Yahoo Finance Wind Mobile dashes hope of a more competitive wireless market
And then there were none.
Hopes for a more competitive Canadian wireless market were apparently dashed on the eve of Industry Canada's 700 MHz spectrum auction when Wind Mobile announced Monday it was withdrawing from the process.
Wind Mobile, is the operating brand of Globalive Wireless Management Corp. and is backed primarily by global conglomerate VimpelCom Ltd. The company bailed out of the auction a day before it was set to kick off when VimpelCom refused to fund any auction-related bids. Wind Mobile paid C$442 million for its initial range of frequencies during the 2008 AWS spectrum auction, and had been the last independent carrier standing after Mobilicity and Public Mobile confirmed following the September 2013 filing deadline that they would not seek additional spectrum this time around.
“It is a sad day for competition and real choice for Canadian consumers and businesses that Wind is unable to participate in the 700 MHz auction,” Wind Mobile CEO Anthony Lacavera wrote in a statement.
Failure to launch
The three independent operators first purchased licenses following the 2008 AWS auction, and had struggled since then to attract subscribers and grow revenue. Mobilicity filed for creditor protection in September as it actively sought a buyer, and Telus acquired Public Mobile in October. Despite the announcement, Wind Mobile says it isn’t shutting down operations.
“There will be no change in our day-to-day business as a result of this decision,” the company said in a statement. “Wind Mobile remains firmly committed to serving our customers and we are determined to continue to be a vital influence on mobile competition in Canada.”
Despite the statement, the company’s withdrawal will place it significantly behind other carriers after they eventually deploy services based on the 700 MHz spectrum, which is renowned for its ability to penetrate deep into buildings and underground.
Being #4 wasn’t enough
After launching service in Ontario in 2009, Wind Mobile gradually expanded service beyond its Ontario base to Alberta and British Columbia. Despite snagging 637,000 subscribers to become the country’s fourth-largest wireless provider, the company was buffeted by corporate uncertainty as original backer Orascom became a VimpelCom subsidiary in a complex 2011 deal, and it was reportedly the target of at least two competing acquisition attempts last year – including a US$700 million buyout offer from Verizon – later denied by the American carrier.
Wind Mobile's exit leaves only ten qualified bidders from the original 15. In addition to the three national carriers, Bell Mobility, Rogers Communications and Telus, the following regional players remain in the frequency hunt:
Bragg Communications Inc., which operates Eastlink in Atlantic Canada
Feenix Wireless Inc., which is wholly owned by Mobilicity’s founder John Bitove
Manitoba Telecom Services Inc., whose proposed sale of its Allstream business unit to Egyptian-owned Accelero Capital Holdings was rejected last October by the federal government over national security concerns. VimpelCom subsidiary Orascom is owned by Naguib Sawiris, who spearheaded Wind Mobile’s initial auction financing in 2008
Novus Wireless Inc., a subsidiary of Novus Entertainment, a Vancouver-based cable and Internet provider that bought spectrum in 2008 and then failed to launch its planned wireless services
Saskatchewan Telecommunications (SaskTel), which is owned by the provincial government
Thunder Bay Telecom (Tbaytel), which is owned by the City of Thunder Bay
Videotron, which is owned by media giant Quebecor
Reason for hope
In a statement released after Wind Mobile’s announcement, OpenMedia.ca, which has been spearheading a national campaign to make Canada’s wireless market more consumer-friendly, said smaller carriers are increasingly at risk.
“Today’s development shows the government just hasn’t gone far enough to stop the Big Three (Bell, Rogers, Telus) from strangling our access to independent providers,” OpenMedia.ca Executive Director Steve Anderson wrote.
Despite Wind Mobile’s move, the federal government’s plans to tweak the rules for greater wireless competition in the future remain on track. On Friday, Industry Minister James Moore announced new rules for the April 2015 2.5 GHz spectrum auction that will, among other things, make it easier for regional players to bid on spectrum by reducing the geographic size of each rural coverage region. Next year’s auction will also place limits on how much spectrum the incumbent carriers can acquire – which will increase the likelihood of four or more carriers competing in any given region. Moore also imposed a rule that compels successful bidders to use their spectrum to actually deliver service. Carriers that let purchased spectrum lie fallow risk of losing it altogether.
While the proposed rules for next year’s auction won’t apply to the 2014 700 MHz process, not everyone believes the current state represents a crisis of insufficient competition in Canada’s wireless market. Mark Goldberg, a Thornhill, Ont., telecom consultant and founder of the annual Canadian Telecom Summit, says the time to discuss our wireless future is now.
“Most Canadians already have access to four or more facilities-based service providers, in addition to secondary brands,” he said. “Indeed, it is surprising that the government hasn't spent more time looking at the few places where there aren't enough competitors and begin a national consultation on the conditions that contribute to that deficiency. Only then can we examine what measures are reasonable to ensure all Canadians can benefit from the national market conditions.”
Carmi Levy is a London, Ont.-based independent technology analyst and journalist. The opinions expressed are his own. carmilevy@yahoo.ca
