Bell, Rogers, Telus, Globalive, Videotron, and PIAC butt heads on telecom

TORONTO--The new minister of industry may have had his telecom industry coming-out party Tuesday when he spoke at the Canadian Telecom Summit, but Wednesday’s regulatory panel would have provided a rousing introduction to the issues Christian Paradis has inherited in his new role. At the conference Wednesday, regulatory leaders from Bell Canada, Rogers Communications Inc., Telus Corp., Globalive Wireless Management Corp., MTS Allstream, Vidéotron Ltd. and the Public Industry Advocacy Centre (PIAC) butted heads over the industry’s most contentious issues, including spectrum auctions, foreign investment, usage-based billing and vertical integration. Rogers’ senior vice-president of regulatory, Ken Engelhart, recalled the “good old days” when spectrum auctions were open, and called for the same principle today with a condition of licence to prevent the hoarding of unused spectrum. A decision on whether to allow foreign ownership in the telecom sector will come before the 700 MHz and 2500 MHz spectrum auctions, which will be held in late 2012 or early 2013, Paradis said Tuesday, but he would not say whether set asides or spectrum caps would be used. “Government’s not smart enough—no one’s smart enough—to micro-manage the market,” Engelhart said. “That’s why we have auctions and that’s why we should have open auctions.” Bell’s Mirko Bibic supported that position but others opposed it. In an interview with The Wire Report Wednesday, Videotron president and CEO Robert Dépatie said caps are needed to prevent “big-pocket carriers” like Bell and Rogers from buying significantly more spectrum, which he said would kill competition within five years. “You can’t compete with the new technology, if you’re a new entrant, with 20 MHz of spectrum or 40 MHz of spectrum in the LTE environment,” he said. PIAC counsel John Lawford said government must follow through on its pledge to foster more competition or new entrants would “blow away.” Edward Antecol, Globalive’s vice-president of regulatory affairs and carrier services, called Bell, Rogers and Telus’ control of the wireless market a “cozy little oligopoly” and called on the government to create more competition with caps and set-asides in the next auction. Chris Peirce, MTS Allstream’s chief corporate officer, called the 2008 auction’s framework—in which spectrum was set aside for new entrants—“instrumental” to the increased competition in the market, but recommended a loosening of foreign investment rules. “Unfortunately, the foreign investment restrictions we have today do not have a symmetrical effect,” he said. “They’re remarkably asymmetrical in that they limit the ability of new entrants and smaller players to raise the kind of capital to compete on an even keel with the larger players.” On rules governing the exclusivity of content among vertically integrated companies—which will be the subject of a CRTC hearing this month—Peirce warned of “cartel-like behaviour” by those that control the content. Lawford said vertical integration could lead to customers choosing carriers based on the content they’re able to access. “Clearly if someone owns the content and is competing with someone who also needs that content to deliver a service, then there’s obviously the propensity for anti-competitive behaviour,” Peirce said. “If you can, if the rules allow you to, you will. You’d be stupid to do otherwise.” Rules should apply to vertically integrated companies, Rogers’ Engelhart said. He suggested that any licensed television content should be made available to all wireless and online providers. Dépatie told The Wire Report that the hearing would show vertically integrated companies are best placed to meet customers’ needs. “Vertical integration, well-managed, is a good thing for the country,” he said. “There has to be less regulation.” On the issue of wholesale usage-based billing, the panel was split on the value of the CRTC hearing in July. Dépatie said it is not an issue for Vidéotron customers, who have understood the retail practice for years, while Telus’ senior vice-president of regulatory affairs, Michael Hennessy, said he doesn’t want to attend a summer hearing. “I’m very disappointed I was even invited,” he said. Bell’s Bibic, on the other hand, said he was “the happiest person in the country” to have a hearing that would dispel what he called the “nonsense” surrounding the issue. Bibic also took issue with a study that Michael Geist, a University of Ottawa law professor, undertook for Netflix Inc. that calculated the cost of transmitting a gigabyte of data as eight cents. Dépatie called the same study “codswallop,” a word he said he learned from a Newfoundland colleague that means something akin to nonsense. Hennessy and Engelhart also took aim at studies that negatively reflected the Canadian wireless and broadband industries’ global position. Engelhart said there has been a “cottage industry” of reports knocking Canada, highlighted by what he said was a flawed OECD report ranking Canada’s broadband pricing. Hennessy called a recent OpenMedia study a “homage” to state-run networks that missed the point that Canada is already world leader. “So let’s save public dollars for the health care crisis or other very real priorities,” Hennessy said. Lawford said the issues of misleading advertising for broadband speeds, international roaming charges, and the full disclosure of charges in wireless contracts are issues that do not require regulation but will if the industry doesn’t address them. Governments in Ontario, Quebec and Manitoba have put forward legislation to protect consumers from wireless carriers. “Is it not embarrassing to this industry that you have such problems with your contracts that the provinces have to step into a clearly federal area of jurisdiction to say, ‘Listen, this is just basic fairness?’” Lawford said. mburgess@thewirereport.ca

Bell, Rogers, Telus, Globalive, Videotron, and PIAC butt heads on telecom

Broadcast | June 2, 2011

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