Telus claims Videotron subsidiary propped up to get western Canadian 5G licenses
By Ahmad Hathout
TORONTO – Telus argued in federal court earlier today a Videotron subsidiary in western Canada was propped up to qualify it for a slice of 5G spectrum outside of its home territory.
Fibrenoire, the subsidiary used by Videotron to qualify for a piece of 3.5 GHz spectrum that was set-aside for smaller bidders last summer, was not actively providing telecommunications services when it won the licenses that will allow the Quebec-based telecom to set up mobile wireless infrastructure in British Columbia, Alberta and Manitoba, Telus told the court.
Fibrenoire provides fiber services to businesses, according to its website.
Lawyers for Telus argued documentation requirements from Innovation Canada (ISED), which manages federal spectrum resources, about Videotron’s need to show proof in western Canada of “active” customers, a retail distribution network, and how many subscribers it has “serves a role in the evaluation of whether Videotron was eligible.
“If, as the respondents claim, Fibrenoire did not need to already be actively soliciting business and actively providing it in western Canada, why would ISED’s published requirements include proof of services being offered…in the relevant area? Why would ISED ask for proof of a network for sales and distribution? Why would the auction documents say there needs to be proof of how the services are being delivered, if as Videotron says it doesn’t matter how they were delivered…? And would ISED have required proof of the number of subscribers if, as the attorney general now says, only one customer was needed?”
The lawyer for the attorney general, which represents ISED, said there might be confusion about the actual requirements to qualify for the licenses and the extra information the minister of Innovation Canada wanted to see to evaluate applications. The attorney general also said Telus is arguing semantics and indicated there was no minimum threshold to provide services to qualify for the licenses.
But lawyers for Telus argued the extra information was a logical extension of ISED’s evaluation of Videotron’s eligibility.
Patrick Ouellet, lead lawyer for Videotron, argued Telus has failed to make its case that it did not qualify and that it is relying heavily on “ambiguities” in the criteria language. He claimed Telus is looking to stave off competition in its home region.
Telus, which was joined by Bell in the original August complaint, reiterated a claim that it paid four times more per unit of spectrum than Videotron during the auction, which the Vancouver-based company said put it at a competitive disadvantage. The federal government netted roughly $9 billion from the auction.
Telus filed the Federal Court challenge on the basis it believes ISED made a mistake in granting the licenses based on its own criteria. Their case turns on the wording in section 6.1 of the auction framework, which states that eligible set-aside spectrum winners are those that are facilities-based providers that are not national, but actively provide telecommunications services to the general public in the areas in which they bid. They focus much of the legal argument on “actively provides” and “to the general public”.
Much of today’s virtual hearing displayed the same arguments heard in oral arguments or seen in written submissions, as the hearing comes off a decision by the court to deny a Telus request to force Innovation Canada to suspend giving the licenses to Videotron.
In the October hearing, both Telus and Videotron went back and forth on the market impact if the latter is given the licenses. Telus argued the alleged discount Videotron received on its spectrum purchase would give it market-distorting power in its backyard, while Videotron said Telus wants to delay competition it did not see coming.
Telus raised the fact that Rogers and Bell have a pre-existing chunk of the spectrum licenses from before the auction – under the Inukshuk Partnership – suggesting another player (Videotron) that it believes is undeserving of the licenses would further harm the Vancouver telecom.
