DURING A SHORT, Monday morning interview with reporters during a visit to Asia to extoll the virtues of the Canadian ICT sector (and others), Industry Minister Christian Paradis noted he wasn’t exactly pleased with Rogers Communications pending purchase of Shaw Communications’ AWS spectrum.
Shaw bought the spectrum in 2008 during that auction but decided not to build a traditional wireless network after all. As spectrum which was set aside for new wireless entrants, the auction rules said it is not allowed to be purchased by one of the incumbent providers until next year. However, Shaw has already sold an option to Rogers for $50 million, meaning Rogers has paid for the right to be the one to buy the spectrum as soon the five year limit is finished.
Spooked at the prospect of a company the size of Shaw deciding that the Canadian wireless market is too fraught with risk to build, so it’s selling its spectrum, Industry Canada launched a new public proceeding aimed at altering the rules surrounding the spectrum license transfer provisions. The ministry’s ideas have been panned by all industry players, while at the same time word is now leaking out via the Globe and Mail that three wireless newcomers Wind, Mobilicity and Public Mobile are all for sale.
However, when questioned by reporters (Cartt.ca was not aware of the call beforehand but was provided a transcript of the conversation) Paradis showed he wasn’t comfortable with the deal Rogers and Shaw have signed. “Consolidation of course might occur but on the other hand I think we put the best policies in place in order to enhance the fact that we can have a fourth player in each region of the country in terms of competition and more investments,” he said. “The intent of the policy was not to… have these set aside spectrum end in the hands of incumbent. That being said… we decided to launch consultations with the industry for a license transfer and of course now the decisions have to be made. Some decision will have to be made when the five years (expires) in September for 2014. But after these consultations, of course we will set up criteria and… each transfer will have to be compliant with the final criteria.”
New criteria or not, Shaw executives expect their deal with Rogers to get done. Company regulatory chief Jean Brazeau told financial analysts Friday during Shaw’s Q2 conference call that he sees no good reason for any governmental interference. “The agreement we've entered into with Rogers is in full compliance with the license conditions on AWS. Those conditions were debated and were almost four years in the making. The only restriction is for the minister to approve these licenses – and we could sell it to anyone after 2014,” explained Brazeau.
“We're in full compliance (and) changing those rules retroactively – the general comments on the consultations were a consensus around this issue – that this would really fly in the face of the principle of contractual certainty and really devalue the whole AWS spectrum and any future spectrum auction,” he continued. “So I think we understand why the minister is looking into this, but at the end of the day, I think they will comply with the framework of the AWS license regime and the transaction will be approved by the minister.”
– Greg O’Brien
