Canadians’ anger over Rogers shutdown could complicate their merger hopes

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

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

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

Consumers and politicians in opposition called on 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% market share in Canada.

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Smaller ISPs and wireless providers rely on their infrastructure network to deliver their own services.

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

“The impact of this shutdown makes it clear that this monopoly cannot continue,” he added.

Industry Minister François-Philippe Champagne, calling the shutdown “unacceptable,” said Sunday he would meet with Rogers CEO Tony Stafieri and other industry leaders to discuss improving the “reliability of networks across Canada.” High cell phone bills were a hot issue in Canada’s recent elections.

Police Canada said that due to interruptions in Internet access, cell phones and landlines, some callers were unable to contact emergency services on 911.

“Due to a glitch in the Rogers system, millions of Canadians were unable to call 911 yesterday. Hospitals were unable to call staff. There was no way to call the families so they could say goodbye to their loved ones at the end of life,” wrote Amit. Arya, director-at-large of the Canadian Society of Palliative Care Physicians.

Rogers, which blamed the outage on a post-maintenance router failure, said Sunday it is aware that some customers are still experiencing outages. He did not comment on whether the failure could affect the merger procedure.

Friday’s outage comes two days after Rogers held talks with Canada’s antitrust authority to discuss possible remedies against a blocked 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 hinder competition in a country where telecommunications rates are among the highest in the world. The merger is still awaiting a final verdict.

The disruption could prompt the Competition Bureau, which typically evaluates mergers based on their impact on price, to take a closer look at other aspects such as quality and service, consumer advocacy groups said.

“It’s a ‘non-price effect’ (argument), that is, a concentration of ownership and control over critical infrastructure, making it an increasingly important point of failure for essential services,” said John Lawford, chief executive of the Ottawa-based company. The Public Interest Advocacy Center (PIAC), which opposed the merger with the Competition Bureau.

But Wass Bedner, executive director of the public policy program at McMaster University, said the shutdown was a separate issue from Rogers’ merger plan.

“I don’t think this issue will affect the merger because I’m not sure how the Competition Bureau can account for the risk of a more severe outage,” Bedner said.

University of Ottawa professor Michael Geist, who specializes in internet and e-commerce law, said the shutdown “should be an awakening for a government that is sleeping in digital politics.”

“Fault for the outage on Friday may lie with Rogers, but the government and (Canadian telecommunications regulator) must be held accountable for the lack of a response,” he wrote on his blog.

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

The interruption was the second for Rogers in 15 months, since last year an external software update shut down service primarily for consumer customers.

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Reporting by Divya Rajagopal; letter from Amran Abokar; Editing by Chizu Nomiyama

Our Standards: Thomson Reuters Trust Principles.

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