OTTAWA – The Minister of Industry will receive a blizzard of paper tomorrow as incumbent wireless operators, and those who would like to be one, submit their opinions on how the next auction of wireless spectrum should be run.
The newcomers, led jointly by Quebecor and MTS Allstream, have not backed off their rhetoric at all. They want into the fast-growing wireless market and they don’t want to pay through the nose for entry with a costly purchase of spectrum at auction.
Keying on a few lines from the 2006 Telecom Policy Review Report (the one which the Conservative government has used as something of a bible on the wired telephony side) which said Canada needs more wireless competition, MTS and Quebecor have asked for a rigged auction so that there is some spectrum reserved for newcomers – and perhaps some mandated roaming to help the new service get off the ground.
The companies are concerned that Bell Canada, Telus and Rogers have the wherewithal to buy up all the spectrum and shut any new companies out of wireless altogether. Luc Lavoie, Quebecor’s EVP asks: "If you have enough spectrum to operate and grow your subscriber base (which the wireless companies always say they have in quarterly analyst conference calls), then why would you need more spectrum?"
"To shelve it. To stop someone else from coming in," he said.
Lavoie also added that the types of wireless broadband services available around the world puts our wireless firms to shame and shows that competition is far too cozy in Canada.
"We want to bring in the third generation wireless network and it so happens that the convergence model that we’ve been developing here at Quebecor fits perfectly with that 3G technology which is far more than just your classic, standard cellular phone," he said.
"Look at what we’re doing now. Our video on demand service in Quebec has a base of digital subscribers of about 700,000 – and in 2006 we had 20 million orders on it. So, we’ve developed a model of exclusive content produced by us (through its broadcast station, TVA, and other specialty outlets)… we’ll be in the position to offer Canadian made content (to handsets) immediately upon having our network operational."
When its pointed out that all three wireless providers claim to have their 3G networks and applications in place, Lavoie added: "I think Rogers has got the beginnings of a 3G network, there’s no doubt about that. (But) I think it’s completely false when you’re talking about Bell and Telus. Their 1x (EV-DO) network is not compatible with 3G… It’s not semantics. 3G has got nothing to do with what Telus and Bell are offering… No matter what Bell and Telus say, they absolutely know that it’s not the truth."
So, is there any worry that Industry Minister Maxime Bernier, an affirmed free marketer, will decide not to interfere with the auction in any way? "He is a free marketer who believes in free market forces," notes Lavoie. "Well, believing in free market forces means believing in competition… if free markets mean you give the incumbents the rights to shelve more spectrum so that no more competition will move into the market, this is absolutely wrong."
Especially since the original wireless players were granted their original spectrum for free, added Lavoie, whose cable division, Videotron, offers wireless service in Quebec on the Rogers network as an MVNO.
The free spectrum contention is not exactly true, explained Rogers vice-president, regulatory, Ken Englehart. While there was no auction in the ’80s or early 1990s (due to lack of interest) Rogers (and the other providers) instead pay licensing fees for that spectrum. No license fees are charged on spectrum that was or will be auctioned off.
"We’ve paid half a billion dollars in license fees for that so-called free spectrum," said Englehart. "And I think it’s a bit funny that MTS is saying there’s not enough 3G in Canada – or no 3G in Canada. There’s lots of 3G in Canada – except in Manitoba.
"Manitoba only has it only in Winnipeg and Brandon, so they’ve got some nerve telling the rest of us they’re going to lead the way in 3G deployment."
While Quebecor and MTS have not said what will specifically be in their submissions to Industry Canada, both have been proponents of not only spectrum set-asides on the auction but also forced roaming, where newcomers are allowed to route their traffic over the incumbents towers.
"We think there’s enough money floating around the telecom sector these days where if they want to buy some spectrum, they can just buy it in an open auction. They don’t need any help," said Englehart. "I worry about new entrants just building in the major cities and then say ‘we’re going to leave it to Rogers or Telus to build to the rest of the country while we roam on them’."
Rogers needn’t worry about that, said Lavoie. "We’re going to invest hundreds of millions of dollars … we may be talking about billions of dollars."
And it could certainly extend beyond Quebec. "We haven’t excluded a national play," he added.
But, while MTS and Quebecor are working together on the lobbying front, that’s it. There are no plans to launch a fourth national carrier together with MTS. "There has been no discussion of a joint venture with MTS, none whatsoever," said Lavoie.
