OTTAWA – Saying the Minister of Industry has no right to change the policies governing the 2008 Advanced Wireless Spectrum auction now, Telus has filed an application in Federal Court asking for a judicial review of the June 28th spectrum transfer policy framework released by then-Industry Minister Christian Paradis.
(We predicted such a legal backlash in April when Industry Canada told the Canadian wireless companies then that it wanted to add new restrictions on the sale of wireless spectrum that had been cleared to be sold after a five year moratorium. Basically, the federal government didn’t like the fact it appeared that the Canadian incumbents were poised to snap up the newcomers – and in one case, has already agreed to do so.)
The Telus application wants the Minister of Industry (now James Moore) stopped from implementing the License Transfer Policy Framework and for the court to declare that the Minister did not have the jurisdiction to adopt the new framework and essentially change the rules of the 2008 AWS auction and spectrum licensing, almost five years after the fact.
The June 28th LTP Framework says companies must seek Ministerial approval for any “Deemed Transfers” of spectrum licenses because the government does not want to see what it calls “undue” concentration of spectrum among Canadian wireless companies. Some of the Advanced Wireless Spectrum was set aside for new entrants back then with the proviso that set aside spectrum was not allowed to change hands for five years – a time which is expiring soon for both Wind Mobile and Mobilicity, who have deployed networks – and for Shaw, which has not.
It’s worth noting that not only is Telus against the LTP Framework, but so are Bell and Rogers – along with Wind, Public and Mobilicity. Threats to the transfer of spectrum after the expiry of the five year moratorium would dampen overall interest in the sale of the likes of Wind and Mobilicity, each big buyers of set aside AWS in 2008 – and whose investors obviously want to maximize their return with the greatest number of bidders possible.
But the June 28 LTP Framework would change that. “The result of the new policy, if implemented, will be that changes in control of AWS licensees who received spectrum through the set aside will no longer be permitted after the expiry of the moratorium except with the Minister’s approval, contrary to the clear, unambiguous and unqualified representations the Minister made in the AWS Framework and in the AWS licenses that the moratorium would expire after five years,” reads the Telus court filing.
With the government on record saying it will do whatever it takes to have four wireless companies in every region of the country, the incumbents are taking that to mean the Minister will say no to them buying one or more of the newcomers, just as it told Telus no in June.
“Furthermore, the LTP Framework interfered unlawfully with vested rights. Under the terms of the AWS Framework and the AWS licenses, new entrants and incumbent operators, including the Applicant, acquired a vested right to enter into arrangements that would result in a change of control for new entrants after five years. The Minister did not have the statutory power to interfere with those vested rights,” reads the application.
This court filing is another front in the battle the incumbent Canadian wireless companies are having with the federal government which either on purpose or not, has – in its push for four wireless companies everywhere – created vast confusion and a loophole in the market. That loophole, which Canadian wireless CEOs have been addressing for a month in the media, could see a company the size of Verizon come in, buy one of the newer, smaller, wireless companies and be able to purchase two blocks of prized 700 MHz spectrum, shutting out one of the big three Canadian companies from the best spectrum to do LTE and rural wireless coverage, in the process. The Canadian incumbents, despite their small size as compared to Verizon, are only allowed to acquire a single block, according to the 700 MHz auction rules.
However, if this legal challenge is successful, the new LTP Framework would disappear, making it more likely that a Canadian incumbent would move to buy the newcomers instead of Verizon.
This saga looks to continue all summer long.
