Canada’s Minister of Industry announced a number of initiatives intended to increase competition across Canada’s mobile industry that is dominated by a trio of operators. The initiatives look to settle issues regarding rules for upcoming spectrum auctions, foreign ownership regulations and tower siting.
The Canadian government noted in its report that incumbent operators, which include dominate players Rogers Wireless, Telus Mobility and Bell Canada, all preferred that the legacy rules regarding foreign ownership remain in place and that future spectrum auctions be open and without restrictions to all players. However, with those three players currently controlling a vast majority of the market, Canada’s Minister of Industry decided on changes.
Christian Paradis, Canada’a Minister of Industry, unveiled an amendment to Canada’s Telecommunications Act lifting foreign investment restrictions for telecom companies that hold less than 10% market share of the total Canadian telecom market.
“This change will promote competition by improving access to capital,” the government agency explained. “In order to encourage long-term investment in Canada’s telecommunications industry, companies that are successful in growing their market shares in excess of 10% of total Canadian telecommunications market revenues other than by way of merger or acquisitions will continue to be exempt from the restrictions.”
The decision would seem to answer concerns voiced over ownership control of Globalive Wireless, which following its acquisition of 1.7/2.1 GHz spectrum in 2008 and attempts to launch service, was nearly shut down in late 2009 after Canada’s regulatory body ruled the company’s ownership structure did not meet government requirements. Globalive is majority owned by Egyptian-based mobile operator Orascom Telecommunications, which paid $442 million for its spectrum licenses. Globalive eventually won approval to offer services under the “Wind” brand.
Paradis also said the government will apply caps for its upcoming spectrum auctions of airwaves in the 700 MHz and 2.5 GHz band designed to guarantee new competitors and that incumbent operators have access to the airwaves up for bid. The caps will place a limit on “prime” spectrum to incumbent operators that is expected to reserve those licenses for new entrants into the space. The government also noted that the 700 MHz auction is expected to be held in early 2013, with the 2.5 GHz auction to follow within a year.
“In the case of the 700 MHz spectrum, a limit on prime spectrum will be imposed on incumbents, which, like a set-aside, will effectively reserve prime spectrum for new entrants and regional providers,” Industry Canada noted. “Unlike a set-aside, the measures will not require Industry Canada to identify specific blocks of spectrum, allowing companies to bid according to their business plans.”
This proposal seems to mirror one proffered by Montreal-based Videotron, which is owned by telecommunications giant Quebecor Media Inc. Videotron President and CEO Robert Depatie told attendees at last year’s Canadian Telecom Summit in Toronto that the company was in favor of rules the prevented current lower frequency holders from acquiring more than one new 700 MHz license. In addition, any provider that does not currently own spectrum in the lower bands would be allowed to purchase up to two new spectrum blocks at 700 MHz. Videotron currently operates its wireless network using 1.7/2.1 GHz spectrum licenses it acquired in 2008 for more than $550 million.
The government also said it will apply “specific measures” for its planned 700 MHz spectrum auction “to see that rural Canadians will have access to the same advanced services as everyone else in a timely manner.” The propagation characteristics of the 700 MHz spectrum band are seen as ideal for providing mobile broadband coverage to the vast expanses of Canada outside of city centers.
The new regulations will require companies that control two or more blocks of paired spectrum in the 70 MHz band to cover 90% of the country’s population with their “current high-speed coverage” within five years and 97% within seven years of being granted the licenses. The government also said it would enforce general rollout timelines to both the 700 MHz and 2.5 GHz spectrum licenses ranging between 20% and 50% population coverage within a 10-year period.
A number of incumbent providers have said they would focus their efforts on building out rural markets with the 700 MHz spectrum should they be allowed to gain unfettered access to those licenses.
The Canadian government said it would also set aside a portion of the 700 MHz spectrum for public safety, which it noted was similar to a decision made by the Federal Communications Commission in the United States and would help foster cross-border interoperability between public safety agencies.
As for the physical infrastructure, the Canadian government said it will “improve and extend” current policies on roaming and tower sharing to bolster competition among wireless carrier, as well as “facilitate agreements between companies to slow the proliferation of new cellphone towers.”
Canada attempt to infuse competition in the space in 2008 through the auction of 1.7/2.1 GHz spectrum bands resulted in a handful of new entrants that have so far focused their efforts in large, metropolitan areas of the country. Paradis noted that the 2008 auction resulted in a 10% decrease in the price paid for mobile service by Canadians.
“The Harper Government understands that Canadian families work hard for their money and that they want their government to make decisions that will help them keep more of it,” said Paradis. “The measures I am outlining today will ensure the timely availability of world-class wireless services at low prices for Canadian families, including those in rural areas.”
Bored? Why not follow me on Twitter?
