TORONTO – After spending $7 billion over two decades to build what’s become the largest wireless company in Canada, Rogers Communications CEO Ted Rogers said he is more than a little miffed at the lobbying tactics being deployed by one of his business partners.
After noting on a conference call with financial analysts on Tuesday afternoon that Rogers Wireless has had in its 20 years, "losses for 19 and profits for one," the company founder set out in no uncertain terms how he feels about lobbying spearheaded by Videotron to decrease the Quebec media company’s cost of entry to becoming a facilities-based wireless company.
Two weeks ago, as Cartt.ca reported, Quebecor president and CEO Pierre Karl Péladeau gave a speech to the Canadian Club of Ottawa accusing the "triopoly" of Rogers, Bell Mobility and Telus of holding back on development of third generation (3G) networks and the advanced services they can deliver.
Needless to say, Rogers was peeved, especially since Videotron offers wireless service right now in Quebec as an MVNO using the Rogers 3G GSM network.
"I’m outraged about some of the unfair and untrue criticisms of Rogers Wireless by Videotron and some others. I think it’s entirely uncalled for," Rogers said on Tuesday.
(One wonders if perhaps Rogers has expressed these thoughts directly to Quebecor previously. Last week at a Canadian Wireless Telecommunications gathering on the spectrum auction, Quebecor’s vice-president corporate affairs Luc Lavoie went out of his way to praise Rogers and its wireless leadership, saying: "We’re great admirers of Ted Rogers and what he has accomplished." Lavoie directed his commentary at Bell primarily, saying, "any time Bell gets mad, I get suspicious." But we digress… )
With a new wireless spectrum auction coming up, certain telecom players – including Videotron and MTS Allstream, among others – have been lobbying Industry Canada (as we reported here last week at the CWTA day) to alter the rules of the spectrum auction so that the established wireless players are somehow held back from buying up spectrum. Those companies have also pushed forced roaming, where a new facilities-based player would be allowed to place wireless traffic on the networks or Telus, Bell and Rogers while they build their own.
Rogers fumed at the very premise of the ideas.
"For the past more than 20 years, I’ve invested more than seven billion dollars in Rogers Wireless to get to this point where we’re just recently starting to generate returns," he said. "This wasn’t a business that was granted a monopoly like land line telephony where they had guaranteed rate of return. Ours was 100% risk."
Rogers added that allowing a lowball spectrum auction would undermine the industry and would be a subsidy paid for by Canadian taxpayers who are well-served, in his view.
"Anyone can start a Canadian non-facilities based competitor and resell at mutually agreed rates using the facilities of one of the three facilities based carriers. Virgin used Bell’s network. Videotron and 7Eleven use Rogers network. Amp’d uses Telus," he explained, pointing out the level of competition that already exists in the market, which runs with little regulation.
Plus, added Rogers, telecom deregulation and letting market forces work are concepts which Industry Minister Maxime Bernier has been unrelentingly unambiguous about since taking office.
"The Minister of Industry has made it abundantly clear that he stands for telecom markets governed by free market competition without stifling, detailed regulatory bodies interfering," said Rogers.
"Our position is very pro-competition. We want to make it clear that we have no objection at all to the licensing of a fourth facilities-based carrier. If that’s what they want to be, let them build the facilities, provided they pay market rates the way that all the other carriers have to for the spectrum."
And if they do get spectrum, Rogers continued, here should be "strict timetables for the construction of the facilities, over, say, a 30-month time period just as was imposed on Rogers and Bell in relation to our Inukshuk network… We were required to wire up areas, cities, provinces and so on and if we didn’t we would lose the license.
"Just sitting on the spectrum without significant construction until foreign ownership changes and then essentially selling out raw spectrum to AT&T or Verizon for billions of dollars in profits. That’s value that belongs to every Canadian," said Rogers.
As for mandated roaming? While all cellular players do get together to share towers, "Rogers utterly opposes any forced roaming rights for a new facilities based carrier. When we began in 1985, such mandated roaming was never given to us by the government," he said.
"Our objection is two-fold: If a competitor wants to be a facilities-based carrier, they should install their own facilities. Second, there’s the economic problem to Rogers or any other established carrier that if a new facilities base carrier is allowed to roam on the other networks and build up a sizable number of subscribers, using these other carriers’ facilities, it then results in large extra capacity as a result of capital expenditures that we have to make on their behalf."
When the new carrier "finally installs their own facilities, if they ever do, and move their customers off of roaming on Rogers’ network, then we have a lot of stranded capital," added the CEO.
As well, "spectrum and facilities based licenses should be national and not regional, provincial or municipal. That was established back in 1985 and has been a policy that the government has followed."
Videotron, of course, has said it wants spectrum, but only in Quebec.
