By Denis Carmel
OTTAWA – In a letter sent to François-Philippe Champagne, Minister of Innovation, Science and Industry (IC), on August 13, Videotron CEO, Pierre-Karl Péladeau responded to claims made by Bell Canada Enterprises (BCE) CEO Mirko Bibic in an interview on BNN Bloomberg (owned by BCE) that Videotron should not have been eligible to bid on set-aside wireless spectrum in the 3500 MHz auction, the results of which were announced on July 29.
IC set aside portions of spectrum in the last few auctions that the larger wireless players (Bell, Telus and Rogers) could not bid on, to try to stimulate competition.
In the BNN interview, “Mr. Bibic accused Videotron of taking advantage of allegedly lax rules for the 3500 MHz spectrum auction ended on July 23 by supposedly buying at a discount a portion of the spectrum set aside by the federal government for new regional competitors such as Videotron,” the letter, obtained by Cartt.ca, said.
The Péladeau letter references the Minister’s August 11 response to a complaint that Videotron was not eligible, where he states “ISED determined that Videotron was eligible to bid on set-aside spectrum licences in these service areas in accordance with the Framework.”
Bibic, however, implied Videotron is a dominant player, not a mere regional player. “The way the auction was designed basically handed $2.3 billion in taxpayer money to Quebecor based on the differential between the prices the national players paid and the prices that they paid for the same spectrum,” he said in the interview. Cartt.ca also notes because Shaw decided not to participate in the auction, Videotron probably paid even less for the spectrum it won.
Péladeau responded in his letter, stating: “The need for spectrum set-aside in Canada cannot be seriously questioned when one considers that the three incumbents still hold over 90% of the wireless market, and that BCE’s market capitalization (nearly $58 billion) is more than seven times that of Quebecor (nearly $8 billion).”
We also note Bibic, in his interview, criticized the government auctions policy, which ensures maximum returns to government, but at the same time increases the company’s costs, impacting the rates of the service for consumers. “You can’t on the one hand keep driving, from a public policy perspective, keep asking for prices to be lower, and lower and lower, which actually is a laudable goal; but at the same time, [they] designed an auction that’s going to make that very, very difficult,” Bibic said.
He is probably trying to preempt the possible temptation from political parties to respond with the assumed public’s perception that Canadians pay too much for wireless services, as the Liberals did in the previous election.
On that note, Minister Champagne recently issued an update on the Government’s efforts to reduce prices for wireless services, on July 30.
“Over two years, the three major wireless providers and their flanker brands, which represent 90% of the national market, are expected to offer plans in the 2 GB to 6 GB range that are 25% cheaper than the established benchmarks. If they do not meet this goal, the government will look to other regulatory tools to further increase competition in the marketplace and help reduce prices,” Champagne’s release stated.
Finally, Péladeau reminded us “Bell itself has repeatedly acquired very valuable spectrum either for free or for a pittance.”
- 1985–1989: cellular band – 25 MHz of premium low-frequency spectrum, obtained free of charge
- 1995: PCS band – 10 MHz of premium medium-frequency spectrum—obtained free of charge
- 2015:2500 MHz band—fixed wireless licences originally obtained for free by Inukshuk Internet converted to mobile wireless licences at no cost—value in excess of $300 million based on 2015 auction prices
- 2021:3500 MHz band—fixed wireless licences originally acquired by Bell for $38 million converted to mobile wireless licences at no cost—value in excess of $3 billion based on 2021 auction prices.
Carrt.ca is sure the two will continue sparring in the future.
