The Harper government has tried to create a delicate balance between the demands of powerful incumbent wireless carriers and the needs of fledgling new entrants in the spectrum auction and foreign telecom ownership rules it announced Wednesday.
The hotly-desired 700 MHz spectrum auction will be held in the first half next year, Industry Minister Christian Paradis said. But against the pleas from newcomers like Wind Mobile, Mobilicity, Public Mobile and Videotron, the government will not set aside spectrum strictly for them.
Instead, spectrum will be reserved for small carriers in 14 bidding regions that will be created. The caps on the amount of spectrum incumbents can buy will be "less intrusive" than the set-aside of fixed spectrum blocks in the 2008 spectrum auction that Wind and other new entrants leveraged to get into the business, Paradis said.
At the same time the government said it will allow foreign companies to buy 100 per cent of Canadian telecom companies that have less than 10 per cent market share. That may help the new entrants afford to bid in the auction and to broaden their networks.
Industry Minister Christian Paradis called it a "winning package for Canadian families," that will extend high speed wireless data service to rural areas and increase competition.
"We had new entrants that came in in 2008," Paradis said, that resulted in more competition and lower wireless prices. "Now we want to sustain competition." Paradis said the government has several goals, including ensuring competition. But one of them, he added, is to ensure that subscribers have a choice of at least four cellular carriers everywhere in the country.
That doesn't mean that the fourth carrier would necessarily be a national carrier. Wind Mobile says it wants to be a national carrier on the scale of Bell or Rogers. Others, like Public Mobile, which operates in Ontario and Quebec, are satisfied to be regional carriers.
On the crucial auction rules, Ottawa will apply caps that it says will enable four or more service providers in each of the 14 bidding regions it creates to obtain spectrum. That will be the rule in next year’s 700 MHz auction and the 2500 MHz auction to be held in 2014.
In the case of the 700 MHz spectrum, Paradis said, a limit on prime spectrum will be imposed on Bell, Rogers and Telus, which, like a set-aside, will effectively reserve prime spectrum for new entrants and regional providers like MTS Allstream and SaskTel.
Two of the new entrants had markedly different reactions to the auction rules. Wind Mobile chairman Anthony Lacavera said he is very unhappy with the structure, saying it won’t allow new entrants to buy enough bandwidth to compete robustly with the incumbents. “We still can’t compete on a level playing field,” he complained.
The rules will force new entrants to merge, he said, because their future is threatened. In addition, the auction rules will impair the ability of new entrants to find new investors he said, despite the proposed foreign ownership changes which he welcomes.