Documents Reveal Ottawa Aims to Prevent Big 3 From Owning Spectrum

wind mobile iphone 5s/5c promo.jpg

Five years after the wireless spectrum auction held by Ottawa in order to diversify the Canadian wireless landscape, the government’s “dream” appears to be grey: Public Mobile was acquired by Telus, and Mobilicity will soon be sold at another auction on December 9. The only viable wireless startup appears to be Wind Mobile, which, by the way, can be sold at any time. In fact, the current situation is reminiscent of a previous generation of wireless startups in the 1990s and early 2000s, when Canada’s No.1 and No. 2 carriers (Rogers and Telus) acquired Microcell Telecommunications and Clearnet Communications, respectively.

Okay, we are not there yet, but Telus was ready to acquire Mobilicity, a struggling wireless startup that paid a big amount of money to acquire spectrum set aside for new entrants in 2008. Rogers inked a deal with Shaw for unused wireless spectrum at the same time that Telus announced the agreement with Mobilicity.

In other words, history seems to keep repeating itself every decade. This year, however, something has changed. Documents obtained by the Financial Post reveal that the government realized that if the incumbents lined up to acquire set-aside spectrum for new entrants, they would be making the exact same mistake the government did 20 and 30 years ago, which led to the 2008 state of the Canadian mobile market.

As a result, the government went back to the roots of their initial 2008 statement: They wanted to create a competitive mobile market, so, starting with then-Industry Minister Christian Paradis, they started sending messages with force: They rejected the Telus-Mobilicity deal and threw cold water on the Rogers-Shaw agreement.

Spectrum is the key: If they allow the big-pocketed incumbents to acquire set-aside spectrum, the much hoped-for fourth national player will never emerge, multiple internal notes highlight, as cited by the Financial Post.

But the sale moratorium on the set-aside AWS spectrum is about to expire (next year). Now it remains to be seen whether or not the government will, indeed, keep its promise to help the competition grow. The media war with incumbents we’ve seen last summer and the budget allocated for transmitting this signal seems to corroborate that.

With Mobilicity on sale next week, there is a great chance to see Wind Mobile acquire the struggling wireless startup. This could be a game changer: Peppered with the potential of the 700 MHz spectrum, the possibility of an emerging fourth national player is here.

Technology enthusiast, rocker, biker and writer of iPhoneinCanada.ca. Follow me on Twitter or contact me via email: istvan@iphoneincanada.ca

  • Pat

    Why does the government feel that crippling the big 3’s infrastructure is the key to more competition and better prices? I’m tired of seeing people try to degrade our Wireless infrastructure for the sake of “competition”… There are better ways to lower prices than to split an already small pie 36 ways to Sunday. Hell, even the US only has 4 major carriers and have 8 times the population we do.

  • FragilityG4

    How are they being crippled? They’re not asking for any spectrum back they just want to limit how much they take of the new so that new players have a chance.

    Yes the US only has four players but their prices are much better than ours. Maybe because they don’t have the safety net of CRTC protecting their interest. Either way we Canadians suffer.

  • Al

    “There are better ways to lower prices”

    Do tell.

  • Chrome262

    US may seem to have 4 major carries, but they have tons of smaller carriers offering decent deals. And the major carriers in other nations actually actively compete with each other. All the government is doing, is picking a nicer way to stop the blatant price fixing and back room deals of the big three.

  • 1His_Nibs1

    EXACTLY!

  • Chrome262

    I agree, the CRTC has been way easy on the big 3, they have violated a few statures and not ben prosecuted, partly because of the vaguries of teh law, but also because there is no setup for getting these criminals.

  • kkritsilas

    So I take it that the Big 3 each owning their own 700MHz block is “crippling the Big 3’s infrastructure”. Please go back and understand the term “crippling”. They will have one block each, as will Wind. How is this any advantage to Wind in any way (call it fair or unfair, I don’t see any advantage)? Competition is what has brought down the cost of cellular plans, and if it wasn’t for Wind and Mobilicity presenting at least a minor potential for competition, the plan prices would not have come down. Prices were on a real downward spiral when Verizon had indicated they were interested in entering the Canadian cellular provider space. When that went away, the carriers stopped reducing prices, and took the opportunity to price gouge users when the contracts were forced to go to a 2 year term from 3 years. Yes, the phone subsidy was paid back over 24 months vs. 36 months, but the increased plan costs were far and above the phone subsidy increase.

    Wrap your head around this: Competition is the only way that Canada’s cell phone plan price will ever be anywhere near the world average. Leaving it to the carriers to do on their own will only result in increased prices. Take a look at what has happened to data plan pricing. For the first 6 years I owned an iPhone, my data plan was $30 for 6GB. What does 6GB cost now? $100+. Why? The existing cell tower costs have long been paid for. The cost of transport on a per MB/GB have gone down, and LTE will bring down those costs even further. Why are data plan prices going up? It isn’t because of the CRTC (although they have allowed it to happen0, it isn’t because of Verizon, Wind. or any of the other straw men the Big 3 want to put up to try and distract people from the truth. Truth is, they are charging more, because they can, and because they know the other carriers will follow along. This is the effect of lack of competition. Increasing competition will probably (but not guaranteed to) help reduce cell phone plan prices.

    Think of it this way: If Wind had a network with coverage as good as Rogers, Telus, or Bell, would they not have many more customers? Would the Big 3 not have to compete with a Wind $45/month plan (all inclusive, unlimited voice, unlimited data, throttled back at 10GB)? With a full coverage network, would Wind be able to steal customers from the Big 3? I know that if I were to have good coverage on WInd, I would have left Rogers a while ago, without a second thought. I would like to pay $45 for the Wind plan vs. the $60 (unlimited Canada wide voice, text, 2GB data) I am paying Rogers. I can’t though, because the network coverage from Wind is spotty where I live and work.

    Kostas