A hypothetical replacement for the North American Free Trade Agreement (NAFTA) that the Trump administration is currently pursuing could reduce phone plan prices in Canada, according to Walid Hejazi, an Associate Professor of Economic Analysis and Policy at the University of Toronto's Rotman School of Management. The new plan that President Trump and his cabinet want to negotiate would theoretically make it easier for American businesses to enter a number of Canadian markets, including the telecommunications one. If American wireless carriers manage to set up shop in Canada, the increase in competition may lead to a price war but even if it doesn't, it could still lower the average price of a phone plan in the country, Hejazi believes.
Not all industry watchers agree with that assessment; Michael Geist, Canada Research Chair in Internet and E-commerce Law, thinks that no major pricing changes will be introduced in the country as a direct result of any NAFTA renegotiations. Geist compared the currently proposed scenario with that pertaining to the Trans-Pacific Partnership (TPP) agreement that President Trump withdrew from in January, stating how Canada's role in the trade partnership did not affect its domestic wireless carrier market. The current U.S. administration is looking to pursue a number of goals with its proposed NAFTA replacement, including changes to foreign ownership regulations. Canada's regulatory framework pertaining to this aspect of the law is said to be one of the strictest in the West, allowing foreign entities to own only 46.7 percent of major telecommunications companies in the country. This model is somewhat protectionist in nature, preventing significant competition from abroad that's present in numerous Western countries, including the United States, where both T-Mobile and Sprint are majority-owned by foreign companies.
The U.S. administration is now looking to address those regulations through its proposed NAFTA replacement, though Geist doesn't think that the local big three — Telus, Rogers, and Bell — will be significantly affected by the change, even if it's adopted. The main reason for that argument is related to the pronounced vertical industry integration in the country which would require loosened broadcast ownership regulations in order to be challenged, Geist claims, adding how such a scenario is unlikely to happen in the near future.