Canada’s incumbent wireless carriers received support in their ongoing attempts to influence the government’s plans to establish rules for the upcoming auction of 700 MHz spectrum licenses.
Perrin Beatty, president and CEO of the Canadian Chamber of Commerce, noted in a blog post that Industry Canada needs to make sure it sets up fair rules for the upcoming auction of 700 MHz spectrum licenses that do not unintentionally benefit large, foreign players at the expense of established wireless operators.
“Here’s where the law of unintended consequences comes in. Preoccupied with the need to coax small players into the market, the government set up a better deal — a much better deal — for them,” Beatty wrote, citing rules set up prior to the auction of 1.7/2.1 GHz spectrum licenses in 2008. “But now, speculation abounds that some of the largest companies in the world may show up to take advantage of that special deal designed for small new entrants. For newly-named Industry Minister James Moore, this is a critical moment. Plenty of people in the government will doubtless urge him to proceed immediately. After all, isn’t more competition good?”
Published reports indicated that Moore had met with Canada’s established wireless operators last week regarding planned rules for the upcoming 700 MHz spectrum auction. The country’s three largest operators – Rogers, Bell Canada and Telus – have repeatedly asked that the government set up rules that allow all operators equal access to the highly desirable spectrum assets. Rogers CEO recently questioned the ability for the country of less than 35 million people to support more than three nationwide operators.
Industry Canada noted that as part of the new framework, the government would work to provide consumers with at least four wireless options in each region of the country.
U.S.-based telecommunications provider Verizon Communications has recently stated its interest in entering the Canadian wireless market, with reports indicating the company has been in talks to acquire beleaguered wireless start-ups. Verizon has said its interest in entering the market would come ahead of the planned 700 MHz spectrum auction, which if entered and if licenses were acquired, would align with its Verizon Wireless services.
“If you look at the population of Canada, about 70% of that population is between Toronto and Quebec,” noted Verizon CFO and SVP Fran Shammo during the company’s recent second quarter financial results conference call. “That’s adjacent to the Verizon Wireless properties. Again if you look at the spectrum auction, it mirrors up exactly what we launched here in the United States on the 700 megahertz contiguous footprint. So we’re looking at all these but obviously some of the cautions here are the regulatory environment, a foreign investor coming into the Canadian market and what does that mean? So again, cautiously looking at it, not ready to make any announcements today and we continue to explore and have discussions, but at this point it’s just really just an exploratory exercise.”
In countering that possibility, Beatty noted that by allowing a foreign operator to access the Canadian wireless market using loopholes would create a negative impact on the space.
“What will happen to the Canadians who responded to the call in the last auction?” Beatty questioned. “Companies like Videotron, Mobilicity and Public Mobile — which have invested as we asked them to? Will they survive now that international giants are poised to take advantage of the special benefits designed specifically for smaller domestic players? It will be a huge black eye for the government if these players are swallowed up.”
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