Why Wind’s banker blew a gasket

Wind Mobile financier Naguib Sawiris dropped into Hogtown last week and ended up saying uncomplimentary things about the Harper government.

Because our foreign telecom investment rules haven’t changed since his Orascom Telecom Holding (now part of VimpelCom) plowed hundreds of millions of dollars into Wind, Sawiris told the Globe and Mail he was misled by the Tories and “totally” regrets his decision.

“They take our money and leave us to the dogs,” he is quoted as saying, the four-letter word apparently describing certain wireless competitors. And, he vowed, Wind won’t bid in the upcoming 700 MHz spectrum auction unless Ottawa sets aside spectrum for Wind (and presumably other new entrants like Mobilicity, Public Mobile and Videotron) as it did in the 2008 auction.

Telus lawyer Michael Hennessy quite properly branded this blackmail, although there is some truth here: Without some sort of protection – either a set aside or a limit on how much spectrum carriers can buy – new entrants won’t get a millimetre more in frequencies. So why would they participate in the auction?

In fact, some incumbent carriers have been doing a bit of blackmail on their own, warning they won’t be able to extend their next-generation LTE wireless coverage to rural areas if the auction is structured so they don’t get enough 700 MHz spectrum.

Rogers Communications has set up a Web site encouraging the public to lobby MPs not to allow any restrictions on the next auction.

Sawiris is reflecting the impatience of all wireless carriers with the Harper government, which promised to announce new rules for foreign telecom investment in the fall of 2010. Then the government said that because the investment rules could affect who could bid in the spectrum auction it had to examine both rules together. We’re still waiting.

A new paper by the SeaBoard Group, a Montreal-based telecom consultancy, notes – as others in the industry do – that Ottawa has been dithering about investment change for some years. In the mean time wireless is growing so fast that by 2015 communications

facilities will need to deal with five times the traffic handled by Canada’s networks in 2007. “That will take investment,” says the paper. “For the large former monopoly providers [that is Bell, Rogers and Telus], it will be a struggle. For the challengers to those former monopolies [Wind etc.], the task will be Herculean. Removing the impediments to non-Canadian capital would make the task less daunting, and it would lower the costs for all – even the incumbents.”

And its not just wireless companies that are affected, the report says. MTS Allstream wants more investment so it can expand its fibre optic network across the country.

“There is urgency to this issue,” says the report. “We must address the foreign investment question – and soon – because to delay longer would be significantly disruptive to the continued development of competition in Canada’s communications marketplace.”
Industry Minister Christian Paradis owes an explanation.

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Jim Love, Chief Content Officer, IT World Canada
Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of ITWorldCanada.com and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including ITBusiness.ca and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@] soloreporter.com

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