In an extensive press release issue today, Bell Canada outlines the three main reasons, and few minor additions, why US wireless providers like Verizon should not be allowed to take advantage of several “loopholes” in the current spectrum acquisition and telecom investment environment.
The main call to order is the limitation on one block of 700Mhz spectrum per region laid on the incumbents, Rogers, Telus and Bell. This theoretically allows a new entrant like Wind or Mobilicity to scoop up more spectrum in a single area, say Southern Ontario, than the incumbents, a move that could potentially limit, Bell says, the expansion of their thriving LTE networks. Verizon, if it enters Canada through the purchase of Wind or Mobilicity, would be treated as a new entrant despite being nearly 10 times the size of the largest Canadian telecom company.
The second issue is what Bell is calling a “free ride on the world-leading networks funded and built by Canadians,” referring to the CRTC mandate that incumbents must share cellphone tower access with their new entrant counterparts. Again, if Verizon was to enter the country through the purchase of Wind or Mobilicity, the incumbents would theoretically be forced to provide access to older networks — in the case of Rogers and Wind/Mobilicity, its 2G EDGE network — where native service doesn’t otherwise exist. Bell thinks that Verizon should be required to build out its own network infrastructure.
Third, and one that doesn’t hold a lot of water, is Bell’s assertion that if Verizon were to enter the Canadian market, it would be able to buy up new entrants like Public, Wind and Mobilicity at “fire-sale prices” because, by virtue of the CRTC’s prohibition against spectrum transfers that results in “undue spectrum concentration.”
Earlier this year, TELUS attempted to purchase Mobilicity for $380 million, a price many would consider fire-sale, for its precious AWS spectrum. While Bell has not made any moves to purchase spectrum from smaller rivals like Rogers and Telus (the former purchased spectrum options from Videotron and Shaw, which is set to proceed once the abrogation against spectrum transfers is lifted sometime next year).
Bell believes that there is a fair solution to these problems, and they amount to loosening the limitations for Canadian incumbents in the 700Mhz auction, bringing up the possibility of buying two blocks in each region; force US carriers, if they come to Canada, to build out a network themselves; and allow Canadian companies to bid against foreign ones when acquiring local wireless “start-ups,” as they refer to Mobilicity and Wind.
These points make sense in theory, but with the emergence of the two-year contracts and the higher prices that come with them, it appears that Verizon’s entry into Canada may be just the catalyst needed to force down prices in the wireless market.