Canada’s small wireless carriers playing a clever game

If telecommunications were a chess game, the sound the country heard on Wednesday was a trio of small wireless companies saying, “check.”

With Wind Mobile, Mobilicity and Public Mobile jointly announcing they were quitting the Canadian Wireless Telecommunications Association because of its alleged favouritism toward incumbents Bell, Rogers and Telus, it’s over to the government and the CRTC for the next move.

How policy makers react to the small companies abandoning a lobby group that is supposed to speak on behalf of the entire industry will inevitably affect millions of Canadian wireless subscribers.

It’s a masterful strategic gambit, given that the industry is currently under a microscope from authorities. The federal government is in the midst of planning an upcoming spectrum auction and reviewing how such licenses can be transferred between players. The regulator, meanwhile, is putting the final touches on a code of conduct that will govern all carriers.

The defections will inevitably increase the pressure on both bodies to get further involved with a wireless market that many observers consider to be uncompetitive.

The upstart carriers, which collectively have about 1.5 million subscribers or about 5 per cent of the market, deny that they strategically timed the move, saying only that they’ve finally had enough after several years of seeing their concerns ignored. All three companies joined the CWTA after they came into existence following the previous government spectrum auction, in 2008.

Their biggest beef is that the organization insists the market is competitive and has low prices, which are positions they’ve always disagreed with. They say they’ve protested against making such proclamations, to no avail.

“It’s like that old proverb where children are better seen than heard,” says Gary Wong, director of legal affairs for Mobilicity. “There’s no point to being part of an association that supposedly represents the interests of the entire industry, but really only represents the interests of the incumbents.”

Wind chief regulatory officer Simon Lockie says the final straw came a few weeks ago when he read an open letter in an industry publication from Bernard Lord, where the CWTA president affirmed his belief that Canada has low prices and a competitive market.

“I thought, ‘Why am I paying for this?’ They’re actively lobbying contrary to our interests,” he says. “We can’t stop it, clearly, so the only question became: do we fund it and do we legitimize it?”

The CWTA denies it favours incumbent carriers and says the new entrants’ departure is unfortunate. The organization doesn’t feel it has been illegitimized, as the defecting carriers charge.

“[We represent] some 130 companies in the wireless space, including large and small carriers, handset manufacturers, infrastructure providers and other wireless companies,” says spokesman Marc Choma. “We certainly are the voice of the wireless industry, and look forward to continuing to make sure Canadians receive the maximum benefits wireless technologies can provide.”

The upstarts point to Canada’s world-leading average monthly revenue per user, high wireless profit margins and long contracts as proof that more government and regulatory intervention is needed. Industry Minister Christian Paradis has stated that he wants at least four strong carriers in each market, a position that has been interpreted to mean he’s in favour of seeing some of the new entrants merge.

The small carriers say they may indeed be open to working more closely together, perhaps by starting their own lobby group. But their joint defection shouldn’t be taken as a sign of other, bigger things to come.

“This isn’t the thin edge of the wedge,” says Lockie.