Tories respond, push wireless policy with departmental website

Wireless incumbents and the Conservative government continue to trade punches as the Industry Department pressed ahead with more public information about its wireless policy, putting a new interactive page on the Industry Canada website that aims to better explain its policy. “Our work is not done. The upcoming auctions are an opportunity to build on our success and provide Canadians with more choice. Because more choice means lower prices and better service,” says the webpage, which provides consumer information and a series of statements challenging arguments put forward in a public campaign by incumbents BCE Inc., Rogers Communications Inc., and Telus Corp. U.S. telecom giant Verizon Communications Inc. said this week it does not intend to expand to the Canadian market, a decision that followed a summer campaign led by the incumbents for changes to the government's wireless policy. The incumbents argue that wireless policy rules that prevent them from purchasing new entrants until next year and limit the amount of spectrum they can purchase in the upcoming 700 MHz spectrum auction create an unfair playing field against foreign-owned potential market entrants. “That website is very consistent with re-establishing the problem that Verizon was supposed to solve,” Greg Lyle, a campaign expert and head of Innovative Research Group, said in a phone interview. With Verizon out of the picture, the government now has an opportunity to re-establish a message about the incumbents’ dominance in the Canadian wireless market, he said. “It won't hurt for the spotlight to get back on the problem they're trying to fix,” Lyle said. The Industry Canada website provides a section called “Cut through the noise,” which attacks arguments put forward by the incumbents in their summer campaign, such as suggestions that the government's wireless policies will cost Canadian jobs, put privacy at risk, or fail to expand rural wireless services. The website says the total number of jobs in Canada's wireless industry has risen by more than 25 per cent since 2008. The department cited data from the Canadian Wireless Telecommunications Association (CWTA), an industry group of which the incumbents are members, to say that demand for skilled specialists in the sector is high and post-secondary institutions are creating programs specifically for telecom jobs. The website adds that Canada's largest three wireless companies hold more than 85 per cent of available spectrum and more than 90 per cent of the Canadian market. “Wouldn't it be nice to have more choice?” it says. Following Verizon's decision not to expand to Canada, speculation is now mounting on whether a foreign-owned player will register to take part in Canada's upcoming 700 MHz auction, for which initial deposits are due Sept. 17. One possibility is Paris-based Accelero Capital Holdings, an investment firm of former Wind Mobile backer Naguib Sawiris, which has expressed an interest in purchasing Wind. Summa Strategies consultant Michele Austin said in a phone interview that the government is probably still hoping a foreign carrier will enter the auction. “Probably, there is some hope that Industry Canada is clinging to a surprise deposit on the 17th from somebody that is from outside, whether it be T-Mobile or AT&T or somebody else,” she said. Industry Canada says it will publish the list of registered auction bidders on Sept. 23. Following an announcement in Saint-Hubert, Que., on Wednesday, Industry Minister James Moore told reporters that the 700 MHz auction is going ahead as planned, with bidding to start in January. "The news from this week of Verizon choosing not to enter the Canadian marketplace will cause incumbent players, and possibly players from outside of Canada, to look at the options, and we'll see what materializes," Moore said. "But to be clear, to those who are looking at our policy, we're not changing dates, we're not changing our policy. We're moving forward and we'll see what what firms choose to present in the auction in January." Josh Blair, Telus' chief corporate officer, said in a phone interview with The Wire Report on Tuesday that he believes the incumbents' campaign will continue beyond the Sept. 17 auction deadline. “I think we have to call for a fair auction. It’s what Canadians want. It’s how both urban and rural Canada will get properly served,” Blair said. “In the end, if there isn’t another large international player in the auction, perhaps the loophole becomes one that doesn’t have a consequence to it because no one’s taking advantage of it, but our view is why not close the loophole.” Lyle said the government should have been more publicly visible about its wireless policy since the start of the incumbents' campaign, which involved national radio and newspaper ads, editorial board meetings, and other media interviews. He said the Tory government understands political controversy and that it would not have expected the incumbents to roll over and lose millions of dollars to new competition. Still, the government may have been surprised at how effective the incumbents' campaign was, Lyle said. “The government wants the fight,” Lyle said, adding that if the incumbents start to fight too effectively, the government could respond with more onerous regulatory measures. “There is some risk of really getting the government mad, but it's hard to tell where the real feelings are in this whole thing when no one is going to tell you their strategy,” Lyle said. “There is a balancing act of going far enough and knowing when you've gone too far.” John Lawford, executive director of the Public Interest Advocacy Centre (PIAC), which had defended the government's wireless policies favouring more competition, said earlier this week that a failure to introduce more wireless competition will put additional pressure on the CRTC to regulate the market through its wireless code. Another result could be additional roaming or even wireless pricing regulations, he said. In an interview Wednesday with The Lobby Monitor, David Coletto, head of public affairs research firm Abacus Data, said he does not know the strategy of the incumbents' campaign, though it may have been intended to send a signal to Verizon that the American company would have been in for a fight if it expanded to Canada. “They may have hoped to make it seem too complex for Verizon to want to take the risk of entering a market, that the return on their investment might not have paid off,” Coletto said. Verizon Wireless, which has more than 100 million subscribers in the United States, would have entered a relatively small market north of the border with a population of 34.5 million people. As part of their campaign, the incumbents have launched court applications challenging aspects of the government's wireless policy, which critics have said were intended to create regulatory uncertainty for potential new entrants. Telus, in July, filed an application to challenge Industry Canada rules that limit incumbent providers to a single block of “prime” spectrum in the auction, while smaller players may bid for up to two of the four prime blocks available in each region of the country. BCE’s mobile division has also launched a court challenge of the industry minister’s authority to impose new roaming and tower sharing rules on the wireless industry, as well as a separate application challenging the minister's ability to restrict the incumbents’ bids in an upcoming spectrum auction, according to Federal Court documents obtained by The Wire Report. In the documents, filed in August, BCE division Bell Mobility Inc. argues that the federal industry minister lacks the jurisdiction to impose roaming and tower-sharing requirements on mobile providers as part of their spectrum licence conditions. The company argues that changes to Industry Canada’s roaming and tower sharing rules, announced in March, are inconsistent with a 2007 policy that those rules would only be changed on an “exceptional basis." As part of its rules for a 2008 spectrum auction, Industry Canada required Bell and other mobile providers to enter roaming agreements with one another to ensure customers have mobile service when outside their carrier’s network footprint. Following a public consultation last year, Industry Canada extended the roaming requirements indefinitely. In a separate application, Bell challenged the minister’s power to limit wireless carriers’ spectrum bids in the upcoming 700 MHz auction. Austin said the incumbents are taking a long-term view of the government’s regulation of the market, and “know better than anybody” that ministers and governments change over time. “I think a lot of this is short-term pain for long-term gain for the telcos. They’re quite happy to put up this fight in the short term, and test the waters to see if they win,” Austin said. “There’s lot at stake for them. They are also knowledgeable enough to know they can wait it all out longer than any government or any minister.” Blair said Telus continues to have a healthy relationship with the Tory government. “This file has been one that has brought out differences of opinion in a very public way, but we have a very positive overall relationship with the federal government,” Blair said. “We have multiple points of contact and partnering with the federal government, and we look forward to a continuing, healthy, positive relationship with the government.” —With reporting by Simon Doyle at sdoyle@thewirereport.ca and reporting and editing by Nicholas Kyonka at nkyonka@thewirereport.ca

Tories respond, push wireless policy with departmental website

News | September 4, 2013

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Tories respond, push wireless policy with departmental website

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