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Government reportedly ready to shun TELUS from 2500Mhz spectrum auction if they continue to pursue Mobilicity

telus

The 2500Mhz spectrum auction is set to begin April 14th, 2015 and a new report in the Globe says that TELUS might be shunned from participating if they continue its path to acquire Mobilicity.

Mobilicity has been in bankruptcy protection for the past number of months and recently auctioned off its assets, which includes 10 spectrum licenses and 165,000 subscribers. Mobilicity’s Chief Restructuring Officer William Aziz said last week that “six organizations submitted participating materials and five bids were received,” but it was TELUS’ $350 million offer deemed “to be an acceptable transaction.”

TELUS’ quest to acquire Mobilicity has been denied twice by the government and many believe deal is “dead on arrival.” The main reason is that the AWS spectrum that Mobilicity purchased in 2008 was set aside to inspire new wireless competition in Canada and should not be sold off to a larger wireless player.

When Industry Canada shut down TELUS’ first proposed $380 million buyout last June, Industry Minister James Moore stated that the “spectrum set aside for new entrants was not intended to be transferred to incumbents. We will not waive this condition of licence and will not approve this, or any other, transfer of set-aside spectrum to an incumbent ahead of the five-year limit.”

The expiry of the moratorium on the transfer of Mobilicity’s spectrum licences expired in February and Mobilicity believes selling to TELUS “will not affect competition in the Canadian wireless sector, satisfies the criteria considered by Industry Canada.”

The Globe’s senior government sources say that “If TELUS doesn’t drop efforts to acquire spectrum set aside for new entrants, the Harper government is prepared to change the rules of the upcoming wireless auction that could effectively bar TELUS or any incumbent from acquiring that spectrum… If companies like Telus think the government will allow them to stockpile spectrum that was set aside for a fourth player, and access new spectrum in future spectrum auctions, they are kidding themselves.”

If the report is accurate, this is “unprecedented action” and will definitely send a message that the government is serious about “fostering competition among wireless providers.” The 2500Mhz spectrum can assist carriers in reaching rural areas and also enhance its LTE (Long-Term Evolution) network.

The Industry Minister stated yesterday that he’ll share his thoughts on the proposed deal “soon.”

Source: Globe

  • jackjiarocks

    Looks like some one at Telus forgot to mail their monthly contributions to the conservative party again… lol

    • Delphus

      Maybe if the Big 3 gave out some free gas Harper would back them up!

    • Omis

      What? More like if the Big 3 REQUIRED you to buy expsensive gas to use their service, Harper would back them up. Harper don’t give gas away for free.

    • Delphus

      No, he would pass a law requiring the Telcos to buy the gas, at a premium price, and then give it away :-)

    • cartfan88

      And if they did let it go thru you would be all irate about it “I guess Telus got their contributions over to the Conservatives just in time”…damned if you do, damned if you don’t…

    • PT

      technical problems in a swiss bank that what we have learned. lol!

    • Al Chui

      Actually, the last gov’t that got caught passing envelopes stuffed full of money was the Liberals. Guess you don’t remember Adscam.

  • canuck07

    If the government is serious about competition, help Wind acquire Mobilicity

    • getdummied

      This will help Wind acquire Mobilicity. By blocking the Telus deal, it will force Mobilicity to fall back to their other offers, one of which is likely from Wind at a lower price.

    • canuck07

      I mean even a lower price is not enough. The new entrants were like sardines thrown into shark-infested water from Day 1. They were never able to compete in a reasonably fair environment.

    • Jim – Rogers Rep

      How were they never able to compete in a fair environment?
      Two of the three opted for AWS being that it is fairly quick to install and comparatively less expensive to maintain, not to mention neither Wind nor Mobilicity have paid taxes since their go-live dates.
      The failure of these companies is a direct result of three things, – Slow implementation of network control, although having Toronto, Montreal, Calgary and Vancouver as your target groups makes sense it doesn’t help when people are locked down in contracts and your incentives are not large enough to really encourage the growth necessary to make a go of it.
      – Lack of handset options until very recently, this is something that if either Mobilicity or Wind could have seen from the pre-planning stages by just looking at T-Mobile in the states, T-Mobile until very recently struggled getting clients onto their data network due to limited options.
      – Cost, although the cost of both of these providers is amazing, and as far as I am concerned fair for what it is they offer, people are hesitant to go for deeply discounted options in fear of loosing something important to them, this is why the big three’s fighters (Chatr, Fido, Koodo, Virgin and until recently Solo) did so well, is because you were getting big three service without all the costs associated.

      Fact is, the three came into the market knowing how Canadians buy, hoping that we would all turn European, and what they got was Canadians being Canadian.

      the market was as fair as it ever will be and the laws were made to keep everyone on the same page, now 4-5 years on we can see how it was, but 700,000 clients isn’t enough to keep a network running anymore, sure it used to be when all there was was GPRS or CDMA networks but now, people demand high speed data communication, with that Cost goes up exponentially.

      It also doesn’t help that neither Wind nor Mobilicity have faith in their own brands,

      To wrap this up, the move into Canada was great and well needed, now we all know that there is a true place for discount services, however at the same time, the implementation of the was/is idiotic, I respect and admire Wind for trying to expand, and signing the roaming agreements with T-Mobile, they really are proving that they will succeed or fail trying, this however doesnt change that fact that from a business perspective they need to re-asses their motivations and then re-assess their ARPU, because at $30-$35/month, they WILL fail and Rogers/Bell/Telus will be waiting.

      *I left out Public because simply the use of a CDMA network, was the dumbest move any of the three could have made, they chose their fate prior to going live.*

      Disclaimer – My opinions are mine alone and do not represent in any way, shape or form those opinions of the company I work for and shouldn’t be miss-construed as such.

    • thomas nguyen

      well said. I’ve been voicing time and time again a 4th national carrier is but a fairy tale, 4 REGIONAL carrier will provide a much more competitive nature, as well as feasible for any new entrants to come in.

    • Nexzen

      Videotron has the ability to become one with the right amount of help. I hope Wind survives as they create the most daring plans in the market. The U.S. add on is a good example.

    • thomas nguyen

      they have the ability, but i think Videotron is trying to dominate their region before looking at expanding, and they are doing a very good job at the moment.
      though they dont have any plans to expand unfortunately.

    • Retrolare

      I like how you state your opinions as being opinions after saying “fact is” earlier.

      Here’s my opinion:
      Fact is, the market was never fair and because the laws favoured the big 3. If it was fair, Sawiris would have stayed and Wind would’ve been tons better than it is now.

      I agree with the part about Canadians being Canadians though. Majority of Canadians are as dumb as our neighbours to the south (maybe even dumber seeing as how they got Harper to a majority after a several reelections). I swear Canadians secretly love paying more for less.

    • Anaron

      You’ve raised some good points. I think the biggest roadblock for the new entrants was lack of device compatibility from other carriers. I used to be with WIND from December 2010 to February 2014 and many people were surprised that I only paid $40/month for so many features. Most of them wanted to switch but couldn’t because they had an expensive iPhone or high-end Android device that didn’t work with WIND’s network. The prospect of having to buy a new device is what put them off. I feel if device compatibility wasn’t an issue, then WIND and Mobilicity would have many more subscribers.

    • danny wood

      Yes, exactly. The merger only makes sense!

  • Striker67

    Well…if no one else is willing to make a competitive offer for the assets then what are they supposed to do. I do agree with competition but it has to be across the board for everyone not just in the main market areas like Wind at the moment

    • hoo dat

      Other entities have bid and in good faith too it’s just Telus is trying to pay over the odds for a company that has no assets outside of its spectrum.

    • Striker67

      True…but the courts have to accept the best bid for the shareholders of the company not taking into account the lack of competition in Canada. if they wanted to favour new entrants they should have blocked incumbents from the last spectrum auction as the article says they are proposing now. The government may have gotten less but as you say the spectrum is an asset which could have attracted new investors into the newer companies.

  • iPwn8599

    I think they should block Telus anyway..

    what are they going to do? leave the country?

    • MisterChew

      I actually laughed at your response.

  • John_JJP

    Seems the gov’t just wants to change it’s own rules. There was a 5 year limit set where Mobilicity wasn’t allowed to sell to an incumbent because of the spectrum conditions. This is now supposed to be over, and if that was their reason for saying no previously, then it isn’t right to deny it now. I know the gov’t doesn’t want Telus to have it, but they set some rules and now those rules don’t apply.

    I personally wish competition was more fierce in Canada, and I completely disagree with how the ‘Big 3′ set their rates almost exactly the same at the same time (smells of collusion to me). However, it is also proper that a new entrant has to do something special to make it and not just be treated differently .. simply so they can make it. It’s obvious that, even with some special rules to set aside spectrum for them, the model they are using just simply isn’t working and they’re going bust.

    Personally, I haven’t felt ‘burdened’ horribly by the ‘Big 3′ .. I do use one of their sub-brands, but I get what I feel is a good deal and am not tied to it for a set term, etc. Sometimes we just have to look around. That being said, I still think they have some pretty wacky pricing on most plans.. :)

    • thomas nguyen

      Yup, i like how they can set a rule, and change it anytime they want. Pretty anti capitalist way of handling any situation, even if people play and abide by the rules, it is set to change to benefit the objective of the government.

    • canuck07

      Yes, the government is anti-capitalist but then so is the Big 3. Anti-competition = anti-capitalist.

    • thomas nguyen

      well i wouldn’t consider the big 3 as anti-capitalist, they do what most other companies do, buy out assets that meets their criteria if it will benefit the company.
      microsoft buying nokia, facebook buying oculus. all this is part of the bigger picture that is increasing value for 1 company as it merge and purchase assets.

    • ChristopherPape

      you don’t need VR or lumia’s, you need cost effective cell service, the governments role is to ensure the private sector operates in a fair and competitive environment with an adequate number or players to ensure access, quality and competitive pricing. The Big three have steadfastly refused to compete on price and one or more fresh players need “protection” during market entry and growth. If the new entrant fails then the government can direct the spectrum to another fresh player to keep the big 3 on their toes.

    • thomas nguyen

      the Big 3 are more expensive due to the services they provide far above cell service, phone support via call center.
      if you want a service with better pricing, look at their sub brands, you lose out on the phone support on some, but you get the same amount of cell coverage of the parent.
      if you want even more savings, then go with wind, mobilicity, or whatever regional carriers you have.

      quality wise, the big 3 and it’s sub brands has more cell quality than the “new entrants” or the regional carriers.

      its up to users if they want coverage, price point, phone subsidies, or quality of service, but each has its own pros and cons.

      what you seem to believe is a magical entrant will come, and beat the price point of every single carrier, while providing you with the service, call support, device subsides, and coverage at a staggeringly low price point.

      I see that the pricing at the moment is outrageous, but that is why you have koodo $35 plans, or mobilicity and wind $35 all inclusive plans.
      Before going on about competition, look at the sub brands and gauge if you need the coverage or can you live with the service provided by each carrier.

    • Benny X

      pretty soon we’ll all be speaking Russian! freakin commies!!!

    • Thom

      Let’s be honest here, it is pretty clear that the Big 3 and their sub-brands are colluding. Notice the lack of proper pamphlets at Koodo and Virgin, they instead give you a printed sheet with their plans (In Quebec at least). Know why ? Because they’re not confident enough in their current price structure e.g. they colluded to arrive at the given prices and any carrier could decide to lower their prices and that carrier would reap the benefits, therefore they don’t print pamphlets to respond faster as they just need to print a different sheet.

    • Trexson

      Wow, sorry to be rude but I don’t think you understand the word collude. Rapidly adjusting prices so another carrier won’t reap the benefits of a price drop is called competition, not collusion. If they were truly colluding they would print their prices in stone tablets and never change them.

      Do some research in competition and markets – matching prices is actually a key sign of a liquid and competitive market. Gold is basically the same price from any gold producer because if you don’t change the price no one buys that, same for any commodity.

      The funny thing is this website, helps this so called collusion. It often leaks pricing changes which then allow competitors to react and come out with the same or similar pricing. Why do they do this, because amongst the big 3 the differentiation of the services isn’t big enough to sustain price differences (they are in some form commodities) thus requiring a match of pricing to be relevant.

      You will notice that the big 3 don’t match Wind, Mobilicity, or even Videotron exactly because their are enough service differences to allow for pricing differences.

    • Thom

      Actually if you understood how collusion works, there is something called “incentive to cheat” where each of the parties that collude would get an advantage if they lowered their prices because they would make more money that their competitors that are still following the set prices. This is why collusion doesn’t usually work in the long run because each party has an incentive to decrease their price. Although this leads to short term gains, it decreases the profitability of the market in the long run because everyone would have lower prices as that price would eventually be matched. A competitive market IS NOT a market in which each company has identical plans, have a look at Europe or various asian countries where different companies offer different plans. It is well known the the Big 3 used the 2 year contracts as a reason to increase their prices and they miraculously all began implementing the same “share” plans and data allowances. You’d be hard pressed to find a single country where every carrier offers the exact same amount of data/minutes/features for the same price.

    • thomas nguyen

      you see only the big 3, but move to the sub brands, regional brands, and new entrants to see the pricing difference between each brand level.

      you need to compare apples to apples.
      telus, bell, rogers, is comparable to:
      Verizon, at&t in the states
      vodafone, o2 in the UK
      compare those prices in each region to see if there is indeed as you state
      “You’d be hard pressed to find a single country where every carrier
      offers the exact same amount of data/minutes/features for the same
      price.”

    • Thom

      Actually, the sub-brands only offer lower prices when you look at cheaper devices. As soon as you want a high-end smartphone, whether it be at the big 3 or their sub-brands, you have the same 80$ plan across the board with the same features.

    • thomas nguyen

      just checked Koodo, 750mb for $65 if you have your own phone regardless of type, this is only considering if you want to have a subsidized device, with that, yes you will pay almost the same amount as the parent brand.

      unlimited everything with mobilicity for $55.

      so no the plans are still anywhere between $50 to $80, but it’s what you want additional to cell service, do you want a phone for cheap? or do you already have your own device?

  • Greg Sandsonni

    How will they ever get another company to invest in this mess of a wireless market if they keep changing the rules on the fly? What a joke.

    • cartfan88

      Maybe if the companies weren’t all at the same time jamming customers with rate increases and $48 mln paydays there wouldn’t be a need to change the rules.. In fact I’m for much more favourable terms for new entrants across the board.

    • ScooterinAB

      No. Mr. Sandsonni has hit it on the head. This isn’t about you being angry about your bill. This is about constant rule changes affecting Canadian investment and attractiveness in business. No company, foreign or domestic, is going to get into this mess if they know that the rules of the game are going to change every week. While I admire the government for basically telling Telus to screw off and quit going after Mobilicity, I do no for one second support it micromanaging the industry and the cost of its stability. An unstable industry (and that is completely as a result of government meddling) is off-putting for foreign investment and actually damages Canada’s investment portfolio.

  • Delphus

    ok when will you understand, it takes massive amounts of money to get a wireless business going. If the government doesn’t allow the Big 3 in the 2500 spectrum chase, no one will buy it AND DEVELOP A NETWORK. You’ll end up with a bunch of holdings buying it cheap to sell it off later on.

    How many fails does it take to understand this… Fido and Clearnet had the best shot years ago, and were absorbed. SaskTel, Videotron and other regional players are the best bet, forget about a fully national player.

    And all you Wind dreamers, really what is it you don’t understand?!?

    As if any seller would turn away from it’s 3 best / richest customers… laughable.

    Harper tactics, “My way or the Highway”…

    • thomas nguyen

      on top of that, 2500mhz is good for only in the city area (low distance). that said, if a new entrant have this, it will boost their speeds in the city, but still limit their ability to go out to the rural areas. That is where the smaller companies need to look for is expansion of their borders, not add capacity and speed to their existing coverage area.

    • thomas nguyen

      what would work better than having 4 national carriers, is work with new entrant to have 4 regional carriers, small enough for them to get a good foothold, and able to ACTUALLY be profitable. this will drive competition regionally, which has a better chance of success than trying to push for a 4th national carrier, which will never work.

    • Dave

      Your wrong Delphus , Some one is going to buy the 2500 Spectrum and the price will drop

  • ABCONMan

    Now if only Harper put this much pressure on Big Oil, instead of handing them tax breaks at every turn.

    • beyond

      yeah seriously, they make S**T loads of money and they can’t even spend a dime towards upgrading those bloody railway tanker cars they use to transport their oil all over the place.

    • OgtheDim

      Its a bit more complicated then that.

      Legally, upgrades to those cars are all at the whim of the companies the railroads lease those cars from.

    • Who Needs Facts

      As proven in the wireless industry they could certainly change the safety standards – effective whatever date they choose.

  • Sweet

    What happened to the government’s recently announced we’ll-let-the-market-decide stance ? Have they flopped back ?

  • Sweet

    My understanding is that Videotron had the next highest bid at $200M followed by Wind at $190M. I hope Wind wins it, since they need the spectrum. I remain skeptical that Videotron will expand beyond Quebec.

  • thomas nguyen

    “stockpile spectrum”, as if TELUS has any stockpile of unused spectrum left. Lets see some data from the government on what each carriers spectrum holdings they have, and how much of it is being used, instead of being counterproductive and assume everyone is hoarding UNUSED spectrum.

    • Who Needs Facts

      Agreed. Painting all incumbents with the same brush is ignorant and only serves to back the CPC’s sudden and about face, alleged care for the consumer. Or as most Canadians know it, pandering for votes.

    • ScooterinAB

      Agreed. This is about Telus reaching for the cookie jar, Industry Canada slapping its hand away. and Telus ignoring them and continuing to reach for the cooking jar. Why should anyone else have to pay for Telus (and Mobilicity for not wanting to take the low-ball offers) basically bullying Industry Canada over this?

  • Who Needs Facts

    Keep digging that hole Mr. Moore.

  • OgtheDim

    I’d like to hear what the NDP and the LIbs think of all this, but the media isn’t asking them.

    • cartfan88

      It’s because they have no tangible ideas on the subject. If they did they would be out in full force with it.

  • Who Needs Facts

    A few things have changed since Industry Canada last published spectrum holdings but in 2010 Telus held 15% of of the total spectrum holdings for Cellular, PCS, AWS and BRS spectrum. By contrast, the “New Entrants” had over 10%.

    I keep wondering why they are lumped in with Rogers (41%) and Bell (29%) who added even more again than Telus in the 700Mhz auction.

  • Ryan

    The government should block the big 3 from participating period

    • ScooterinAB

      Why?

    • Ryan

      Reason being because all they seem to be doing as of late is increasing their prices. They should offer all the spectrum to Wind and other small carriers to get some real competition in the Canadian market

  • RLC

    Does the government really expect Telus to drop their bid for mobility? Telus submitted a bid to the bankruptcy court and backing out at this stage will expose them to legal claims from the debtors.

    Sounds like the government is going to change the format of the next wireless auction and is using this situation as an opportunity to signal it’s intent.

    The government could have simply said the bid was not approved. Is the government planning to approve the Telus purchase with the condition that Telus cannot participate in the next auction?

    • thomas nguyen

      they will threaten TELUS, and even the reports deems they make make all incumbent banned from the next auction. So they are trying to bully TELUS out of the bid, or make the other 2 incumbent force TELUS to back out. regardless, its a move that is shining a negative light on our government structure.

    • RLC

      Since Rogers and Bell have significantly more spectrum than Telus I don’t expect Telus will listen to them.

      Telus may think the government has already made a decision about the format of the next auction so they have nothing to gain by backing out.

      Telus may feel that there is little value in the 2500MHz spectrum, ability to penetrate buildings etc.

      When balanced against the potential of creditor legal claims I don’t see Telus withdrawing their bid.

    • thomas nguyen

      I don’t either, and if the government DOES ban them from the next auction, they are making it widely known to everyone planning to invest in Canada that our government is able to make any and all changes to their rules and regulations at any point in time.

      The bid will go through as there is nothing to hold TELUS back from acquiring Mobilicity, the 5 year ruling is now passed, and the company is declaring bankruptcy.

      we’ll see how Moores react when the carriers stand their ground against the ongoing bullying from IC.

    • ScooterinAB

      Even though the limit on the transfer of spectrum has passed, I understand that Industry Canada can still block the purchase, as it did with Bell’s initial purchase attempt of Astral Media (later approved on the condition than Bell sell off a number of properties to other telecoms).

      I completely agree though that this is damaging to Canadian investment and horrid for PR. While hilarious, this is absolutely the wrong move to be making, and can only results in actually stifling competition and limiting growth within the industry.

  • Tornado15550

    Currently there are no (flagship) phones that support the 2500Mhz spectrum. Lets hope we see some phones that do pretty soon.

    • thomas nguyen

      thought the xperia line actually had 2500mhz band – mainly for UL though

  • thomas nguyen

    since everyone is going on about how cell phone prices are so high, and the government want a 4th carrier to come in to build competition.

    why not get a 4th major player in the gas industry, i’m sick and tired of paying over $1.30 for gas (some alot more in the eastern province), we need some more competition to drive down the gas prices too!

    • RLC

      How about 4 national airlines as we pay to much for airfares in Canada.

    • thomas nguyen

      That’s a perfect idea!
      I wouldn’t mind more major banks as well, mortgage and loans are too high!

    • RLC

      Government does not want lower mortgage rates as they are concerned about the risk to Cmhc, so I guess we have too many banks, must reduce competition.

    • Conception

      We need more strip clubs! The beer prices at the one’s nearby are TOO HIGH. Oh, and the lap dances – extortion prices!

    • ABCONMan

      Yeah, but then you’ll end up with the B squad over at the discount strip joint. Can’t have that.

    • Conception

      I don’t mind if they have no teeth… ;)

    • ABCONMan

      You had one, it was called Petro Canada. Trudeau made it a reality back then, but Harper sold it.

    • RLC

      Petrocan was sold well before Harper was elected.

      Petrocan shares were sold to the public in 1991.

  • Just Jess

    Good.

  • cartfan88

    With what the Big 3 have been carrying on with lately…changing the rules is justified. In fact the rules should be ridiculously skewed towards any 4th player in the market. The Big 3 are simply operating as one thuggish company at the present.

  • hoo dat

    I wonder if the Government will “protect” Shaw’s spectrum from Rogers with as much fervour as well?

  • Omis

    all of this could have been avoided if they set aside some of the 700mhz for the new entrants. they’d be competing instead of going bankrupt. typical of the harper government to be reactive instead of proactive.

    • Who Needs Facts

      The fact of the matter is, the feds could GIFT the spectrum to Wind/Mobilicity. They could change rules so there are ZERO roaming charges and they could mandate that the big three were not allowed to bundle.

      And they would still fail.

      There is no trust in the government. What is good now may not be good in three years.Or three months.

      Even with the favourable auctions and promised roaming changes, why has Vimplecom dumped Wind? They don’t trust Harper or Moore. Yes the see the government doing whatever it can to make them viable. They have seen the attack ads on the Big Three, Mobilicity and Public. They have seen it with the CRTC and contracts and with promised roaming charges and with fixed auctions.

      But.

      These guys are not a bunch of clowns. They are business execs in control of billions of dollars and they know they could be on the wrong end of a random decision in IC’s next press release.

      They have seen the proof.

  • Peter

    This matter will end up in court. TELUS knows exactly what it is doing. They followed the governments rules and are now being threatened to be vetoed again. Secondly, TELUS has the least amount of spectrum of the Big 3. Lastly, the more the government interferes the less likely we will have new entrants wanting to come in and invest in Canada, I mean why would they, they would never be allowed to sell their business if they tried and the rules keep changing.

    • RLC

      Agree, Canada is looking like a banana republic.

  • Savbers

    Who is using 2500MHz for rural areas!? They’re crazy if they do.

    2500MHz is all about inner city, but the incumbents don’t need it anyhow.

  • deltatux

    They should have done that with the 700 MHz spectrum, not wait until 2.5 GHz, 2.5 GHz is too high to punch through buildings properly and they don’t reach far per tower. Not sure if the Big 3 really consider it a real threat at this point…

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