 |
Enraged, small Canadian cellphone players may stage boycott
 |
The Canadian Press
MONTREAL - Wind Mobile and Public Mobile — two of Canada's smallest cellphone companies — are threatening to sit out the next federal auction of radio waves needed to expand their wireless networks if space isn't set aside for new players like themselves.
"We're not suicidal," Wind Mobile's Anthony Lacavera said Monday.
"We're not going to go out and try to bid on something we have zero chance of winning."
Lacavera said smaller cellphone companies like his own will be outbid by established players like Rogers (TSX:RCI-B.TO - News), Bell (TSX:BCE.TO - News) and Telus (TSX:T), which won't help competition in the wireless industry.
Wind Mobile needs the new radio frequencies to build a faster, more advanced wireless network that uses Long-Term Evolution (LTE) technology and handles the latest smartphones, said Lacavera, chairman and CEO.
Federal Industry Minister Christian Paradis is expected in the coming weeks to announce rules for the auction of the 700-megahertz band, known as the "beach front property" of the airwaves for its reach.
The new spectrum has the ability to allow cellphone calls in elevators, deep in underground parking lots in big cities and in basements and attics in suburban areas. The frequencies, made available by the switch to digital television signals, also provide better and more affordable coverage in rural Canada because fewer cellphone towers are needed to provide coverage.
Bruce Kirby, vice-president of strategy and business development for Public Mobile, said if the new cellphone companies can't win some of the new radio spectrum, they won't be able to expand into rural Canada.
"If the rules are structured in a way that you can't reasonably compete and have a fair chance of winning spectrum, it's not worth spending the money to go into it," Kirby said.
"What we won't be able to do is build rural areas. You will end up being constrained in terms of the size of the market that you can effectively address."
Rural Canada won't have the same level of competition without radio waves being set aside for new players, Kirby said from Toronto.
"Without that competition, Bell, Rogers and Telus will never even contemplate offering smaller markets and rural areas the kind of plans they now offer precisely where the new entrants compete against them," he said of big market competition.
The auction of the spectrum isn't expected until late this year or 2013, given the time it will take for the government to organize the auction and for wireless companies to get ready and secure financing.
In 2008, the federal government set aside radio spectrum for newcomers opening up Canada's cellphone industry to more competition and raising more than $4 billion for federal coffers.
The auction saw the debut of Wind Mobile, Public Mobile, Mobilicity and Quebec-based Videotron (TSX:QBR-B.TO - News) all launch into the cellphone market.
Kirby said foreign ownership restrictions should be removed on all telecom companies, but as a first step it should be removed from smaller companies with a 10 per cent or less market share.
"By far the worst thing the government can do is say it's too complicated so we're not going to do it for anybody until we can solve it for everybody."
Rogers has said it's opposed to any radio waves being set aside for the new players and Telus has proposed spectrum caps for the next auction.
Telecom analyst Iain Grant said competition is restricted to large cities because that's where the new cellphone players and the alternative brands established by Rogers, Bell and Telus that compete against them are located.
Grant said rules for both the auction and foreign ownership of telecom companies need to be settled at the same time by the federal government.
"If we lessen the restrictions on foreign investment, more Canadians will feel the benefit of competition," said Grant, managing director of the Seaboard Group Inc.
"If we have foreign investment, then the problems that the new entrants may have in mustering capital go away," he said.
In 2010, the Conservative government pledged to open up foreign ownership in the telecom industry.
Ottawa has already outlined three options on easing foreign ownership restrictions — removing all restrictions, increasing the limit of foreign investment above the current direct and indirect investment total of 46.7 per cent to 49 per cent, or allow non-Canadians to own 100 per cent of telecom companies that have a 10 per cent market share or less.
596 page views
|
|
|
|