OTTAWA – The federal government said Tuesday that Telus can not buy Mobilicity right now and also pushed out the date of the auction of 700 MHz wireless spectrum to January of 2014.
Mobilicity’s network is built with AWS spectrum that was set aside for new competitors in 2008 and part of the rules of that set aside meant the spectrum could not be transferred to an incumbent for five years, a period which does not expire until February 2014. "Our government has been clear that spectrum set aside for new entrants was not intended to be transferred to incumbents,” said Industry Minister Christian Paradis in a statement released early Tuesday morning.
“We will not waive this condition of licence and will not approve this, or any other, transfer of set-aside spectrum to an incumbent ahead of the five-year limit," he added. "Our government will continue to allow wireless providers access to the spectrum they need to compete and improve services to Canadians. We are seeing Canadian consumers benefit from our policies and we will not allow the sector to move backwards. I will not hesitate to use any and every tool at my disposal to support greater competition in the market."
It’s not yet known what Mobilicity or Telus will do in the face of this, but Telus chief commercial officer Joe Natale told Cartt.ca after his morning keynote at the Canadian Telecom Summit the companies are now assessing their options. “We’re disappointed that the transaction has been denied,” he said. “At the end of the day, Mobilicity approached us with the fact they are in dire financial circumstances and were looking for a way out – and we put together what we thought was a very good deal for Mobilicity customers, employees, their investors where everyone was going to win.
“We’re going to regroup with our team and the Mobilicity team and try to figure out what are our best options are going forward and we’ll pick an option.” When asked if it could still pursue a purchase after the five year moratorium expires on Mobilicity’s spectrum in February of 2014, and provide the company with some sort of operating loan to get it to that point, Natale was non-committal. “There are any number of options available to us. Something in that realm might be an option,” he added.
Readers will remember that Rogers has purchased an option to buy AWS set aside spectrum from Shaw Communications, but the companies promised that deal would not be officially done until the end of the five year wait period, in 2014. The company has also recently signed a deal with Videotron to purchase spectrum the Quebec company owns in Ontario. Those deals, and others, will be very closely scrutinized by the government.
"Our government is clearly committed to encouraging competition in the wireless market so that Canadian families will benefit from cutting-edge technologies and services at affordable prices," said Paradis. "I believe the basis of a strong economy is a competitive marketplace and consumer choice. We will continually review the regulations and policies that apply to the wireless telecommunications sector to promote at least four wireless providers in every region of the country so that Canadian consumers benefit from competition."
The Minister also announced that changes to the policy on spectrum licence transfers are not finished and “will be released in the coming weeks, which followed consultations launched in March 2013. Going forward, proposed spectrum transfers that result in undue spectrum concentration – and therefore diminish competition – will not be permitted. This policy will apply to all commercial mobile spectrum licences, including the 2008 AWS licences,” said the Industry Canada release, which seems to speak directly to incumbents wishing to buy AWS set-aside spectrum.
All applications for licence transfers will be reviewed on a case-by-case basis and decisions will be issued publicly to increase transparency.
Wind Canada CEO Tony Lacavera told Cartt.ca after his luncheon keynote he was very pleased by the minister’s announcement Tuesday morning. “The government did a very good job today of making it abundantly clear that the policy is simple: ‘we’re going to assess any transfer on the basis that we want a fourth carrier in every region and we want every carrier to have sufficient access to LTE spectrum’,” said Lacavera.
So, because of all that, the timing of the 700 MHz auction has been pushed back. The application deadline will now be September 17, 2013, and the auction will commence on January 14, 2014. These new dates will provide companies with additional time to consider today's decisions and finalize their approaches to the auction process. The old dates were June 11 and November 19.
