Wireless spectrum auction reaction largely positive

Reaction to Ottawa’s moves yesterday to increase competition in Canada's wireless sector was largely positive, but some in the industry worry the measures may not go far enough to bring down prices for consumers.

Industry Minister Christian Paradis on Wednesday announced placing limits on the coming wireless spectrum auction for large players and the lifting of foreign investment limits for small telecom firms.

At the same time, he said the next auction of radio waves in the 700 and 2,500 MHz frequency bands will be held in the first half of 2013.

Paradis said Ottawa will lift restrictions on foreign investment in firms with less than 10 per cent of market share by revenue.

Smaller players had said they couldn’t compete with the financial weight of the big firms — Bell, Rogers and Telus — without access to capital from foreign investors.

Paradis also announced Ottawa will limit how much spectrum the largest players can buy through the auction.

It will set aside one of four blocks of the new spectrum for new entrants and regional providers.

Companies that hold more than one block of spectrum will have to provide wireless services to 90 per cent of their coverage areas within five years and to 97 per cent of their coverage areas within seven years.

Telus called the initiatives “thoughtful and balanced,” and said they meet Ottawa’s goals of “promoting consumer choice, supporting sustainable competition through investment in technology and further expanding broadband services in rural markets.”

Smaller player Mobilicity, which had called for the new 700 MHz airwaves to be set aside exclusively for bidding by smaller telecoms, was mostly positive, saying the decision will “help sustain competition and lower wireless pricing for consumers.”

“While we recognize a compromise has been made,” CEO Stewart Lyons said in a statement, “we are confident that competition will continue for the betterment of Canadian consumers."

Speaking on CBC's The Lang & O'Leary Exchange, Lyons said Mobilicity will be an aggressive bidder in the upcoming spectrum auction.

"We'll be a force to be reckoned with in that auction," he said, adding that his company has already received funding support offers.

The Public Interest Advocacy Centre, which helped design the spectrum auction process in 2008 and contributed to the planning for yesterday’s changes, had a wait-and-see reaction.

PIAC, which says its focus is ensuring access, affordable prices, and consumer choices, also criticized the choice not to set aside the 700 MHz spectrum for new entrants, while applauding the partial lifting of ownership controls.

“Spectrum auctions are meant to provide outcomes that best meet the public interest”, said executive director Michael Janigan.

“That is not always synonymous with getting the most money," he added.

PIAC, he said, isn’t sure the changes do enough to ensure strong rivalry against the three dominant companies.

‘We’ll see how the financial backers of new entrants view this package fairly soon,” Janigan said.

Liberal industry critic Geoff Regan called the rule changes “half-measures.”

"If you are an outside investor, are you going to want to invest money in one of these small players so that it can grow, when you don’t know if it can later on grow beyond 10 per cent or it might be capped there and, therefore, unable to really compete with the big players later?" he asked on CBC's Power & Politics.

Regan said it’s clear they “will not lead to cheaper cellphone bills or better rural service for Canadian families,” but will “only maintain the status quo, supporting a market dominated by the Big Three,” a reference to Bell, Rogers and Telus.

“Without a competitive telecom market, Canadians will continue to pay some of the highest prices for voice and data in the developed world. After waiting two years for this announcement, the results are very disappointing,” Regan said.

NDP critic Guy Caron said the government's new rules could eventually create a situation in which two companies of similar size are competing under different sets of rules.

OpenMedia.ca, a lobby that describes itself as a grassroots organization that aims to promote an open and affordable internet, was also disappointed with the decision not to set aside the 700 MHz band exclusively for new entrants.

That, it said, would have gone the furthest “in improving what many Canadians now feel is a broken telecom market.” It said the government could have done more.

“Big telecom companies are still basically the ones regulating our phones and internet services and this decision is a clear missed opportunity to bring more telecom choice and affordability to Canadians,” it said.

“Canadians were looking for a bold step in the right direction and they didn't get it. This decision could have been worse, but if prices do not begin to come down Canadians will know who to blame.”

OpenMedia.ca is, however, was pleased that there will be a use-it-or-lose it clause, “which means that wireless carriers cannot simply hoard spectrum without using it to bring service to Canadians.”

The government also said Wednesday it will apply measures in the spectrum auction to ensure rural Canadians get the same service as people who live in bigger towns and cities.

The changes to the auction rules will let at least four companies obtain spectrum in each of Canada's 14 licence areas. Antenna tower sharing and roaming policies will also be changed.

A portion of the spectrum will also be set aside for public-safety services such as firefighting and police.

Wireless firms need access to the additional spectrum to expand their networks.

The industry needs the new frequencies to build networks to handle faster, more advanced long-term evolution (LTE) technology and to accommodate the latest smartphones.

The new spectrum has greater reach than available spectrum, allowing calls in elevators and deep underground parkades. It will also mean better and more affordable coverage in rural areas because fewer cell phone towers are needed.

The frequencies are available because of the switch to digital television signals.