Rogers requests hearing into Public Mobile & Dave Wireless

With the new wireless entrants getting prepared to launch their new offerings to us Canadians shortly, I can remember when then Industry Minister, Jim Prentice spoke about the intentions of the Wireless Spectrum auction: “Our government’s intentions are clear: to achieve lower prices, better service and more choice for consumers and business. We believe in relying on market forces to the maximum extent feasible because competition benefits consumers, and consumers benefit most when markets are as competitive as they can be.”

This sounds really beneficial for us consumers… more competition, lower costs. The auction raised a staggering $4,254,710,327 over eight weeks and 331 rounds. However, for the incumbents such as Rogers, Bell and TELUS this must scream a nightmare. New players coming in and taking their profits.

It’s well documented the most feared new entrant is WIND Mobile (Globalive). They invested $442 million and are backed by Eygptian-based Orascom, a wireless giant that simply knows how to succeed (they currently have over 100 million wireless subscribers around the world). TELUS didn’t like this news and over the past number of months have succeeded in getting the CRTC to look into their foreign ownership (to enter the Canadian wireless space a foreign investor can only hold 20% voting shares).

The hearings will take place on September 23rd and 24th in Gatineau, Quebec. In response, Anthony Lacavera, Chairman of Globalive Holdings said “The Government of Canada has ruled that we are fully compliant with the wireless entry requirements and we are confident that the CRTC will make the same ruling. Game-playing by the incumbents will only serve to delay our investment into the Canadian economy, the creation of new jobs and ultimately, Canadian’s already overdue access to a new competitive offering.”

WIND is not the only newcomer to be attacked. Rogers has stepped up and has also requested the CRTC look into the foreign ownership of both DAVE Wireless and Public Mobile.

DAVE Wireless (Data & Audio Visual Enterprises Wireless Inc.), led by Chairman of DAVE Wireless John Bitove, invested $243.1-million for 10 licenses. At the 2009 Canadian Wireless Summit, DAVE Wireless CEO Dave Dobbin said “It’s going to be hard, when you look at the incumbents, I mean the folks running Bell, TELUS and Rogers are really really smart people. They will figure out ways to compete with us, so we need to be aggressive, we need to be smart”.

This is now true. Rogers letter to the CRTC regarding DAVE’s ownership said “While on the surface it appears to meet the Canadian ownership and control rules as the two American partners (Vulcan and Quadrangle) only owned 33.33% of the votes, there is not enough information to make a final determination. For example, it is unknown who owns Data & Audio Visual Enterprises Investments Inc. It is revealed that the company has three directors who are all Canadian residents but no information is provided with respect to the shareholders who could replace the directors at their discretion. These issues were further complicated by changes to the ownership structure after the auction began. Shortly into the auction, Vulcan Capital withdrew from the DAVE consortium. It is unclear however who made up the lost capital. Was it split between DAVE and Quadrangle? If so, who received how much? Were new investors brought into the fold and if so who are they and what is their nationality?”

Rogers also goes after Public Mobile. Very odd as Public has purchased G Band license that nobody in the past wanted. Although Public Mobile only spent $53 million they will reach 19 million people in Ontario and Quebec. I guess everything is a threat when you break into new territory. Rogers says Public Mobile ownership is “even more confusing. It filed two beneficial ownership structures before the beginning of the auction. Initially the primary Canadian shareholder was the investment fund Novacap Technologies III L.P. who was to control 66.67% of the voting shares. A group of foreign investment funds including Columbia AWS Canada Inc., AWS Canada M/C Inc., CTC Catalyst L.P., Battery Ventures VIII Canadian Spectrum Holdings Inc. and CRP XIII Blocker Inc. held the remainder of the voting shares and all of the non-voting shares. However on May 15, 2008, just 12 days for the start of the auction, 6934579 Canada Inc filed a new beneficial ownership structure with Novacap replaced by three new entities Rho Canada Ventures LP, 6976387 Canada Inc. and BMO Capital Corporation. The five foreign firms remained. Apparently the controlling Canadian shareholder was replaceable while the non-controlling foreign shareholders were not. Who controlled the bidding is unknown”.

With a few months to go, the competition is heating up – and none of the new carriers even have a customer yet. This is not stopping the new carriers to make plans. WIND, DAVE and Public all have been quoted in one way or another to offer us Canadians what we all want: more choice, better value and greater customer service.

More here at Cartt