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Canadian telcos cry foul over spectrum auction rules

Canadian telcos cry foul over spectrum auction rules 

The normally staid Canadian wireless telecommunications market has been in an agitated state since June, when the federal government ruled that it would not allow TELUS to buy Mobilicity’s wireless spectrum licenses. Mobilicity acquired its spectrum license in 2008, when the federal government set aside such licenses for new entrants to the Canadian market. 

After the government’s ruling, U.S. wireless provider Verizon began to express an interest in purchasing Mobilicity or WIND Mobile, another new entrant to the market which is also currently for sale. Verizon might also consider buying both wireless companies. The American telecommunications giant will benefit from the rules of the upcoming wireless spectrum auction that allows new entrants with less than 10% of market share to bid on two out of four blocks of the airwaves. Incumbent wireless providers, in contrast, cannot bid on more than one block.{mospagebreak}Bell, TELUS and Rogers recently launched public relations campaigns complaining about the unfairness of the auction rules. “We share the government’s goal of a competitive, world leading wireless sector,” said Nadir Mohamed, President and Chief Executive Officer, Rogers Communications. “Unfortunately the government’s current policies have resulted in unintended consequences that allow massive foreign companies like Verizon to take advantage of loopholes and get special advantages over Canadian companies. We welcome competition, we’re just asking for a fair and level playing field.” 

George Cope, president and CEO, Bell Canada and BCE, echoed Mohamed’s sentiments. “Bell has made clear that we welcome wireless competition and we’ve always supported policies that promote competition. We ask only for a level playing field where the same rules apply to all,” he said. “The loopholes in the wireless rules actually give major US incumbents a range of benefits designed for new players, including special access to Canadian airwaves and Canadian networks. It’s time for Ottawa to confront these loopholes, their costs to Canadians and the implications for Canadian industry and infrastructure.” TELUS’ president and CEO Darren Entwistle made a similar point about his company’s desire for competition. “We welcome competition from any quarter, and have advocated for lifting foreign ownership restrictions in Canada since 2001,” he commented. “Our only request is that we be allowed to compete on a level playing field, without being hobbled by special advantages granted to foreign companies that dwarf Canada’s entire telecom industry.”

The Canadian Chamber of Commerce has sided with the Big Three. In a blog post published this week, Canadian Chamber of Commerce president Perrin Beatty argued that the spectrum auction rules will benefit foreign entrants to the market, and not the small start-ups that the Canadian government wishes to foster. He urged the minister of industry James Moore to consider changing the rules.

Minister Moore remains steadfast in his determination to maintain the rules for the upcoming spectrum auction. In a statement published online this week, he wrote that “Ottawa will continue to stay the course by ensuring Canadians benefit from a competitive telecom industry.” The minister pointed out that increased competition in this market has led to lower prices and greater choice for Canadians. Moore has taken the same stance as his predecessor, Christian Paradis, who lobbied for four wireless providers in each region of the country. 

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