INDUSTRY MINISTER JAMES MOORE has fair sized reservoir of stamina. After two full days of going west to east talking wireless with just about everyone who’ll ask for his time – and with three days of that still lying ahead – he sounded fresh and combative when it was our turn Tuesday afternoon to talk with him.
For readers not vacationing incommunicado for the past two months, Minister Moore has taken this week to tour the country to talk up the federal government’s wireless policies in the face of an all-out onslaught of sustained criticism from the big three Canadian incumbents Rogers, Telus and Bell.
The three companies and their many supporters insist that recent federal government policies governing wireless are wrong and could allow a huge U.S. competitor in the form of Verizon into the market under terms that are wholly unfair to companies who have spent billions over many years building networks in Canada already. The rules of the 700 MHz wireless auction coming in January could allow Verizon, a company four times the size of the entire wireless industry in Canada, to buy twice as much spectrum in the auction as Canadian carriers, which are prevented from buying more than one of the four blocks of spectrum being auctioned. It’s worth noting that Verizon may have cooled on the prospect of coming north, but that leak could simply be a negotiating tactic.
Further, Industry Canada has indicated it will take a dim view of any of the incumbents attempting to purchase the set aside spectrum that Wind, Mobilicity and others bought in the 2008 auction, even after the 2014 expiry of the moratorium placed on the sale of that spectrum (something over which Telus has taken the government to court). That warned, yet not specifically forbidden, spectrum transfer condition likely artificially lowers the return on investment those companies could expect, given both are for sale, and seems to shut out Rogers, Telus and Bell (but as you’ll read, the door isn’t totally shut tight on that bit).
So while the big three have a web site, radio, TV and print ads extolling their virtues, the Conservative Party of Canada last week launched their own site swinging back at the companies and insisting what the federal government is doing is right for and by Canadians.
But back to Minister Moore. Besides the web site, he is on tour this week to state his case and gave Cartt.ca editor and publisher Greg O’Brien a few minutes to chat Tuesday. Given that many of our questions were likely being asked and answered by others in the day-long interview queue (click here, here, here and here for some of the other coverage) we tried to throw in a few original curveballs to try and wring out a different story. We also decided to run the full transcript (edited only slightly, since the Minister, a pretty skilled speaker, rarely ums and ahs when he speaks) rather than get all fancy with the prose.
Greg O’Brien: Your cell battery isn’t dead yet, given the day you’ve had?
James Moore: No, things are fine.
GOB Well then let me hop right into this, because I know you’re pressed for time. Is there any chance at all the auction will be delayed again? Or, will there be any rules changed prior to the beginning of the 700 MHz auction process September 17th?
JM: No.
GOB: Easy answer.
JM: We’ve delayed it twice. It’s time to move forward.
GOB: Going a little further then, when the five-year moratorium expires on the sale of the (set aside) AWS spectrum that Wind and Mobilicity own, will any of the big three be allowed to buy that spectrum?
JM: I can’t speculate on that right now but we are obviously paying close attention to it.
GOB: Any comment on the Rogers and Shaw option that’s out there as well?
JM: Not right now.
GOB: Will we ever see a digital economy strategy from the federal government that fully sets out your priorities for digital communications and technology – which includes wireless and fixed line broadband and many other technologies across all segments of the economy – because that is something that has been promised since 2010.
JM: We’re looking at different options. We know it’s obviously a high profile file and it’s a necessary fact of the government’s ongoing policy structure. To be honest, I think there’s a good model with what we did to copyright reform – and you have to have some kind of ongoing commitment. It’s not as though in 2013 we’d say that this is what our policy will be and it’s set in stone. Nobody is that clairvoyant or arrogant and so you have to set in place a structure of policy that can assess and address ongoing issues in the best way to serve the country. So we’re looking at different options to do that and certainly there are some high profile needs, both regulatory and investment, which we’re looking at different options on.
GOB: I’ve written in the past that if the federal government really wanted full competition in wireless in Canada, the way we see in other countries, the foreign investment rules should have been changed prior to the 2008 AWS auction. Since we can’t go back in time, what about fully liberalizing those now, so the likes of Orange or Vodafone or Verizon can come in to Canada however they like, maybe buying one of the incumbents, and really lower wireless prices with their economies of scale?
JM: I think it’s overly simplistic, given Canada is the second largest country in the world in size but 34th largest in population. We do have expectations and obligations to rural parts of this country to ensure that there is some comparable level of service and not all of Canada is well served. I’m not yet convinced by the arguments than an absolute open market would serve Canada in that regard.
GOB: Sure. There are areas I can drive to in an hour from where I live where there is no cell service, so there are certainly still some holes to fill.
JM: There are indeed. It’s an ongoing challenge.
GOB: I’m wondering if you can explain to me then the difference between protecting a resource like potash, as the government did in 2010 with the denial of the sale of BHP to the Australian firm, and offering half of the available 700 MHz spectrum, another one of our resources, up to outsiders for what will be a cheaper price?
JM: Well, there are different industries at different states of health, growth and capacity to make transitions into more liberalized markets than others. And, we also have broadcast policy rules and other rules as well that from time to time, if you compare one industry to another that they may seem incongruent, but the reality is that different industries have different states of health and strength and capacity to absorb those kinds of market pressures and obviously it’s an ongoing assessment of what would best serve the Canadian economy.
GOB: Do you think there’s any way to open it all up and just say “look if you’re coming into Canada you still have to abide by our Canadian content laws if you’re offering video” when you think about the broadcast side?
JM: We don’t have any plans right now to change the broadcast policy.
GOB: Now, if Verizon or other companies decide not to make an entry into Canada with the auction, what does the government plan to do then? And if Verizon does come or another (foreign) company does come and, say, Bell and Telus want to merge, or Rogers and Shaw – as many Bay Streeters seem to expect at some point – what will you have to say to that? Will that be allowed?
JM: I can’t really comment on a hypothetical reaction to a hypothetical entrant. It’s great for you to write about that and speculate about that but obviously it would be inappropriate for me to speculate about a hypothetical. But your first question, though, is to be answered and if Verizon chooses not to come, our policy still holds and will result in more competition. The auction will still go forward for that fourth block and we’ll see who steps up and what kind of plan they have to deploy that spectrum and serve the Canadian marketplace.
GOB: So no thought to do a Crown corporation like the union has suggested or to back the creation of an MVNE where there would be a single network operator and any companies could provide services on that as they like?
JM: No. I think Peter Nowak had a good blog post on New Zealand’s experience so no, that’s not in the cards for our government.
GOB: How much does the federal government hope to take in from the auction? Do you believe it will be more, or less, with Verizon’s or another outside investor’s involvement?
JM: I don’t know. Whatever revenue may come from the auction, whatever the dynamics of it may emerge, we’re not banking on that money for any particular commitment. Obviously we want the auction to do well, but it’s not something that we can forecast.
GOB: And now I’ll ask you what everyone else has asked you as well: What do you make of this giant PR campaign that has been spinning for the last few weeks, which has drawn you in personally as well?
JM: These are large Canadian firms who are engaged in a campaign to try to alter the government’s policy to try and best-serve their companies’ interests. We have a different responsibility as a government, which is to have an overall policy that serves Canadian consumers with more competition than we now have and so they can engage in a campaign in whatever way they think is effective for their firms and we’ll keep governing the way that we think is the best interests of the country. From time to time we agree. Sometimes we disagree with the big three. We’re comfortable with our policy but for them this is about not wanting competition on the scale of Verizon and they’re trying to deter that. That’s their business decision. We have a broader view of what the role is of public policy in serving the country.
GOB: Are you worried at all about the regional players – Videotron and SaskTel and EastLink maybe not being able to get any 700 MHz spectrum, given the (potential) outside bidders and the big three who are going to be bidding as well?
JM: We’ll see what happens in the auction and we’ll see what happens as a consequence of the auction and we’ll see how the marketplace reacts to that. Also, there’s the 2500 auction down the road and there’s also the Shaw spectrum that’s there as well that we’re looking at. There are other items there that you know very well which will obviously come into play in the months and years ahead. It’s an ever-changing file.
GOB: Are you happy you made the change in ministries now?
JM: Absolutely. I went from Copyright and the Save Local TV campaign to the future of carriage and value for signal debates. I’ve known these files quite well for quite a long time and it’s interesting to be more engaged in policy, that’s for sure.
