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WIND CEO: Favourable Wireless Rules for Verizon Are “Completely Unfounded”

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Ottawa’s wireless spectrum rules have recently come under fire by incumbents Rogers, Bell and TELUS as they claim the playing rules aren’t fair and give advantages to foreign companies such as Verizon. Through the noise, WIND Mobile CEO Anthony Lacavera doesn’t agree, as he has dismissed those claims as “completely unfounded.”

Speaking with the Globe and Mail, Lacavera says our incumbents are being “disingenuous” with their claims of being treated unfairly. The ‘Big 3’ have received more than ample assistance from the Federal Government in creating their wireless businesses, specifically the “spectrum gifts” to carriers in the 1980s and 1990s, which have resulted in a “substantial spectrum imbalance”, thus resulting in disadvantages for any new wireless startup carriers, regardless of size.

According to Industry Canada, Rogers, TELUS and Bell collectively possess licenses for roughly 85% of all “currently usable mobile spectrum” and provide services for 90% of all wireless customers. As more users rely on data services over voice, spectrum battles are more important than ever.

Lacavera said on Friday:  

“Spectrum is a national asset and it was allocated to incumbents in the mid-eighties and the mid-nineties on a beauty contest basis – a free basis. And that spectrum today has very high value,”  

He says Ottawa’s rules for the upcoming 700 MHz spectrum auction are in place for a reason to offset the challenges newer entrants face against the incumbents, which go beyond just spectrum. Rogers, TELUS and Bell own media assets, offer telecom service bundles, long wireless contracts and their decades long head start in building wire-line assents help them hold their advantage over any new competition.

For these reasons alone, Lacavera disregards the idea Ottawa’s spectrum policy will cause a large foreign telecom like Verizon to exploit the industry: 

“A U.S. major assessing the market is clear evidence that the government policy to foster more competition in wireless is working. And the frantic reaction from all three incumbents is all the evidence one should need to assess the need for more competition to disrupt the entrenched and cozy oligopoly.”

The issue at stake are the four available blocks of 700 MHz spectrum in the upcoming auction. If Verizon were to enter Canada, it would be treated as a newer carrier and be able to bid on two blocks, while our incumbents limited to one. This means one incumbent could lose out entirely, which has caused the ‘Big 3’ to cry foul.

Bell’s CEO wrote a public plea to Canadians via a two-page ad in the Toronto Star, claiming the wireless industry would be in jeopardy if Verizon came to town. Rogers CEO Nadir Mohamed met with the Star’s editorial board to reiterate we have no need for a fourth carrier, as it’s already hard enough with three in this unsustainable market. He also revealed government officials flew directly to New York to offer ‘favours’ to Verizon if they agreed to enter Canada’s wireless market.

TELUS CEO Darren Entwistle has claimed a “bloodbath” would ensue if Verizon entered the spectrum bidding process, as incumbents would be fighting tooth and nail to acquire a precious block of 700 MHz airwaves to prevent being the odd one left out.

Moreover, rumours have pointed to Verizon offering a $700 million deal to acquire WIND Mobile and possibly Mobilicity as well, two new entrants the incumbents were prevented from acquiring by Ottawa. TELUS bid $380 million for Mobilicity but the deal was ultimately rejected by the Federal Government.

WIND Mobile is not alone in calling out the foul cries by our incumbents, as Eastlink CEO Lee Bragg is also critical of the recent stance by the Big 3 on Ottawa’s wireless rules:

“While we agree companies the size of Verizon should not be given any advantages, this is not a Verizon issue. It is about how we create the right structure to ensure stable completion in all areas of rural and urban Canada,” 

Our wireless incumbents reiterated this week they have not received handouts from the government, as Bell CEO George Cope said:

“I think if you study the financials from 1985 to 2000, you’ll find that no one who owned a wireless company in Canada made any money,”

…since 1985 when the industry became competitive in wireless, we had to compete like everyone else. We’ve had no special privileges granted.”

Rogers CEO Nadir Mohamed echoed it isn’t fair to compare previous auctions to Verizon’s advantageous entry terms:

“When we started in ’84, there weren’t very many people talking about wireless the way we are today. It was very much a bet on something that hadn’t happened. We built the networks in Canada,”

“I think today looking at a company like Verizon or a large U.S. incumbent, it is a very different picture. … We are not saying anything that would suggest we’re not open for competition. All we’re saying is we should have the same rights.”

Below is a timeline of spectrum history in Canada, as detailed by the Globe and Mail:

1985: Rogers Cantel Inc. and telcos receive licences for the 800 MHz frequency in a comparative review or “beauty contest.”

1995: Industry Canada conducts a “beauty contest” for the PCS band and implements a spectrum cap. Licences given to Clearnet, Microcell, Rogers and telcos.

1996: Federal Budget introduces legislative changes to enable spectrum auctions.

2000: Telus buys Clearnet and returns some spectrum.

2001: Returned spectrum, along with previously reserved PCS licences, are auctioned. Rogers, Bell, Telus win licences.

2004-2005: Auctions of the 2.3 GHz and 3.5 GHz bands; Rogers buys Microcell.

2008: Auction of Advanced Wireless Spectrum licences.

Clearnet and Microcell offered some of the best cellphone plans when they started up in Canada, only to be eventually acquired by TELUS and Rogers, respectively. It’s clear Ottawa is trying very hard to prevent history from repeating itself, as the TELUS/Mobilicity deal was shut down, sending a clear signal the government will not allow incumbents to acquire newer entrants anymore.

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  • CC

    It’s funny all the CEOs are coming out to have their little talk now.

    Wind and Mobilicity want to be bought, get out of the market, and make a profit. The Big 3 want to stay the same and make their usual profits in Canada.

    These are all money talk to me and I don’t blame them. It’s all business.

  • Bbrysucks

    The difference is that the big three have always been consistently dishonest and dirty little bastards. This isn’t news, it’s a gong show.

  • K3

    So if it really is a blood bath Michael Hall will be Verizon’s new “Can you hear me now?” guy….????

  • Michael Durech

    and you think that Verizon wouldn’t do the same? they basically have a monopoly in the states, AT&T sucks… if you really want a 4th carrier, the Canadian Government should be courting Deutsche Telekom (T-Mobile), but T-Mobile will never come, they wont make money. To low of population and to much land mass to cover…

  • K3

    ” and you think that Verizon wouldn’t do the same? ”

    There is a reason why the current providers here are all calling foul to the public now.

  • Bbrysucks

    Please. Don’t be yet another ignoramus by spouting off the 30 year old population vs area argument.
    Over 90% of the population live within 100 miles of the us border, and those who don’t simply don’t have service. The carriers don’t roll out their networks to 90% of the landmass since its wilderness. They only cover the population and major cross Canada highways.
    In a nutshell, the radio towers vs population is almost identical to that of the USA. The USA has around 200k sites vs 20k sites in Canada. A ten to one ratio which BTW is very close to the population density difference of 320 mil vs 37 mil. In fact, in major urban centers its actually a lot cheaper to host equipment and pay site leases in Canada as opposed to the us.
    So…. Yea. I’m drunk but you get the point, I hope.

  • ????Dennis

    None of the Telcos said shit when Rogers bought Fido…. Fido struggled to give us the best rates and was really hurting the Big 3 when they handed out their $40 unlimited plans. Rogers scooped them up and that was the last of any decent plans here in Ontario.

    I give a big middle finger to the big 3 and really Love watching them squirm and lose sleep over fighting for spectrum. Bring on Verizon! I’m not upgraded my phone till they get here and I will switch the day they enter and laugh when Rogers tries to finally offer me something better than a fucken $5 credit on my bill.

  • ????Dennis

    Hahaha you’re such a tool. I’m glad there are people like you out there… One less person to wait for in line to switch to Verizon.

  • Qwe123

    In your face! Big 3!! Lol

  • Wufai

    Of course there will be bloodbath if the Big 3 only has access to 2 blocks of spectrum. Canada should sell these at crazy prices for the benefit of the Canadian government! How much would you think the Big 3 will bid if they know they are ‘guarantee’ 1 block each?

  • Chrome262

    Regardless if AT&T sucks they still have a huge market share. And T-mobile and the others are offering competitive pricing in the US. Something we don’t have. I for one welcome Verizon. Ruthless competition we need. And T-mobile doesn’t have the cash, but they would love to buy wind

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