Telus buyout of Public Mobile opens next competition chapter

Call it the beginning of the end of Canada’s latest experiment in wireless competition.

Yesterday’s surprise announcement by Telus that it was buying Public Mobile removes one of three new players from the wireless market barely five years after the federal government launched its latest attempt to encourage new investment and competition. Wind Mobile and Mobilicity remain in the game, but given the struggles they’ve had attracting subscribers, it’s anyone’s guess how long they’ll hold out.

“Keep in mind that most Canadians have four or more options for their mobile service,” said Mark Goldberg, a Thornhill, Ont., telecom consultant and founder of the annual Canadian Telecom Summit. “Where Public Mobile operated, they were one of six players in the market. It was inevitable that there would be some consolidation.”

The next to go

Vaughan-based Mobilicity, with less than 200,000 subscribers, could be the next to go. It’s been desperately searching for a white knight buyer for much of this year, and filed for creditor protection last month as it pursued additional restructuring and investment. A $380 million offer from Telus in May was squelched by then-Industry Minister Christian Paradis over concerns that transferring Mobilicity’s spectrum to Telus would reduce wireless competition.

In contrast, current Industry Minister James Moore wasted no time in approving the latest Telus deal. Because Public Mobile’s spectrum is in a less-desirable frequency, known as G-block or G-band, that isn’t used by the latest wireless devices, Moore said in a statement that, unlike the earlier offer for Mobilicity, there is no concern over concentration.

“We will not approve any spectrum transfer request that decreases competition in our wireless sector to the detriment of consumers,” Moore wrote. “This means Canadians will continue to benefit from quality spectrum being deployed across the country, resulting in dependable high-speed wireless services with the latest technologies at the best prices."

No financial terms were announced by either company. Telus will acquire the spectrum, which cost Public Mobile C$52.4 million in the 2008 spectrum auction to establish initial operations in Ontario and Quebec. The spectrum was not considered part of the AWS frequencies that had been set aside for new entrants during the 2008 auction, and consequently is not subject to the five-year moratorium on sale or transfer that applies to AWS frequencies.

Relatively few mobile devices use G-block, and Bell and Rogers do not currently support it. Telus might have tipped its hand when it bought unused G-block spectrum last June from Novus Wireless in Alberta and British Columbia. Those companies had paid $17.9 million for the spectrum during the 2008 auction, but did not deploy services.

The struggle to survive

Public Mobile, the consumer-facing brand of Data & Audio-Visual Enterprises (DAVE) Wireless Inc., had struggled to build its subscriber base since first going live in 2009. At the time of the Telus transaction, it had 280,000 subscribers who will all now be gradually absorbed into Telus’s network.

If the Telus-Public Mobile deal continues a revolving door of activity around the new entrants – Wind Mobile remains on the block, as well – it also kicks off a potential opportunity for consumers.

“I suspect there will be some aggressive offers from service providers that seek to win over Public Mobile's customers, which should ensure prices continue to be disciplined even with the loss of one of the players,” says Goldberg. “This should help to strengthen Wind Mobile, which helps preserve an alternative to the three larger national brands.”

With next week’s filing of final deposits for January’s 700 MHz auction looming, and no interest to-date from foreign investors, the next competitive chapter in Canadian wireless remains to be written.

Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own. carmilevy@yahoo.ca