THE ARGUMENTS FILED yesterday with Industry Canada on each side of the advanced wireless spectrum auction debate haven’t changed in a month, but circumstances have.
Reply comments on the spectrum auction framework were due into the ministry yesterday. As most will recall, the established players want an unfettered auction for new spectrum that will enable all sorts of new applications and services beyond just voice while potential newcomers want it good and fettered. The fight is still the same.
The three incumbents, Bell Canada, Rogers Communications and Telus, all argue the same thing as they did 36 days ago: That an open auction is the only way to go and that potential rules such as spectrum set asides, caps and mandated roaming distorts the market, costs taxpayers and would force the shareholders of the three incumbents to bear an unfair burden since they are the ones who took the risks and spent the billions on building the wireless industry in Canada.
Those trying to break into the wireless market are led by the two biggest firms, MTS Allstream and Quebecor Media who still say that without some kinds of limits or new rules placed on the big three, there’s no chance for a new wireless operator to survive, or even launch. The incumbents are the ones who can afford to spend the multi-millions to buy up all the spectrum giving newcomers no chance to build a business.
The biggest difference this time are what Telus CEO Darren Entwistle had to say over the five to six days where his company thought it would make a bid to purchase Bell Canada. Basically, he said he would accept auction rules such as those mentioned above as a condition on the purchase of Bell by Telus.
As Quebecor noted in its submission, "(t)he mere hypothesis, which is definitely not far fetched, that there can be a merger of Telus and Bell Canada should be more than sufficient for the Department to take action now and move forward as quickly as possible to initiate the process for the upcoming auctions with a spectrum set aside to ensure new entry."
Further, said QMI, Entwistle "has publicly acknowledged that a spectrum set aside would be required to ensure the entry of a new third mobile carrier in Canada, should the Telus/Bell merger become a reality, and that this new carrier could in fact be comprised of many new regional entrants across the country."
While Telus vice-president wireless, broadband and content policy Michael Hennessy told Cartt.ca that the aborted bid for Bell should have no bearing on the upcoming auction as Entwistle’s acceptance of auction regulation was contingent on the vision of a combined national telco, the Rogers submission had this to say:
"(R)ecent announcements by Telus Corp. about a possible acquisition of Bell Canada should in no way change the need for any intervention in the auction. No doubt the Competition Bureau will conduct a full assessment of such a merger, if it was to occur, and any steps proposed by Telus to revise auction rules would be premature."
And while the three incumbents look to stay structurally the same for now, one wonders if the brief change in tactics by Telus didn’t soften up the Ottawa decision-makers in favour of an altered auction.
Rogers also submitted a new study refuting what many have said about wireless rates in Canada. Mainly that they’re too high. The new report from Rogers, done by U.S. firm Analysys, says that "talk is cheap in Canada" when compared to other countries, which is in contrast to other reports citing the opposite.
In most cases, says the report, a Rogers subscriber pays 29% to 35% less in Canada for their wireless service, than if they bought the same service in the United States. For high usage customers (1,050 minutes per month or more), though, the monthly bill at Rogers is still 16% higher than the U.S. average.
MTS Allstream, of course, had its own research, reiterating Canadian wireless rates are far too high when compared to the rest of the world.
The only bit of potential movement, and it’s not a big move, is where the Rogers submission points out the difference between a spectrum cap and an auction cap.
"(A)uction caps are less distortionary than spectrum set-asides since they still force carriers to pay a comparable price for the spectrum they obtain and they do not encourage uneconomic entry and speculation to the same extend as spectrum set-asides," it says.
"We exist in a spectrum ecosystem and that’s not shaped necessarily by Rogers Wireless or what happens in Canada, it’s actually North American," said Rogers Wireless president Rob Bruce, in an interview today with Cartt.ca. "For handsets and gear, we’ve actually got to be on the same frequencies as the U.S. or otherwise we lose all the economies of scale of being able to buy those same handsets… if we got shut out of getting spectrum, they’d effectively be shutting us out of the ecosystem that we need to be a part of."
For more on the other point of view, follow the links to our recent interviews with MTS Allstream’s chief regulatory officer Chris Peirce and Videotron president and CEO Robert Dépatie.
The last word – for now – can go to Telus, which opened their reply comments with a pithy little paragraph that takes a swing back at Videotron and its size and influence.
"One thing both Telus and Quebecor agree on; AWS is not simply about wireless phone service. AWS represents an alternative information and entertainment content distribution platform. Small wonder that cable companies want to restrict entry by carriers like Telus into that line of business," wrote Hennessy. "However no matter how many ads Quebecor runs in their newspaper empire about wireless prices, a simple truth remain: wireless prices keep declining year over year while cable bills just keep going up."
