Wireless telecom veteran Kedar calls for new spectrum licensing structure

One of the country's most experienced and respected telecommunications leaders is once again calling on the federal government to overhaul the current telecommunications regulatory framework, and implement a new structure that would favour more sustainable competition. Specifically, Mike Kedar, chair of MobilExchange Ltd., wants Ottawa to take away spectrum licensing powers from Industry Canada and centralize them with all other telecommunications licensing procedures at the CRTC where, he believes, they would be less political.The founder of Microcell Telecommunications Inc., Call-Net Enterprises, and a handful of other telecom firms would also like to see the government give the Competition Bureau more muscle to ferret out anti-competitive behaviour on the part of the country's incumbent telecommunications service providers.Kedar made his comments during a webcast on January 25, which was presented by Dolphin Investor. He explained that the CRTC, as an arm's-length quasi-judicial body, is better suited to spectrum licensing than Industry Canada. "(The department) is, in certain situations, very open to lobbying and to being motivated by other (influences)," he said during the 30-minute talk. "I would like to propose Industry Canada relinquish licensing of wireless spectrum to the CRTC, so it's not a political process anymore, but a regulatory process, very much like it is in the United States and in Europe."During the presentation, Kedar explained that the business failures of a number of promising CLECs and other new entrants clearly demonstrates that there is a lack of sustainable competition in the telecom market, and that the incumbents possess too much market power. He pointed out in the presentation, titled Towards Sustainable Telecom Competition, that there is much the government can do.In an interview with Report on Wireless after his presentation, Kedar backed up his statements by indicating that this year marks a significant milestone in the telecom market. "This June will be the 10-year anniversary of opening up competition for long distance, and yet we lost most of the new entrants." he stated. "There's very little competition right now." Kedar was instrumental in bringing in long distance competition (Telecom Decision 92-12).To ensure that new entrants and other competitive providers can operate on a level playing field with the incumbents, Kedar proposes that more power be given to the Competition Bureau to regulate anti-competitive behaviour. In his presentation, he explained the bureau is going to have to look at a number of issues in the near future with deregulation coming in the power and transportation markets. Much like the U.S. Department of Justice's suit against Microsoft Corp., the Competition Bureau needs greater powers to look into similar matters."We don't have any anti-trust laws in this country," Kedar told Report on Wireless. "And yet you have companies like BCE, which are in broadcast, newspapers, in satellite, in cable and in telecom, basically in all areas." This would never be allowed in the United States, without close scrutiny from the Department of Justice, he added.Opening up wireless networks a possible solution One way in which the government could make the telecom market friendly to new entrant players is to open up access to the wireless carriers' existing networks, Kedar believes. Currently, about 50 per cent of all voice and data traffic is sent over the various types of wireless networks.Specifically, Kedar said a major chunk of existing mobile operators' spectrum holdings is laying fallow, and currently isn't being used. Three of the four national operators now have about 50 MHz of PCS licences in all major regions of the country, which they purchased in the last spectrum auction (RoW, Feb. 5/01). Current spectrum cap rules prohibit any wireless operator from holding more than 55 MHz in any given region (RoW, Nov. 15/99).Giving new entrants and other competitive providers access to this resource would only serve to spur competition in the urban markets, Kedar said. This, he added, would also enable a much broader deployment of wireless services in the under-served regions of the country and would allow for the introduction of new applications and services. New players would be able to subsidize rural service deployment through profitable urban operations, he explained.Under the current system, new third-party providers can't get access to these wireless networks without becoming customers of the current spectrum holders - the four national mobile wireless operators. Kedar isn't proposing free access to the carriers' networks, either. He is advocating that new entrants pay the true incremental cost of accommodating the added traffic, not a price inflated with the cost of building out the entire network."They have already sunk the money to build the network," he explained. "I would like to pay the incremental cost of taking my traffic through and sending it to my switch."Several years ago, Kedar lobbied the CRTC to mandate open access to the wireless carriers' networks through an application he filed on behalf of another one of his companies, AIRREACH Integrated Network Ltd. The resulting decision wasn't what the telecom veteran was looking for (RoW, Nov. 23/98).The commission ruled against mandating wireless carriers to open up their networks (Telecom Order 98-1092)."After three years of deliberation, (the commission) decided to make a decision that says 'well if the carriers will let you, we will not object'," Kedar told RoW. "But they would not mandate a particular price rate and interconnection (costs) like they've done in the wireline space."However, he does hold out some hope that things will change in the future. "I think that the new chairman of the commission (Charles Dalfen) and the whole economy and industry being the way it is with lots of bandwidth, I can't believe keeping access closed or bottlenecked the way it is, is something that is sustainable. I'm not the only one talking about it, there are many other people that are going to push," Kedar explained.Time is ripe for changes Kedar recognizes the difficulty in trying to implement a regulatory regime that favours sustainable competition given the current fragmented framework that exists today. While the existing three-legged regime - Industry Canada, the CRTC, and the Competition Bureau - makes it extremely difficult, the commission and the bureau already have to work together on some issues. "I think the bureau of competition needs to get instructions or direction from the government through amendments to the Telecommunications Act that would give it the power to actually implement sustainable and fair competition," he said during the presentation.Canada will soon begin discussions on if and how it should change current foreign ownership restrictions, which would necessitate amendments to the Telecommunications Act. Kedar said this is a perfect time to discuss additional amendments that would entrench sustainable competition in the Act."They should look at the seven principles that guide the Telecom Act and see if they can change the wording to give the commission enough powers to introduce regulation, which will basically sustain competition," he told RoW. "Because right now the words are so nebulous that there is really no direction from the government to the commission."

Wireless telecom veteran Kedar calls for new spectrum licensing structure

News | February 19, 2002

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