Quebecor has eye on wireless startup Mobilicity

In a new twist in the hope for wireless competition in Canada, Quebec telecom operator Quebecor has expressed an interest in looking at struggling startup Mobilicity, according to a bank analyst.

Scotiabank analyst Jeff Fan says that Quebecor, owner of wireless operator Vidéotron, has signed a non-disclosure agreement with Mobilicity, which is currently under creditor protection.

It’s the first indication that the carrier might have an interest in operating outside Quebec. There was no comment from Quebecor.

Several other wireless firms have looked at Mobilicity, including Wind Mobile and U.S. carrier Verizon.

Industry Canada has twice refused Mobilicity's sale to big carrier Telus, saying that a purchase by a major carrier will decrease competition.

Mobilicity operates in Toronto, Ottawa, Calgary, Edmonton and Vancouver and has almost 180,000 cellphone customers. It bought spectrum in the 2008 auction, but Industry Canada has been cagey about whether it can retain its rights to the airwaves if it is sold.

Quebecor's interest in Mobilicity suggests it might be looking at offering wireless service on a national scale.

Industry Minister James Moore has said he hoped this auction will help introduce new competitors to the Canadian wireless market, which is dominated by Telus, Rogers and Bell.

But hopes of developing a fourth major carrier were dashed yesterday when Wind Mobile announced it did not have the cash to pay for new spectrum and would not be bidding.

“Three companies control 90 per cent of the cellphone market in Canada — the cellphone market is broken,” said Steve Anderson, executive director of Openmedia.ca.

“The Canadians know that the government has said they will fix it, but it looks like you have to do much more.”

Vidéotron is among the eight qualified bidders for the 700 MHz wireless spectrum auction that began today.

The airwaves being auctioned off are the old analog TV spectrum and they are valuable for their ability to carry data for the next generation of telecom devices.

In addition to the big three telecom carriers, there are other regional carriers applying for spectrum, among them Vancouver’s Novus, Halifax’s Bragg Communications, Winnipeg’s MTS and John Bitove’s Feenix Wireless. Bitove was the founder of Mobilicity.

Vidéotron currently provides cable, internet and telecom services in Quebec, competing against Bell, Quebec’s dominant carrier.

A 2008 auction of wireless licences was rigged to promote new competitors but the three new entrants it encouraged will not participate this time around. Mobilicity is in creditor protection, Public Mobile has been sold to Telus and Wind backed out yesterday.