rely on their infrastructure network to provide their own services.

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

“The implications of this outage make it clear that this monopoly cannot continue,” he added.

The disruption to internet access, cellular and landline phone connections meant some callers were unable to reach emergency services via 911 calls, police across Canada said.

“Because of 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 loved ones at the end of their lives,” tweeted Amit Arya, director general of the Canadian Society of Palliative Care Physicians.

Rogers, who blamed a router malfunction after the maintenance, said Saturday it would credit affected customers and invest more in its network and technology. It did not comment on whether the outage could affect the merger process.

Friday’s outage came two days after Rogers held talks with Canada’s antitrust regulator to discuss potential remedies for its blocked CA$20 billion ($15.34 billion) acquisition of Shaw Communications (SJRb.TO). .

Canada’s competition regulator blocked the deal earlier this year, saying it would hamper competition in a country where telecom tariffs are among the highest in the world. The merger is still awaiting a final verdict.

The disruption could prompt the competition regulator, which generally evaluates mergers based on their impact on price, to look more closely at other aspects such as quality and service, consumer rights groups said.

“It’s a ‘non-price effect’ (argument) – that is, the concentration of ownership and control over critical infrastructure that is an increasingly central point to failure in the delivery of essential services,” said John Lawford, executive Director of the Ottawa-based Public Interest Advocacy Center (PIAC), which opposed the merger to the Competition Bureau.

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

“I don’t think this issue will impact the merger as I’m not sure how the competition bureau can account for the risk of a major outage,” Bedner said.

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

“The blame for Friday’s outage may lie with Rogers, but the government and (Canada’s telecoms regulator) should be held accountable for their failure to respond,” he wrote on his blog.

Canadian Industry Minister François-Philippe Champagne described the outage as “unacceptable” on Friday. High cell phone bills were a hot topic in the last Canadian election.

The outage, which began around 4:30 a.m. ET (08:30 GMT) on Friday before service was fully restored on Saturday, knocked out a quarter of Canada’s observable internet connection, the NetBlocks monitoring group said.

The disruption was Rogers’ second in 15 months, when an outside software upgrade last year crippled the service, primarily for consumer customers.

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Reporting by Divya Rajagopal; Writing from Amran Abocar; Edited by Chizu Nomiyama

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