News that the U.S. Justice department will move to block AT&T’s proposed acquisition of T-Mobile may resonate on this side of the border. Why? Because there have been persistent reports that Bell Canada’s parent BCE Inc. would like to go to the alter with Telus Communications Co.

We often follow merger trends in the U.S., and if the government there has trouble cutting down the number of competitors in a regulated industry, odds are Ottawa will too.

As our colleagues at Network World U.S. write, Justice has concluded that the proposed merger would significantly damage competition in the wireless industry. It also believes any efficiencies gained by combining AT&T/T-Mobile spectrum would we undone by the damage to consumers by cutting the number of national carriers to three from four.

Up here, financial and industry analysts have been wondering for years when “Belus” will arrive. One argument is they already share so much: Western-based Telus and Eastern-based Bell formed a partnership with their CDMA networks. In 2009 they shared construction of an HSPA network.

Two years earlier, when BCE [TSX, NYSE: BCE] was struggling over its ownership, Telus almost made an offer for Bell before changing its mind.

Then the rationale for merger was the debut of new wireless entrants and increased competition Bell and Telus [TSX: T, T.A; NYSE: TU] would face. How much market share could they afford to lose? Surely they could justify a marriage as a way to save costs in the face of those terrible startups (with the fledgling networks).

Well, several years on and Bell is back as a publicly-traded company and on surer footing. Apparently the Bell-Telus friendship hasn’t extended to partnering on construction of their next-generation LTE networks (although, once their HSPA network was built upgrading to LTE would be relatively easy).

Still, business often believes that bigger is better.

On the other hand, Bell and Telus coming together would drop the number of truly national wireless networks down to two from three. If AT&T can’t sell the benefits of an acquisition in the U.S., how could Bell and Telus sell it here? At the end of last year the two of them combined had roughly 60 per cent of all wireless subscribers.

There will be mergers in the wireless business here. Not all of the new entrants will survive as independents. Bell, Telus (or Rogers) might swallow one of them. But Belus? I don’t think so. The Harper government tilted the rules of the 2008 AWS/PCS spectrum auction to encourage new more wireless competition, not less. And my bet is that Conservatives won't be shaken by moans that Wind Mobile has a big backer in VimpelCom Ltd. so Ottawa shouldn't again set aside spectrum for new entrants in the upcoming 700 MHz spectrum auction, or liberalize foreign telecom ownership regulations. But that’s for another column.


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