OTTAWA – As Industry Canada ponders the rules that will surround next year’s advanced wireless spectrum auction, Rogers Communications CEO Ted Rogers was in Ottawa today to reiterate just where he and his company stand, while saying the company might be looking to spend between $500 million and $1 billion.
While potential national newcomers like Quebecor and MTS Allstream are demanding spectrum set asides, or caps on how much the incumbents can buy and other favours like mandated tower sharing/roaming in order to get into the wireless business cheaper than they would in an open auction and open market, the incumbents have far different ideas.
While the issue has been silent for a few weeks as the ministry brings a new minister, Jim Prentice, up to speed, it’s front and centre this week with Rogers’ speech today and another in Toronto tomorrow to be made by Quebecor CEO Pierre Karl Peladeau.
Today, Rogers noted how the big three in Canada (himself along with Bell and Telus) built their nationwide networks, spending billions, and that extending the wireless networks beyond the major cities paid off because they could subsidize rural coverage with money earned in the cities. The carriers who didn’t offer wide service and only stuck to the denser regions? “They have gone bankrupt or been sold to the existing three national carriers,” he noted.
As for the conditions that the potential newcomers are proposing, Rogers had this to say:
“Some potential spectrum bidders want to pay a lot less for spectrum than the three existing competitors by getting the government to reserve a large chunk of the spectrum for their exclusive bidding at much lower rates than Bell, Telus and Rogers will have to pay,” he said,
“The discount worth hundreds of millions of dollars will be a direct gift and subsidy from the taxpayers of Canada. It would be unprecedented patronage to large, well-financed communications companies who would be the all-time corporate welfare bums in Canadian history!”
Rogers insisted that his company need new spectrum for new wireless services such as video and other data and not to block any newcomers. But perhaps ceding the fact that there are going to be some rules to favour newcomers, Rogers set out conditions required for mandated roaming.
“First, new entrants should be required to build out a minimum of 20% of their spectrum area before having rights of forced roaming. Second, the area for forced roaming should be restricted to where they have purchased spectrum – not beyond. Third, if they do not meet their required build-out schedule then their right to forced roaming would terminate. Fourth, forced roaming should be restricted to voice only – not broadband internet nor video services which take up too much capacity,” he explained.
And, small regional players should be discouraged, added Rogers. “If a new competitor wishes to enter the Canadian wireless business – they should be national providers to all Canadians.
“I have mentioned that some of these potential bidders are, or have been, in Canadian wireless before. One that comes to mind is Quebecor-Vidéotron who owned a large chunk of Microcell, had an opportunity to buy all of it, but decided to take their financial profit and leave the wireless industry. Another that comes to mind is Manitoba Tel & Tel who has been in wireless for 22 years – chose the wrong CDMA technology and hardly has set Manitoba afire with either new services or lower rates.”
Rogers then went on to dispute the claims being made by potential bidders who claim that the Canadian wireless business is non competitive, priced too high and well behind the times technically.
“An OECD study which came out recently shows that Canada has low rates when compared to the other OECD countries. Rogers did a study which we filed with the government which looked at the cellular packages that most Canadian buy. We looked at the most popular packages for Rogers Wireless customers and priced these in the US and many European countries. We found that the Canadian price for these packages were among the lowest in the world,” he said.
“New entrants do not need to besmirch the existing companies to support their demands for patronage and subsidies at the expense of the people of Canada.”
– Greg O’Brien
