My family and heart have ties back to Saskatchewan where I grew up. Currently there is some discussion of privatizing some of the current provincial government monopolies (called "Crown corporations") of which one--Sasktel, the province's only phone carrier, wired and wireless--is the employer of one of my good friends. Here is our conversation:
Me: I hate to sound callous, but we don't make buggy whips anymore for a reason: there's cars now. I hope I can make a contrary opinion without seeming harsh, but I really don't understand much of this thinking. It's sounding a lot to me like you guys have lived under a monopoly for so long you've forgotten how detrimental they can be. If a competitor comes in to SK it won't destroy anything Sasktel does well, it will just force it to demonstrate what that is, via competition. Its talent pool will come from the same industry, so full-time/part-time won't really be an issue (can't get the hours you want over there? Defect and we'll pay you better). And when consumers pay less and get more the standard of living goes up faster for everyone involved. This is economics 101 guys: competitors may take a piece of Sasktel's pie, but the whole pie grows when another company comes in and sets up shop. I know it feels right to want to protect what you've got, but some changes are for the better. Football would be pretty boring if only one team were allowed to score touchdowns, right? The athleticism and performance of all are increased by the addition of an opposing team. Don't make the mistake of thinking you aren't strong enough to ride the wave of changes that could benefit you and everyone. That's what makes France riot, and the opposite is what makes that kind of complete shutdown of all productive activities because of the anger of a few so completely unthinkable in the US. Again, sorry if this isn't the right venue for an opposing view, but I honestly think this thread could benefit from thinking through some of my points, even if, in the end, we agree to disagree on this.
Her: Well this isn't about competition. Sasktel has had competition in the wireless business from the very begining. In fact Rogers launched in Sask two weeks prior to Sasktel launching cell service. Yes for landline as a Crown Corp they were a monoply. But that was changed back in the 90's. I was working with Sasktel then. For 8 yrs it was open for competition and no other company would make the venture. Saskatchewan was viewed as too small of a population, too expensive to build a telecommunication infrastructure. Even on wireless Rogers only built towers where they had to major centers and the corridors in between, they are still that way. Sasktel though, as a Crown, has built a network that covers over 95% of the Sask Pop. That NEVER would've happened if we were a private company. Sasktel is a leader in Telecommunications in the world. There are still area of New York City that are on partylines! There are non in little old Saskatchewan. Sasktel, as do all Crown, must give back at least 50% of its revenue to Saskatchewan to lower taxes. All of our Crowns benefit Sask. We are a small pop province, majority rural. My fears, and fears of others is not that competition will come in, cause its here, is that we will be sold and become the next cashcow for the Government, like PCS was for the PC's.........but then what? Taxes go up, rates will go up, small town dealers will not be needed, job loss will occur. It happened with AGT when Telus bought them. Same with BC Tel when Telus bought them.....look at Bell, so many operators in Ontario were told you can have your job IF you move to the States. They currently have a Call Center in India!! What about employing Canadians?
Me: Thanks for helping me understand more of the particulars. I'm not well acquainted with all the details of the many examples you brought up. I'm satisfied you're thinking your own argument well and backing it up with examples and experiences. I wonder if there's still not room for a different analysis. Crowns DO benefit SK, but that's not the question. The question should be: do they benefit SK BETTER than a private company would. For high set-up cost businesses like telecommunications, the answer may well be YES: monopolies actually DO perform better there. In that sense, you're right, this is not about competition for me either. On the other hand, if you had the SAME monopoly privately WITHOUT the hidden 50% tax burden passed on to the consumers that you just admitted to (and I don't imagine anyone is really under the illusion that the profits Sasktel turns over to the province reduce anyone's taxes one iota), how much cheaper would service be to everyone? Now I grant you that rural areas pose special problems for profit-focused groups because they have a harder time justifying costs for smaller population bases. This requires some extra protection. You are right to be proud of your company and what it has accomplished. On the other hand, companies handle much worse and much more costly problems setting up wireless in Africa (remote locations, no roads, violent unstable areas, etc.) and STILL manage to make a profit. Lower labor cost? Somewhat, but less than you'd expect because of the bribes to pay to government officials and because of a lack of skilled labor available. I'm sorry, but I just don't buy the idea that no one wants to compete in SK because of SK. I think it's much more likely that companies don't want to set up there because POLITICIANS are greedy and make it an inhospitable place for them to do business.
Here's my basic outlook: companies don't exist to provide benefits or salaries or even guarantee jobs in a small town. They exist to make profits. This is good and right, because a profit is the proof that both parties have benefited in a free exchange of goods and/or services. If there are salaries and benefits to be had, and jobs to be maintained in a rural area or anywhere, it MUST be because there are profitable reasons for it. If not, the company is being irresponsible to its shareholders, and it will ultimately fail and no one will benefit from its goods and services. Inasmuch as the company belongs to the shareholders, those shareholders should decide when, where, and how to do the best business they can for the benefit of their consumers. When their consumers get the best bang for their buck, the result is also that the shareholders make out the best. Everybody wins. Politicians get in the way of that. They introduce political reasons into the market decision process, and because they have the power to impose taxes and other conditions THEY are the ones responsible if no companies want to come in and compete.
Now, should Sasktel be sold? I don't know. If so, would the new company recruit the best from SK and move other jobs to India? Maybe. I will feel sad for their loss. But I guarantee it will be a cashcow for a government if and only if that government is taxing it (i.e. using their power to distort the market), maybe even offering a special monopoly deal. Rates will go up only when supply and demand dictate it, and job losses will occur precisely where there isn't enough supporting work needing to be done. That's the only thing that would make good business sense for any company dealing freely in a competitive market environment.
Of course one's heart goes out to an individual who loses a job because of a decision from higher up. It doesn't feel fair for an executive to just erase someone's way of life. But my own family didn't come to K-Town because they aspired to be wheat farmers. It was because the automobile made Carey Kerr Campbell's Clydesdale nursery obsolete: no heavy horses were needed to pull fire carriages any more around 100 years ago. And he moved on, because he was an adaptable human being. If SK is not the best place to do X business, the money will go elsewhere. If SK IS a good place to do X business, the jobs will remain until they are obsolete. Now, Sasktel is involved in wireless service which is NOT obsolete, so the only reason for job loss to occur if a successor were to buy it up would be if the politicians were making SK an impossible place for that company to make its natural business decisions to keep people like you in place who are better at serving your customers than anyone in India could ever be, almost literally with one hand tied behind your back, because you care, and because you live and work in the same place your customers do. The answer, then, is not more protection of the Crowns (which are terribly named, btw: they are not really free and private corporations, but government sponsored monopolies), but rather more freedom for them to succeed or fail on their own merits in free competition (as much as can be possible) with others in their own industry.
And now thank your for your indulgence with my rather conservative principles. I feel that they explain cause and effect pretty well, without attempting to twist or distort anyone else's point of view. I will fully accept correction if I have done so. I also hope I have not seemed un-civil in any way and apologize ahead of time if my remarks seem harsh to anyone because they aren't intended that way. I have said my piece and will now hold my peace so I can absorb your comments will may also help change my own thinking.
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