Telus and Microsoft Team up to Offer Skype Phones.

Telus, (TSE: T), realizing the growth in the market for data fees on its cellular network, is teaming up with Microsoft's (NASDAQ: MSFT) Skype to permit smartphone users to use the once derided service.

The partnership, announced this week, is the first such partnership to exist in Canada. Previously, carriers, such as Telus, Bell, and Rogers, had feared allowing Skype to be used on their networks because it has the potential of reducing their revenues, especially for long-distance calls. But the rapidly changing landscape of the telecommunications industry, with the advent of social networking and text-messaging, has forced carriers to consider new ways to ensure that customers stay tied to their telephones in an era of less voice communication. 

To be released this summer, the Skype branded phone will be an LG Optimus Black phone that comes pre-loaded with international Skype calling credits for users to enjoy. Of course, as many users of Skype already know, Skype-to-Skype calls will be free, but traditional calls to other carriers will require a monthly subscription or a per-minute payment. 

Some benefits that Telus customers will enjoy with the new Skype plan will be having Skype credits added directly to their Telus bills and free technical support to help Telus customers use Skype.

Of course, to utilize the Skype service, a conventional Telus plan is still required... so they are not losing anything here, it will generally only be a net-addition to total revenues as there is undoubtedly a revenue sharing agreement between both Microsoft and Telus. 

The conclusion for the Intelligent Investor: A big thumbs up to both Telus and Microsoft on this one. A great new revenue stream for both of them in an era of intense and ever-increasing competition. It allows both of them to offer something new and different in a highly crowded marketplace.

"Fox News North" Blocked, Despite Harper's Intentions.

Last week Canadian regulators blocked the advent of Fox News into Canada, and with it, Sun TV News, or "Fox News North" as it has been called. In an article written by Robert F Kennedy Jr. in the Huffington Post, it is stated that "fans of enlightenment, democracy, and justice can take comfort from a significant victory."


The Radio Act in Canada declares that "a licenser may not broadcast....any false or misleading news." This ensures that Canadians enjoy much less biased and rational news coverage than our brothers and sisters to the south. In Canada many see Fox News as notoriously biased and dishonest in its coverage. Of course, many Canadians see much of our coverage as biased and somewhat misleading as well... but indeed it stays much truer to the facts than does much of the coverage in the United States.  


According to Mr. Kennedy: 


"When Stephen Harper moved to abolish the anti-lying provision of the Radio Act, Canadians rose up to oppose him fearing that their tradition of honest non partisan news would be replaced by the toxic, overtly partisan, biased and dishonest news coverage familiar to American citizens who listen to Fox News and talk radio."


Now, as a Canadian citizen, I did not notice this public outcry referred to by Mr. Kennedy, but surely it warrants some attention given that he seems to regard Canadian broadcasting with some esteem. For Rogers (TSE: RCI.B) , Bell (TSE: BCE), and our nation's other media conglomerates, the blockage of any northward expansion of media is a helpful way to maintain a near monopoly on the airwaves. 


To read Robert Kennedy's article, go to:


http://www.huffingtonpost.com/robert-f-kennedy-jr/fox-news-will-not-be-moving-into-canada-after-all_b_829473.html

Competition is Bad for Business. Search for Monopolies.

Monopolies are bad for consumers but good for businesses. As an intelligent investor it is always important to be careful to watch the competition that exists in your industries. Investors should think of themselves as owners, and as owners, you do not want your customers to have too much choice in whether or not they buy your products or services.

Ideally, you would be the owner of a business that is the sole provider of the product or service. For instance, in most of the areas in which it operates, CN Rail (TSE:CNR) is the only choice for rail transport. In the same token, CP Rail (TSE:CP) is the only choice where it operates. Why would the two companies choose to split the market in this manner and divide the territory into monopolistic segments? Because it ensures that they can garner enough pricing power, or the ability to raise prices, to ensure that they maintain healthy profits.

The reverse side of this is an industry with lots of competition, which as an owner, makes it difficult to ensure with any degree of certainty that you will continue to generate healthy profit margins in the future. Clothing retail and consumer goods, such as electronics, often fit into this category. A recent article in the Globe and Mail indicated that Sears Canada (TSE:SCC) is suffering under intense competition from Wal-Mart (NYSE:WMT), clothing retailers, appliance and furniture distributors, such as Leon's (TSE:LNF), and soon Target (NYSE:TGT). Customers of Sears can easily go elsewhere to find products similar to what they sell. This creates an inability for Sears to raise prices when their own costs increase. Also, it makes it very difficult for Sears to be sure that its customers will keep coming back. They need to be innovative and change with current tastes and trends in order to remain profitable.

In Canada, our banking industry has ensured itself healthy profit margins by not competing on any large-scale, as have our telecommunications companies, which have really split the country up into a number of key markets where they chooses to operate. Telus (TSE:T), Rogers (TSE:RCI.B), and Bell (TSE:BCE), dominate the wireless market, and through their brands, such as Koodo, Fido, Virgin, Solo, PC Telecom etc., they make it seem like the public has a choice, but really all of the profits are largely split between the three of them. New wireless entrants like Wind Mobile and Mobilicity are already finding it very difficult to crack into the market.

Thus, be careful not to invest in companies or industries with too much competition. As an owner, competition is bad and the ability to raise prices is good. If someone could easily sell a similar product or service without too much start-up investment and costs associated with doing so, it might not bode too well for your fortune.