TORONTO – It was no surprise when the last member of the Canadian wireless triumvirate to address this week’s Canadian Telecom Summit made his pitch for an open auction the next time wireless spectrum goes on the block.
As George Cope, president and CEO of BCE and Bell Canada, put it during his luncheon keynote address on the final day of the Telecom Summit: why would the Canadian government put a spectrum auction process in place that would prevent one of the big three incumbent wireless carriers from participating fully in the 700MHz spectrum auction (expected in late 2012)?
But that’s exactly what new wireless entrants such as Globalive and Videotron have been asking for, repeatedly, at the telecom industry’s annual gathering. Earlier today, Globalive chairman Anthony Lacavera proposed a complete set aside of 700MHz spectrum for the newest wireless competitors. On Wednesday, Videotron president and CEO Robert Dépatie was a little more accommodating toward the incumbents when he suggested a spectrum cap that would allow regional incumbents to bid on only one block of 700MHz in regions where they already own low-frequency spectrum.
In Cope’s view, if set asides are in place for the 700MHz auction, one of the three national wireless carriers will not get the spectrum necessary to evolve to the next level of technology – Long Term Evolution (LTE) – which all of the three big carriers have been touting as the future of broadband wireless in Canada.
In a similar vein to comments made earlier in the week by his counterparts at Rogers and Telus, Cope said LTE deployment is key to serving customers in rural communities.
“One of the big problems we had a couple of years ago was the digital divide – how were we going to get high-speed to rural communities?” Cope (right) said, adding the rollout of HSPA+ technology by Bell Canada and other carriers has dealt effectively with the issue of a rural digital divide. However, the lifecycle of HSPA+ has been so rapid, Cope said, national carriers are now looking to LTE as they build out the next generation of their wireless networks.
“LTE’s future hinges on the auction rules,” Cope said. “If you separate that spectrum (700MHz), you run the risk…of a rural divide again.”
While he acknowledged the use of set asides in 2008’s Advanced Wireless Spectrum (AWS) auction allowed new entrants into the wireless market, he said the 700MHz spectrum auction is “a different game” than the previous one.
“It’s really important that everybody understands there’s 50% less spectrum available this time than last time,” Cope said.
During a media scrum after his luncheon keynote, Cope argued that new wireless entrants such as Videotron, Shaw Communications and Wind Mobile (financially supported by giant wireless provider Orascom) are as large as other wireless competitors now, so there is no reason why an open spectrum auction can’t be held, he said.
“My point is this time everybody is quite capable of attracting capital, so we should have an open auction,” Cope said.
Having access to more spectrum is a key concern for Bell Canada right now, Cope added. “We’re going through our spectrum at a level I’ve never seen before because of the demand for video. If you look at our mobile video service, the whole future of video services on wireless is going to be driven by having access to spectrum,” Cope said. “So if someone else thinks the spectrum is more valuable than Bell does for its shareholders, then they should be bidding for that spectrum.”
Cope had said earlier during his keynote address that an open auction would generate the most revenue for the government, and he told reporters Industry Canada actually “left money on the table” during the AWS auction because set asides made it possible for new entrants to buy spectrum for half the price they would have paid if they had been competing for spectrum in a completely open auction.
This was a contrary opinion to that of Michael Hennessy, Telus senior vice-president of regulatory and government affairs, who on Wednesday during the “Regulatory Blockbuster” panel had re-asserted a claim that the inclusion of set asides in the AWS auction resulted in $2 billion in overpayments for spectrum.
When this was pointed out to him by Cartt.ca editor Greg O’Brien, Cope was unfazed, saying: “Telus can make their comments that obviously Telus think are appropriate.”
However, Cope added: “If you look on a global basis, Canada paid a higher price (per megahertz per pop.) for that spectrum than we had in any other auction in the country before. But the concept that entrants who are as large as Rogers and Telus and Bell paid less for the spectrum makes no commercial sense to our shareholders.”
During his keynote speech, Cope spoke about current areas of focus for Bell Canada, which included achieving a competitive cost structure, leveraging wireline momentum, accelerating its wireless business and improving customer service.
At the end of lunch, Cope got a first-hand taste of the types of complaints received by Bell Canada customer service when he was approached by a waitress who wanted to voice her dissatisfaction with Bell’s level of service. In a prior conversation with this reporter, she had explained she was having trouble getting someone to look into a $2,000 monthly bill she received recently for Bell wireless services. After speaking with her, Cope was observed guiding her toward a Bell public relations representative standing nearby.
Asked about the incident later, Cope said: “I actually don’t know what her issue was, but she did say she had a service issue, so we had someone grab her right away to make sure it was dealt with.”
Speaking to the general issue of customers being surprised by large monthly bills, Cope said high data roaming charges for travelling customers create challenges for all global carriers.
“You try to tell customers, ‘Now you’re in this country, watch your rate,’” Cope said. “It’s the data issue. On voice, it’s pretty simple now. But with data, suddenly someone is downloading a video on their data device in another country.
“A lot of times, we end up doing a lot of things with customers where there are credits because they didn’t know they were on,” Cope said. “The industry has to mature on that process…There’s work to do and I acknowledge it.”
Photo by Michal Tomaszewski, courtesy the Canadian Telecom Summit.
