Canadians’ anger over Roger’s power outage could complicate their merger hopes

Rogers Building, a business campus with a green top for the Canadian media conglomerate Rogers Communications, was 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 obtaining antitrust clearance for a $ 20 billion telecom merger after Friday’s massive power outage highlighted the dangers of Canada’s effective telecommunications monopoly and triggered a setback to its industrial dominance.

Roger’s network outages disrupted almost every aspect of daily life, cutting millions in banking, transportation and public access, and hitting the country’s cashless payment system and Air Canada’s (AC.TO) customer center.

Consumers and opposition politicians called on the government to allow more competition and adopt political 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 ISPs and wireless providers rely on their infrastructure networks to provide their own services.

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

“The consequence of this power outage makes it clear that this monopoly cannot continue,” he added.

Industry Minister François-Philippe Champagne, calling the power outage “unacceptable”, said Sunday that he would meet with Rogers CEO Tony Staffieri and other industry leaders to discuss improving “the reliability of networks across Canada.” High cell phone bills have been a problem in recent Canadian elections.

The disruption in internet access, cell phone and landline connections meant that some callers could not reach the emergency services via 911 calls, police said across Canada.

“Because of the Rogers outage, millions of Canadians could not call 911 yesterday. Hospitals could not call in 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 failure after maintenance for the disruption, said Sunday that they were aware that some customers are still facing disruption. It did not comment on whether the interruption could affect the merger process.

Friday’s power outage came two days after Rogers held talks with the Canadian Antitrust Authority to discuss possible remedies for their blocked C $ 20 billion ($ 15.34 billion) takeover of Shaw Communications (SJRb.TO).

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

The disruption could cause the competition agency, which generally considers mergers based on their impact on price, to look more closely at other considerations such as quality and service, said consumer rights groups.

“It’s a ‘non-price effect’ (argument) – that is, the concentration of ownership and critical infrastructure control is making an increasingly central point of failure in the provision of basic services,” said John Lawford, Ottawa-based CEO. The Public Interest Advocacy Center (PIAC), which has argued against the merger at the Competition Bureau.

But Vass Bedner, executive director of the Public Policy Program at McMaster University, said the power outage was a separate issue from Rogers’ merger plan.

“I do not think this issue will affect the merger because I am not sure how the competition agency can account for the risk of major power outages,” Bedner said.

University of Ottawa professor Michael Geist, who focuses on the Internet and e-commerce law, said the power outage “must be a wake-up call for a government that has slept on digital politics.”

“The blame for Friday’s power outage may lie with Rogers, but the government and (the Canadian telecommunications regulator) should be held responsible for the lack of response,” he wrote on his blog.

The power outage, which began around 4:30 a.m. ET (0830 GMT) Friday before the service was fully restored on Saturday, cut off a quarter of Canada’s observable Internet connection, NetBlock’s monitoring group said.

The outage was Rogers’ second in 15 months with an external software upgrade that knocked out the service primarily to consumer customers last year.

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Reporting by Divya Rajagopal; writing by Amran Abocar; Editing Chizu Nomiyama

Our standards: Thomson Reuters Trust Principles.

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