Ottawa stands firm on wireless policy

The Harper government has made it clear it won’t change any wireless policy despire pressure from the big three incumbent carriers.

After meeting with all carriers Industry Minister James Moore posted a statement on the Web that the government is unmoved by claims that if Verizon Communications is able to buy a startup here competitors will be put at a great disadvantage.

“Since 2008, our Government has introduced new policies to increase competition in our telecommunications industry,” the statement said.  “The result has been greater choices at lower prices for Canadians.  In fact, our actions have driven down the average cost of wireless services by nearly 20 per cent.

“Our government’s view is that Canadian families work hard for their money, and they want their government to make decisions that will help them keep more of it.  Protecting consumers and increasing competition in the wireless market are priorities for Canadians and our Conservative Government.

“Our policy has been clear and remains unchanged: greater competition and liberalized investment has meant more choices at lower prices for Canadian families.

“Our government’s telecommunications policy was not created overnight.  It is the result of a vigorous consultation that started in 2008 and continues today. All players – industry, consumer groups and everyday Canadians – contributed to this policy.

“We are committed to ensuring the best possible outcomes for Canadian consumers.  We want all regions of Canada to benefit from competitive market forces, which is why more progress must be made.  We will continue to stay the course by ensuring Canadians benefit from a competitive telecommunications industry.”

The statement was posted on Moore’s personal web site, jamesmoore.org,  and not on the Industry Canada site subscribed to by most in the industry.

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This could be seen as a green light to Verizon, which has said it is in discussions here, although only characterized as “an exploratory exercise.” But Fran Shammo, the company’s chief financial officer, also told financial analysts on July 18 that “some of the cautions here are the regulatory environment, a foreign investor coming into the Canadian market and what does that mean?”  Moore’s statement could have cleared away any questions Verizon has about rules changing after it has made an acquisition.
Ken Engelhart, Rogers Communications’ senior vice-president of legal affairs, agreed in an interview this morning the government didn’t allow itself any wiggle room in Moore’s statement. Still, he said is company will “continue to make the point that it makes no sense.”

In an interview this morning Thornhill, Ont.-based telecom consultant Mark Goldberg said he isn’t sure the government has closed the door on any policy changes, including altering the rules of the upcoming 700 MHz spectrum auction. Incumbent carriers Bell Canada, Rogers Communications and Telus Corp. say those rules in particular would give a Verizon-sized competitor unfair advantage.

Officially, Industry Canada says that carriers have to file applications to participate in the auction by Sept. 27. But Goldberg notes that the most recent application form is undated; instead they say applicants should watch the Industry Canada Web site for the final date. He agreed that could be interpreted as meaning the situation is still in flux.

Goldberg also said the government should step back and look at the impact of a number of decisions that have recently been made by Industry Canada and the Canadian Radio-television and Telecommunications Commission (CRTC), who share jurisdiction over telecommunications.

Industry Canada has issued rules over spectrum auctions and, in June, the transfer of spectrum licences. The CRTC earlier this year issued new rules over cellphone contracts. “It’s time for a time-out,” Goldberg said.

Iain Grant, managing director of the Montreal-based SeaBoard Group, a telecommunications consultancy, said Moore’s decision not to change any policies wasn’t unexpected — the Harper government decided in 2007 it wanted more competition in the cellular business, he pointed out.

But he also said the recent headlines sparked by comments from Bell, Rogers and Telus about Verizon’s possible entry in the market here were a bit much considering the U.S. carrier has only given “a nod and a wink” about possibly buying a Canadian carrier.

Grant also wondered why Telus [TSX: T] is making warning noises about Verizon. Telus and the U.S. carrier have long worked together, he said, and would be an obvious – and for Telus lucrative — roaming partner for its American subscribers.

Questions still remain: Will Verizon [NYSE: VZ] actually strike a deal to buy either or both of Wind Mobile and Mobilicity? Will BCE Inc.’s Bell Canada and Telus Corp., who share a wireless network, attempt to merge so they can compete? Would the government allow that? If so, how would Rogers Communications respond?



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