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Bell: If You Don’t Sell Us the Frequencies, We’ll See That Rural Canada Gets Nothing

Bell this week brought out its saber collection for a little rattling in Ottawa over the Canadian government’s consideration of a plan to set aside certain mobile spectrum for new competitors.

A mobile spectrum auction, expected later this year, will increase the number of 700Mhz frequencies available for wireless communications.

Some of Canada’s largest cell phone companies are well-positioned to outbid the competition, but not if Industry Canada decides it needs to set aside some of the frequencies for an auction among smaller competitors.

BCE, Inc., the parent company of Bell, has little regard for that plan and has now joined Rogers in a lobbying effort for an “open and transparent” sale, which effectively means the highest bidder takes all.

If Canada doesn’t follow Bell’s advice, the company is threatening to withhold advanced mobile Internet services in Canada’s lesser-populated regions.

“An auction for this spectrum that isn’t open and transparent would limit the amount of spectrum available to Bell, forcing a focus on more densely populated centers in order for Bell to compete with new carriers,” the company said in a news release.

In response, Wind Mobile, one of the newest entrants in the Canadian mobile market, said it would sit out of a spectrum auction that favored deep-pocketed incumbents with winner-take-all rules.  In short, it could not afford the prices players like Rogers and Bell will be able to bid for the new frequencies.

Industry Minister Christian Paradis was unwilling to set an exact date or format for the 700MHz spectrum auctions.  Observers suspect if he waits much longer, the auction won’t take place until 2013.

Just three major wireless companies — Bell, Rogers, and Telus, control 94 percent of the Canadian wireless market.

Cell Phone Companies Hoarding Cash/Credit for Spending Blitz on Canadian Spectrum

Phillip Dampier October 13, 2011 Astroturf, Broadband Speed, Canada, Competition, Consumer News, Mobilicity, Public Policy & Gov't, Rogers, Vidéotron, Wind Mobile (Canada), Wireless Broadband Comments Off on Cell Phone Companies Hoarding Cash/Credit for Spending Blitz on Canadian Spectrum

Upcoming wireless spectrum auctions are critically important for some of Canada’s newest players in the cell phone marketplace.  Most are working hard to make sure they have plenty to spend to secure new frequencies for advanced wireless services that will help them remain competitive with larger players.

Globalive Holdings, the parent company of Wind Mobile, has convinced backers to provide hundreds of millions of dollars in financing, so long as all of the money is spent on acquiring wireless spectrum.

Wind’s nearly 400,000 customers will appreciate the additional room for growth, and new customers may keep Wind in mind for advanced 4G networks most Canadian providers intend to build and expand into the new spectrum they acquire at an auction next year.

Much of the funding, estimated to approach nearly a half-billion dollars, is coming from Wind’s parent entities, Egypt-based Orascom Telecom and the European conglomerate VimpelCom that acquired Orascom earlier this year.  Because the Canadian government is expected to set-aside some of the valued 700MHz spectrum exclusively for bidding among new entrants in the market, Wind could walk away a big winner, particularly if other similar-sized competitors Mobilicity and Vidéotron Ltee./Quebecor have trouble raising enough money to remain competitive in the bidding.

As far as Canada’s largest cell companies are concerned, set-asides are unnecessary and they prefer a winner-take-all auction.  Rogers, in particular, has been lobbying hard to convince Canadian officials it needs access to the 700MHz spectrum up for auction to roll out service in rural communities and upgrade networks in larger cities.

Those who feel Canada’s cell phone marketplace is already too concentrated have little sympathy for Rogers’ point of view, and expect an auction free-for-all will mean the largest incumbent players will walk away with everything they can bid on.

Among smaller players, assuming the set-asides are in place, analysts expect Wind will probably secure the most spectrum, but Vidéotron is expected to stay competitive and walk away with at least some frequencies for use in its home province of Quebec.  Big losses among the smaller players could fuel calls for additional mergers and acquisitions among those carriers deemed to have been left behind.

The Canadian government is expected to be the biggest winner of all, netting a potential $3-4 billion from the spectrum sale.

Industry Minister Holds Closed Door Meetings With Big Telecoms And You’re Not Invited

Phillip Dampier August 30, 2011 Bell (Canada), Canada, Editorial & Site News, Net Neutrality, Public Policy & Gov't, Rural Broadband, Telus, Wind Mobile (Canada), Wireless Broadband Comments Off on Industry Minister Holds Closed Door Meetings With Big Telecoms And You’re Not Invited

Industry Minister Christian Paradis just completed nearly two weeks of private meetings with some of Canada’s largest telecommunications companies regarding issues important to the industry, but has not scheduled face time with ordinary Canadian consumers or the public interest consumer groups that represent their interests.

Minister Paradis

Wire Report provided the schedule:

Aug. 16
Cogeco Cable Inc.
Shaw Communications Inc.
Quebecor Media Inc.
Globalive Wireless Management Corp.
Xplornet Communications Inc.
Public Mobile

Aug. 17
EastLink
BCE Inc.
Mobilicity
Telus Communications Co.

Aug. 22
Rogers Communications Inc.
MTS Allstream

Aug. 24
SaskTel

Bloomberg reports the primary topic on the agenda is upcoming spectrum auctions for additional wireless frequencies and loosening restrictions on foreign-ownership rules regarding would-be wireless competitors interested in entering Canada’s cell phone marketplace, which currently has the third-highest prices for mobile-phone services in the world, according to the OECD.

A rules change regarding foreign ownership may open the door...

Canadian telecom providers may not have more than 20 percent of their operations owned or controlled by foreign entities, a percentage that could be adjusted in the coming months.  But while changes in foreign ownership rules may benefit new entrants like Globalive Holdings, which operates Wind Mobile, it could also spell profound changes for millions of Canadians.  Industry analyst Dvai Ghose told Bloomberg he expects any relaxation of foreign-ownership rules may also pave the way for a mega merger of Bell and Telus.

“If you allow foreigners into our market, it becomes much more compelling to say we should allow one Canadian champion,” said Ghose, co-head of Canadian research at Canaccord Genuity.

That “champion” could quickly become Canada’s version of AT&T, dramatically reducing competition and raising prices, especially for captive landline customers who rely on the companies for broadband and landline service.  Telus and Bell currently compete with one another in the wireless market, where they would have an enormous share and combined market power should they be permitted to merge.

That would be a high price to pay for many Canadian consumers who do business with Bell or Telus, especially when contrasted with the fact Wind Mobile has attracted only 271,000 customers as of the end of March 2011.

...to a mega-merger of Bell and Telus.

Unfortunately, consumers are not included in Minister Paradis’ day-planner to share their views of further marketplace consolidation or wireless spectrum reform.  In fact, they don’t even have a right to learn what exactly was discussed during the closed door sessions.

A spokeswoman for Paradis, Pascale Boulay, would only confirm the minister met with 13 companies since Aug. 16, but refused to elaborate on the meetings.

Federal Communications Commission chairman Julius Genachowski tried this approach with some of America’s largest telecommunications companies last summer, holding a series of closed door meetings.  They eventually produced telecommunications policies so watered down, they neutralized Genachowski’s earlier commitments to protect Net Neutrality and foster additional competition.  Will Canada repeat America’s mistake?

Canada’s Cellular Cartel: 3 Wireless Companies Control 94 Percent of the Market

Next time you wonder why you are paying substantially higher cell phone bills than your neighbors abroad, take note: just three cell phone companies control 94 percent of the wireless marketplace in Canada, with more than 23.5 million combined subscribers.  The four other significant carriers have a combined subscriber base of around 1.5 million, hardly worth noticing by the largest three:

Rogers Communications

The telecom giant Rogers controls the largest share of the Canadian wireless market with 9,127,000 subscribers as of the end of June.  Nearly 7.5 million of those customers are on two year contracts and pay an average bill of $70.07 per month.  Prepaid customers pay substantially less for their occasional-use phones: $16.14 a month.  Rogers adds more subscribers than it loses, picking up 591,000 new customers during the first quarter, while losing 456,000 current customers, winning a net gain of 135,000.

Data revenue is becoming increasingly important for Rogers, now constituting 35 percent of earnings for the company’s wireless division.

Bell

Coming in at second place is Bell Canada, with 7,283,000 customers.  Over 5.7 million are on contract, 1.6 million are using Bell prepaid phones.  Bell added just under 38,000 new customers last quarter, the smallest net add among the three largest providers.  The average contract customer pays Bell $63.18 a month; prepaid customers pay $16.88.

Telus Mobility

Telus, western Canada’s largest phone company, sells wireless service across the country and has become the third largest wireless provider with 5.8 million contract customers and 1.2 million prepaid clients.  Together, they pay an average of $58.88 a month.  Telus picked up 94,000 net additions last quarter, which is better than Bell but worse than Rogers.

Everyone Else

Among the rest, Saskatchewan’s phone company Sasktel had managed to reach 568,000 subscribers, mostly in the province, as of late March.  MTS Allstream Inc., a wholly-owned subsidiary of Manitoba Telecom came in with 489,722 customers.  Videotron, Quebec’s biggest cable company, had 210,600 clients, mostly in Quebec.

Among the newest entrants, Wind Mobile, subject to considerable controversy for its foreign financial backing, may one day be a much larger player in Canada’s wireless marketplace, but not today.  It had just 271,000 customers as of March 31st.

Even fewer customers rely on some of Canada’s regional providers, which include companies like Thunder Bay Telephone, Lynx Mobility (co-owned by an aboriginal partner with a mission to serve rural Canada), Calgary-based AirTel, which is popular with oil/gas workers for its “push to talk” service, and Ice Wireless, which is the largest GSM carrier in northern Canada, reaching 70% of the population of Nunavut and the Northwest Territories.

Canada’s largest three providers also own or control several “competitors” that mostly sell prepaid service.  Customers thinking they are escaping the big boys often really are not:

  • Fido is owned by Rogers;
  • Virgin Mobile Canada is owned by Bell;
  • Koodo Mobile is owned by Telus

Capping the Cappers: Putting Limits on How Many Licenses Rogers, Telus and Bell Can Buy

Anthony Lacavera

Large Canadian telecommunications companies like Rogers, Telus, and Bell are loudly protesting a proposal to cap the maximum number of wireless licenses they can beg, borrow, or buy.

The proposal, from Wind Mobile and Quebecor Inc.’s Vidéotron Ltée, would tell some of Canada’s largest telecom companies they cannot buy up every available wireless license that becomes available in the future in an effort to lock out would-be competitors.  Both companies fear that without such a license cap, the deep pockets of larger providers could sustain a wireless cartel to keep mobile competition at bay.

“Competition doesn’t just ‘happen’,” said Wind Mobile’s Anthony Lacavera. “True competition and the long term benefits of competition for Canadians will occur when, and if, our regulatory framework is improved, our access to foreign capital is unhindered and the playing field is leveled to the benefit of Canadians.”

Lacavera’s upstart Wind Mobile has faced incumbent provider-fueled scrutiny over claims of foreign ownership violations in an effort to keep Wind’s discount service out of Canada.  In addition to fending off regulatory challenges, Lacavera is wary of Conservative Party policy towards wireless competition, which he suspects is too shallow and lacks important protections against further marketplace concentration.

The idea of a license limit met with predictable hostility from the three larger incumbents.

On Wednesday, Telus’ chief financial officer rejected the idea out of hand, telling the government they should not be giving advantages to discount carriers and foreign entities over Telus, which he said was more focused on “innovation.”

Wind Mobile

Rogers called a license cap “a slap in the face” to millions of their customers, and Bell pulled an AT&T — without allowing companies like Bell to have the chance to outbid everyone else, Canada will run the “risk of lagging” behind the United States, harm innovation, and deprive the government of much needed auction revenue.

Bell CEO George Cope also warned letting foreign companies into the Canadian market could leave rural Canada with older technology.  At the risk of shooting down his own earlier argument, Cope specifically targeted his remarks at U.S. carriers, who presumably could be among Canada’s future wireless players.  In Cope’s mind, U.S. providers like AT&T would treat Canada as an afterthought.

“If you really believe that if a U.S. carrier had owned Bell at the time we launched HSPA+ (an advanced iteration of 3G), do you really believe Prince Edward Island, that province, would have had HSPA+ before Chicago?” Cope asked. “You’ve got to be kidding me.”

Large incumbent carriers also accused the smaller competing upstarts of simply trying to boost their own value before they sell out.  Telus and Rogers should know — they fought over buying that competition, like Microcell’s Fido, which Rogers eventually acquired in 2004.

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