Mobilicity to Ottawa: Introduce a ‘spectrum screen’ for auction

Wireless provider Mobilicity is wasting little time lobbying the federal government to level the playing field for a forthcoming wireless auction.

In a letter to Prime Minister Stephen Harper and Christian Paradis, Minister of Industry, Mobilicity's executive chairman John Bitove proposed Ottawa adopt a so-called 'spectrum screen' while pointing to recent success the concept had in the U.S. in blocking an AT&T/T-Mobile merger and to "limit carrier holdings and prevent hoarding and monopolies".

Bitove attributes Canada's so-called Big Three carriers' (namely Rogers Communications Inc., Bell Mobility and Telus Corp.) excessive spectrum ownership to "decades of lack of competition and the free spectrum that were gifted to the incumbent carriers back in the 1980s."

In the letter, Bitove adds that, "this problem could have been easily avoided if the government had implemented a stringent 'spectrum screen' in the first place."

"John's letter is encouraging set-asides versus spectrum caps as the best way of dealing with, shall we say, the inequitable distribution of spectrum in Canada as it stands," says Stewart Lyons, president & COO, Mobilicity in Toronto. "More spectrum is a requirement for the new wireless entrants, especially for us, as we're using up all the spectrum that we have with the current 3G network.

"We can't launch an LTE network without more spectrum."

South of the border, the Federal Communications Commission (FCC) recently applied a spectrum screen to help block the proposed AT&T/T-Mobile merger out of fear that one carrier would hold too much spectrum.

Bitove also urges the government to proactively regulate all used and unused spectrum holdings. "Fostering a healthy, competitive wireless industry is in all of our best interests," the letter concludes.

Spectrum screen to help consumers?

Lyons says not only would Bitove's recommendation help Mobilicity expand its business, but the advantages for Canadian consumers "are as long as your arm".

"Look at what's gone on in the Canadian marketplace since the new entrants came about: you have the end of the system access fee, for the first-time ever you have unlimited data plans and that was totally unheard of in Canada, and unlimited long distance plans," he continues. "Those things will continue to occur provided new entrants get more spectrum."

Warren Shiau, director of research, Consumer Insight & Technology, Leger Marketing in Toronto, remarks on the one hand, there's a desire to encourage a certain scale for key market participants so that Canada has some big national players. Giving up a certain amount of market control to guarantee these players achieve that scale is par for the course.

"It's so very Canadian and so very socialist," he adds. "But for consumers' sake, why not open up the market a bit more, whether it's through a spectrum screen or anything else?"

When asked how spectrum auction rules set today would impact the future of foreign ownership telecom rules in Canada, Lyons says there's a misconception in this country surrounding the topic.

"There's not a big influx of foreign operators looking to come here and launch businesses here," he says. "Big international players want to go to places like India and China, they don't want to be the sixth or seventh new player in a country of 32 million people.

"New foreign ownership rules are a nice-to-have but not necessarily a must-have. We were successful raising money in Canada under existing business rules."

Which begs the question: is Canada still a leader in telecommunications or have we become a digital backwater?

"We were very slow to roll-out 3G technology across the country. We were one of the last western jurisdictions to do so," he adds. "We're getting better thanks, quite frankly, to the new entrants and the competition we bring. So LTE roll-outs are probably now on par with other jurisdictions.

"The pricing isn't there yet but it's getting better."

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