There was a time when Canada looked like it was going to be one of the feistiest nations in the world when it came to wireless competition.
After the 2008 spectrum auction new competitors appeared: Wind Mobile, Public Mobile, Mobilicity, Videotron. Shaw Communications would soon start service. In some parts of the country one could envision at least six facilities-based carriers fighting for subscribers.
Or perhaps because I’m a reporter, who, like my colleagues, thrives on David-vs-Goliath stories, I was blinded to the truth — incumbents Rogers Communications, Bell Mobility and Telus Corp. would only minimally yield to the startups.
April pulled the blinders off. Mobilicity was in trouble.
In the months to come it would try to sell itself to Telus and be rebuffed by the Harper government. Now it is ready to auction off its assets; Telus was allowed to buy Public Mobile; and Wind Mobile’s main financial investor would send signals that it wants out. Shaw had already decided wireless was too expensive to get into.
Only in Quebec, where well-funded cableco Videotron can take on Bell, is a new entrant succeeding in taking significant market share from an incumbent. Eastlink Wireless, which only began service this year, holds promise.
The Big Three still have over 90 per cent of subscribers this year.
Where did the federal strategy go wrong?
For one thing, people took comfort in the fact that at the time of the 2008 auction cellular penetration was about 68 per cent nationally. Lots of room for competitors, some said. But in major cities it was higher, meaning there was less room.
And, predictably, Rogers, Bell and Telus didn’t roll over. To fight them a startup needed big money — for building a new network, for marketing and for absorbing years of losses.
It was telling that Shaw said no. It was even more telling that big foreign carriers who invest around the world said no.
Later in the year Verizon Communications pumped headlines with reports it was looking to buy Wind, or Mobilicity, or both, or would start from scratch, or was waiting until after the January, 2014 auction for spectrum in the 700 MHz band. And in the end it walked away.
Today the Harper government, which in 2006 told the Canadian Radio-television and Telecommunications Commission (CRTC) to rely on market forces to the maximum possible now is saying it will set domestic roaming rates.
Now the brave 2008 strategy of encouraging new entrants is in tatters, resting on three carriers: Wind, Videotron and Eastlink. The Harper government failed to give new entrants more support, particularly in setting limits on how much incumbent carriers could charge new entrants for putting antennas on their towers.
The hope of having a national carrier to challenge the Big Three is gone. Ottawa now hopes to have vigorous competition regionally — like Videotron in Quebec, SaskTel in Saskatchewan, Manitoba Telecom in Manitoba, Eastlink in the Maritimes.
And Wind? No one knows yet. It suffered two blows: First, Ottawa signaled it wouldn’t allow VimpelCom’s offer to buy out Canadian partner Anthony Lacavera, reportedly concerned that the Amsterdam company’s biggest shareholders are Russian. Then it killed Manitoba Telecom’s attempt to sell its Allstream division — which runs a national fibre optic network for business services — to a company called Accelero. Accelero is headed by Wind’s Naguib Sawiris, who led the Canadian startup’s original big investor, Orascom Telecom. Orascom was later bought by VimpelCom. There were reports that after VimpelCom took over Wind, Lacavera and Accelero would make a bid to buy Wind back.
With an apparently unenthusiastic VimpelCom still involved, it raises questions over how much money it will put in for buying spectrum in the 700 MHz auction and expanding Wind’s network. Will it retreat from Alberta and B.C. to Ontario?
It’s true few developed countries have more than four facilities-based carriers. The Harper government may have to shrug and say ‘Well, we tried’”
Blinded by the light indeed.
Also in April:
Another ‘oops, we lost a USB stick.’ Someone at the Investment Industry Regulatory Organization of Canada (IIROC) fumbled away a drive with the personal information of some 52,000 brokerage customers.
The device was password protected, but the data wasn’t encrypted. When will they learn?
Losing a data stick didn’t get Canadians riled, but the Royal Bank of Canada’s attempt to save money by outsourcing some IT jobs to iGate blew up in its face when it was revealed 45 employees would be replaced by temporary foreign workers here.
Days later bank CEO Gord Nixon promised the 45 would be offered local positions.
Meanwhile unpaid interns at Vancouver’s Hootsuite kicked up enough of a storm that the company promised they’d get back pay
Vancouver unveiled a $30 million high tech city plan
Data centre consolidation part 1: Shaw Communications buys Enmax
Data centre consolidation part 2: Primus sells BlackIron to Rogers
I had an opportunity to chat with Lexmark Canada’s leader Todd Hamblin, who talked about the latest moves in enterprise printing
A parliamentary committee rapped social media firms on their privacy policies
Flight simulator boosts Canadian air cadet skills
Federal information commissioner Jennifer Stoddart urged Parliament to put make it obligatory for organizations to give customers notification if data is lost
Spamhause cyber attacker operated from van: Police