Shaw says it’s a must if the government truly wants competition
OTTAWA – The large incumbent wireless operators and their smaller rivals continue to spar over proposed 600 MHz spectrum licensing rules in reply comments to Innovation, Science and Economic Development’s (ISED) consultation. There are several sticking points over ISED’s pro-competitive ideas but the most contentious revolve around the provision to set aside spectrum for companies which aren’t Bell, Rogers or Telus.
Rogers and Telus remain convinced that setting aside spectrum for the regional wireless players isn’t the right approach. (Bell Canada’s reply comments weren’t made available at the time of writing.) Competitors such as Shaw Communications (owners of Freedom Mobile), on the other hand, argue setting aside a healthy chunk of the band is the only way the government of Canada can ensure sustainable wireless competition.
In their reply comments, both Rogers and Telus highlight the negative impacts from set asides. Whether it’s Telus describing them as “unjustified subsidies that will continue to enrich family-controlled companies,” or Rogers lamenting the competition, affordability, infrastructure investment and rural deployment impacts, they don’t like them.
The two companies tell ISED that if it’s going to stick with a set aside, then it should be a maximum of 20 MHz. If a competitor wants more than it should have to bid on the open blocks, they note. Rogers adds any set aside should be combined with a cap of 20 MHz. Without such an additional measure, it’s likely the 600 MHz band will end up in the hands of a few providers.
Rogers even takes a swipe at Bell and Telus in its reply, noting that the spectrum set asides and caps over the past decade have only served to favour them. The company adds that because the two companies run their wireless network together and combine their spectrum into a single network, they can minimize the impact of ISED’s spectrum caps.
“The playing field must be re-balanced to foster sustainable competition in the future,” – Rogers Communications
“The playing field must be re-balanced to foster sustainable competition in the future,” argues Rogers in its submission.
Telus offers set aside alternatives in its reply. Adopting a 50 MHz cap of all sub-GHz spectrum would effectively create a set aside of 30 MHz to 40 MHz in all markets for all regional wireless carriers. It says a one-size-fits-all approach to set aside bidding eligibility would also be more fair. Providers with less than 45 MHz of sub-GHz spectrum in a region would all be treated the same and they’d be “allowed to bid on the set-aside in that region so as to address the sub-GHz spectrum deficiencies of all deficient providers.”
Noting that it became the third national carrier without any sub-GHz spectrum in 75% of the country and without mandated roaming and mandated tower sharing and only bolstering its low frequency holdings in the 2014 700 MHz auction, Telus believes it should receive the same treatment as the other regional wireless operators.
“The proposed rules are unfair and ignore the imbalance in sub-GHz holdings between the national providers themselves because of their differing lineages.” – Telus
“There is no logical reason that Telus should not be given the same privileged access to sub-GHz broadband spectrum in these regions as the regional providers. The proposed rules are unfair and ignore the imbalance in sub-GHz holdings between the national providers themselves because of their differing lineages,” it argues.
Shaw, whose Freedom Mobile subsidiary stands to benefit from set aside spectrum, contends that a more competitive wireless market is being upheld by competitor access to sufficient low-frequency spectrum such as the 600 MHz band. Because of its propagation and penetration characteristics, low frequency spectrum such as this is an essential element to building a network that can travel long distances and into buildings.
“It is therefore considered to be the foundation of any mobile network, not only in the early stages of build-out, but also for timely and cost-effective expansion and augmentation of the network,” the company’s submission says.
While the Big Three rail against a set aside, Shaw argues that it should remain a critical element of the policy because without it, the Big Three would be able to “relegate new competitors to the sidelines.”
“This would destroy the prospects for a truly competitive wireless market that is capable of meeting the evolving and escalating needs of Canadians. A substantial set-aside is the only protection against this outcome. It will help break the status quo and end the game where the Big Three win and Canadians lose.” – Jay Mehr, Shaw Communications
“If the Big Three have the chance to block strong competitors from the market, they will,” Jay Mehr, president at Shaw, said in a news release. “This would destroy the prospects for a truly competitive wireless market that is capable of meeting the evolving and escalating needs of Canadians. A substantial set-aside is the only protection against this outcome. It will help break the status quo and end the game where the Big Three win and Canadians lose.”
In its November 3 reply comments, the company says if ISED remains true to its proposals and supports sustainable facilities-based competition through a set aside, “this will yield many billions of dollars in consumer and economic benefits, including lower prices for more valuable services, more innovation and digital adoption, as well as heightened entrepreneurial activity and other forms of economic development.”
While ISED has proposed a 30 MHz set aside, Shaw and other competitors argue it should be increased to 40 MHz. University of Maryland economic professor Peter Cramton, in a supporting report for Shaw, notes that a set-aside of 40 MHz is “the best assurance that new competitors will be put on the most even footing possible with the incumbents.”
Shaw takes issue with a Telus suggestion that it doesn’t need low frequency spectrum based on spectrum utilization rates. This is the wrong way to look at the situation, says Shaw noting that if this were the case, then Telus wouldn’t need any more low frequency spectrum either.
“Shaw notes that AT&T and Verizon serve more than twelve times the number of subscribers that each of Rogers, Bell and Telus serve using approximately equivalent amounts of low-frequency spectrum. Using Telus’ flawed logic, if AT&T and Verizon can serve twelve times the subscriber base using similar amounts of low-frequency spectrum, then Telus definitely does not need any more low-frequency spectrum,” the company argues.
Ice Wireless, the upstart mobile operator affiliated with Iristel which serves the far north, weighed in on the set aside and bidding eligibility rules. According to Ice, Bell’s suggestion that the set aside in the North be removed, should be rejected. Just because the 700 MHz northern licence has yet to be bought doesn’t mean wireless operators in the North don’t want the licence. It’s just that they can’t afford it because the opening bid prices are too high.
The company also takes issue with suggestions that ISED restrict bidder eligibility to those that are wireless facilities-based carriers. Ice says adopting this type of proposal would be detrimental to competition.
“It would prevent existing facilities-based carriers who do not currently offer wireless services from diversifying their service offerings,” the company argues. “It would prevent existing wireless service providers from expanding beyond their current service areas.”
