Canadian Wireless Carriers Spar over 700 MHz Spectrum Auction Rules

Such spectrum is critical to Rogers’ deployment of its next-generation LTE network, said Rob Bruce, president of the cable and wireless arm of Rogers Communications. He said the 700 MHz spectrum offers better in-building penetration and better coverage in rural and remote areas, which is especially important in a country like Canada with low population density.

"Those who have suggested that companies like Rogers shouldn’t have fair and equal access to this spectrum are misguided,” said Bruce, whose company is the nation’s largest wireless provider. “Restrictions on the 700 MHz band auction would be a slap in the face to our nine million wireless customers, who have every right to access a truly national, robust LTE network in both urban and rural markets.”

Such newer wireless players as Globalive and Public Mobile have sought spectrum set-asides or other special rules for new entrants in the 700 MHz auction to spur market competition, as the federal government established in its Advanced Wireless Spectrum (AWS) auction three years ago. But the nation’s three large incumbent wireless providers -- Rogers, Bell Canada and Telus -- are lobbying the government strenuously to avoid a new round of set-asides this time around. “If you look to other sectors with limited or precious resources, our government has a long track record of creating a level playing field for these sectors,” Bruce said. “Why would it take a different approach to the valuable and limited 700 MHz spectrum auction?"

But Robert Depatie, CEO of Videotron, called for absolute restrictions on the spectrum auction. Specifically, Depatie, whose company is the biggest cable operator in Quebec, made the case for an in-band spectrum cap for 700 MHz bidders. He proposed that the government limit any company that already owns low-frequency wireless spectrum in a given region to bidding for just one new spectrum block in the 700 MHz range. That would keep such incumbent wireless powers as Rogers, Bell Canada and Telus from gobbling up more than one block apiece with their deep financial pockets.

The Depatie proposal would permit any company that does not already own low-frequency cellular spectrum in a region to bid for up to two 700 MHz spectrum blocks. So, newer wireless players like Videotron, Globalive, Public Mobile and Wind Mobile would be able to acquire up to twice as many spectrum blocks as larger rivals. Calling it a “fair shake” approach, Depatie said the proposal would offer several advantages over other spectrum proposals that have been advanced: (1) the Videotron proposal would not exclude any company from bidding on spectrum nor guarantee success for any firm. (2) it would not set aside spectrum for any firms and would avoid “any definitional skirmish” over what constitutes a new market entrant.

"The result would be something that everyone -- from wireless carriers to ordinary Canadians -- would be happy to see,” Depatie said. “There would be sustainable competition in the market, with multiple strong players able to offer better service through faster networks with broader geographic coverage."

Bruce also urged the new Conservative Government and its new Minister of Industry, Christian Paradis, to adopt three key principles as a framework for Canada’s digital strategy. Besides the “level playing field,” he said the government should adopt a regulatory regime that rewards and incents companies that build in both urban and rural areas and to make more spectrum available quickly, as the U.S. has done.

Rogers executives also urged the government not to liberalize the rules on foreign investment in Canadian telecom firms at the same time that it puts caps on how much spectrum domestic companies can buy or sets aside spectrum for newer operators. “If you liberalize foreign ownership in Canada, I don’t think you can say to Orange, ‘you can buy all the spectrum you want in Canada’ but Rogers can’t,” said Ken Engelhart, senior vice president-regulatory affairs for Rogers, in remarks after Bruce’s keynote.

But Depatie said even with Videotron’s proposed in-band spectrum caps, “the incumbent cellular carriers would still come out on top.” So he implied that Rogers, Bell and Telus would have little to fear from the idea.

Depatie took some potshots at the Big Three. Calling on Ottawa to “fix the spectral imbalance that favors Rogers, Bell and Telus,” he stressed that the three incumbent carriers still have “almost 140 megahertz of spectrum more than Videotron or any other challenger.” He also emphasized that the three Canadian incumbents together “control much more spectrum” than most other cellular carriers in the world.

Paradis made his first public appearance before the Canadian telecom industry after less than two weeks on the job. Appointed to replace former Industry Minister Tony Clement, who had been working on the rules for the spectrum auction, Paradis offered few specifics about the auction rules or foreign investment limits. In his short keynote, he said the Canadian government is now “evaluating all of the options” and will consult with all of the parties.

But Paradis did raise a few industry eyebrows by suggesting that Canadian government officials might repurpose other existing broadcast spectrum for wireless use. Noting that “the 700 and 2500 frequencies will not meet all demands,” the minister said officials “are also exploring what other frequencies can be made available over the next few years.”