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Ottawa moving quickly to finalize wireless rules

Industry Minister Christian Paradis announced in March, 2013, that Ottawa is reviewing its policy on wireless-licence transfers – an indication that he could block major carriers from acquiring spectrum from wireless newcomers.


Industry Minister Christian Paradis will move swiftly to finalize rules that will govern the transfer of wireless licences between telecom companies and could reveal those new regulations as soon as May.

Mr. Paradis took the industry by surprise last month when he announced that Ottawa is reviewing its policy on wireless-licence transfers – an indication that he could block major carriers from acquiring spectrum from wireless upstarts. Spectrum refers to the radio waves that carriers use to provide cellular service. It is a public resource that is considered the very lifeblood of the wireless industry. As a result, the stakes of this review are high for both carriers and consumers.

By all indications, Ottawa's goal of ensuring at least four competitors in every market is on the brink of collapse. New entrants such as Wind Mobile, Mobilicity and Public Mobile are financially strapped and have been put up for sale. Sources have said that the big three incumbents are potential bidders for Wind, while Telus Corp. is also in talks to acquire Mobilicity.

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Separately, Rogers Communications Inc. has struck an "option" deal to eventually acquire unused spectrum from Shaw Communications Inc. Given that spectrum assets are finite, critics say these potential transactions could limit competition.

"Our government recognizes that new competitors require sufficient spectrum and is committed to providing access to spectrum for at least four providers in each region," Industry Canada told The Globe and Mail.

Although carriers have already urged Mr. Paradis to avoid introducing heavy-handed regulations, final comments are due May 3. "Our government intends to finalize the approach shortly thereafter."

For now, Industry Canada is declining comment on new entrants being in play and the Rogers-Shaw option deal.

Still, sources say Mr. Paradis initiated the licence-transfer review after learning about those developments. His objective is to ensure that any new rules are firmly in place long before a federal prohibition on incumbents purchasing new-entrant wireless licences expires next year. Public Mobile is the only new-entrant carrier that is excluded from that ban because of the type of spectrum it purchased in 2008.

Already, the prospect of fewer competitors is sparking a backlash from consumer groups over fears that wireless prices could rise after years of declines. On Friday, the Public Interest Advocacy Centre and the Consumers' Association of Canada urged Mr. Paradis to block incumbents from buying new-entrant spectrum. "Choice in the cellphone market seems doomed," said John Lawford, executive director of PIAC.

Advocacy group, meanwhile, called on Mr. Paradis to take "bold action" to ensure the survival of new-entrant carriers to preserve consumer choice.

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"We believe Industry Canada will do all it can to ensure sustainability of a fourth facilities-based carrier in each market," wrote Greg MacDonald, an analyst with Macquarie Capital Markets Canada Ltd., in a note to clients. "The rub is that the current regulatory options are still less than likely to achieve this goal."

Mr. MacDonald argues that Ottawa's upcoming decision on spectrum-licence transfers will be pivotal.

"We believe the consultation will convince the government to limit incumbent spectrum consolidation to near or at the current 85-per-cent level, which may prompt new-entrant consolidation and improve willingness of foreign carriers to acquire, or Quebecor to [engage in a joint venture] with, the resulting entity."

Mr. Paradis, meanwhile, has taken other steps recently to ensure the survival of a fourth national carrier, including unveiling stricter rules that push carriers to share cell towers and toughening up the requirement to provide domestic roaming on their networks to competitors.

"The only major near-term lever is spectrum transferability," Mr. MacDonald said. "If this or recent roaming and tower-sharing rule announcements do not lead to a sustainable fourth carrier, we think the CRTC may look to be more interventionist on setting tariffs for roaming and tower-sharing."

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