Quebecor CEO said it’s “another attempt” to “eliminate real competition”
By Ahmad Hathout
TORONTO – Bell wants the Federal Court to review whether Innovation Canada made a mistake in awarding Quebecor’s Videotron crucial 5G spectrum licenses outside of its normal operating territories, a move that Pierre Karl Peladeau said is another attempt to “eliminate real competition.”
The Quebecor CEO, who has tweeted his thoughts on the matter, said in a statement Monday: “This is just another attempt from Bell and Telus to eliminate real competition, but Canadians deserve better than today’s overpriced wireless marketplace.” Bell and Telus have a network sharing agreement in parts of the country.
In a request for review on Thursday, Bell told the court it believes Innovation, Science and Economic Development Canada (ISED) should not have awarded Videotron, which operates almost exclusively in Quebec, slices of the 3.5 GHz spectrum in Manitoba, Alberta and British Columbia because the company allegedly fails to show it actively provides telecommunications services to the general public in those areas.
Auction results were announced in late July and Quebecor secured 294 blocks worth $830 million across all territories.
Bell’s argument hinges largely on section 6.1 of the auction framework, which states that eligible set-aside spectrum winners are those that are facilities-based providers that are not national, but actively provide telecommunications services to the general public in the areas in which they bid. It focuses much of the legal argument on “actively provides” and “to the general public.”
But Bell is also not privy to potentially critical information that would provide it with the full picture as to why the federal department made its decision because ISED allegedly told Bell in August it would not provide details of Videotron’s application beyond that Videotron noted “‘it provides over-the-top business Internet services in these areas through its affiliate, Fibernoire Inc.” Fibernoire exclusively services businesses with fibre backhaul services.
Bell is asking the court to force ISED to hand over all relevant material related to the Videotron decision, including its application and eligibility as a set-aside bidder, and any correspondence between the ISED Minister and Videotron related to the matter.
Bell is backing its request by arguing it believes ISED’s response to its request for information “lacked transparency, intelligibility and justification” and prevents Bell from understanding whether Fibernoire “actively” provides telecom services in those provinces in question, or if it offers those services to the “general public.”
Bell also claims Fibernoire offering over-the-top services cannot be consistent with the framework because the infrastructure used to deliver OTT services are not those of Videotron’s, but the OTT provider.
Bell uses publicly available information and comments from Fibernoire to illustrate its argument, including a quote from the Quebecor affiliate that it “exclusively specialized in fiber optic connectivity services for businesses in Quebec and Ontario.” It also notes past comments from Quebecor executives, stating recently that acquiring the spectrum in question is a “first step” to expanding outside of Quebec, suggesting it has not ventured out previously.
Bell argues ISED “unreasonably interpreted” the auction framework, “unlawfully discriminated among bidders by applying the Auction Framework to them unevenly, and exceeded his statutory authority” under the laws it administers.
But Peladeau disagrees.
“Videotron secured the right to bid on set-aside spectrum in several provinces outside Quebec based on the activities of its affiliate Fibrenoire Inc.,” said Peladeau in the statement. “Detailed evidence regarding these activities was provided to ISED during the auction application process. It was based on this evidence that ISED correctly determined Videotron’s eligibility.
“Pro-competitive measures such as set-asides and caps are commonly used around the world to ensure equitable auction results,” he added. “They foster facilities-based competition and maximise the disruptive effect of new competitors, to the benefit of consumers.”
ISED carved out roughly 25% of the available spectrum for set-asides, which provide regional carriers an opportunity to avoid bidding against the deeper-pocketed national carriers for the scarce stretch of spectrum.
Cartt.ca attempted to get clarity in June on spectrum eligibility for a carrier bidding outside of its operating territory. ISED told this publication that a company that is “actively providing commercial telecommunications services such as broadband internet or wireless within an area of B.C. or Alberta” is eligible, assuming it meets other eligibility criteria.
Quebecor is making a play to go national, and it has made overtures over the past several months about its interest in Shaw Communications’ Freedom Mobile if regulators force a sale of the wireless company as part of an agreement to allow Rogers to purchase Shaw, a proposed deal announced in March.
The Montreal-based company had by then already filed registrations to lobby the British Columbia and Alberta governments about wireless competition and the Rogers-Shaw proposal.
Updated August 31:
Telus filed a similar application against the decision to award Videotron licenses and claims neither Videotron nor its subsidiary Fibernoire actively provides telecommunications services to the general public in the western provinces. It has asked the court to nullify the auction results that favour the Montreal-based company, as well as prohibit the issuance of spectrum to Videotron, and commence a new auction.
Altogether, 1,495 out of 1,504 licenses were awarded to 15 bidders in late July, which netted the federal government $8.91 billion.
