Opposition to Telus Mobility ESMR petition widespread among industry players

Telus Mobility’s plan to cap spectrum used for its Mike services at 10 MHz in the calculation of its spectrum aggregation limit no matter how much it actually holds is coming under heavy fire from its competitors, which believe such a move would confer an unfair competitive advantage on Telus over themselves. Comments from several industry players, in response to DGTP-003-02, centre on a few key points claiming that Telus doesn’t warrant special treatment for its Enhanced Specialized Mobile Radio (ESMR) spectrum holdings (RoW, June 11/02). Telus based its argument on three primary points: ESMR services are different from cellular/PCS services, there are significant technical complexities in deploying services because spectrum is not in contiguous bands, and the Federal Communications Commission made a similar ruling in 1994. These arguments, however, didn’t convince opponents. They state that the country’s third-largest wireless operator should wait, like all the other carriers, until the department undertakes a full-scale review of the spectrum cap rules in proceedings leading up to the release of spectrum for third-generation services. The plan’s opponents also agree that Telus would gain preferential treatment in a market with intense competition among four national carriers. "The approval of selective and special treatment of ESMR spectrum would place one of Canada’s largest incumbent wireless players in an extremely advantageous competitive position relative to its competitors in the market," writes Don Woodford, Bell Mobility’s director of government and regulatory affairs. "The BWA (Bell Wireless Alliance) further suggests that such a fundamental change in the policy would be premature and should not be entertained prior to Industry Canada’s anticipated overall review of the spectrum cap policy." Montreal-based W2N Inc. takes a less subtle approach in criticizing Telus’ plan, by saying that the company should wait until a full review of current spectrum cap rules. "Let us avoid creating a new adage: If you don’t like the spectrum policy, wait a minute. Public policy should not change that often or that easily. It’s not like the weather," the company writes in its June 10 comments to Industry Canada. Rogers Wireless Communications Inc. takes dead aim at Telus’ claim of ESMR as a different service offering. In comparing handset features, service offerings, coverage and rate plans, Rogers concludes that there is actually little difference between the offerings and that, in fact, ESMR competes directly with PCS services. "Telus competes in spite of what it claims are spectrum engineering complexities and other difficulties associated with its deployment in the 806-821 MHz band. Telus has chosen to compete on the basis of the various attributes of that band, and that technology, and has done so quite successfully," Dawn Hunt, Rogers Wireless VP government and inter-carrier relations, writes. "In RWI’s view, it would be unsound public policy to tilt the playing field in an unquestionably competitive marketplace by favouring the underlying cost structure of one provider to the detriment of others." Bell Mobility agrees with Rogers Wireless’ assessment that ESMR is "directly substitutable for its cellular and PCS services." The country’s largest wireless operator points out that Telus touts its Mike service on its web site as an "all-in-one business communication powerhouse with Mike’s Direct Connect, PCS phone, Internet capabilities and pager services." Microcell Telecommunications Inc. offers that after years of trying to convince Industry Canada to remove the mobile spectrum cap altogether, to no avail, Telus has decided to change strategy. The Montreal-based operator points out that in the mid-1990s, Clearnet Communications (acquired by Telus two years ago, RoW, Sept. 5/00) was granted ESMR spectrum licence fees based on the cellular model by convincing the department that the spectrum was going to be used for services competitive to that of PCS and cellular. Cell splitting complexities get rough ride from opponents The vast majority of the plan’s opponents also disagree that expensive and complex cell splitting techniques needed to increase capacity on the network would actually decrease choice in wireless service offerings. The opposite is true, W2N believes. "Changing the spectrum cap to allow Telus, already a near monopoly in SMR services, to obtain additional ESMR spectrum (also to be used inefficiently without cell splitting) is more likely to deny Canadians a further choice in wireless service offerings by reducing the spectrum available to competing service providers," it writes. Rogers Wireless even questions Telus’ willingness to expand coverage of the network using money saved by not having to implement costly cell splitting measures. "In RWI’s view, if the department were to approve Telus’ request any such service deployment would never materialize in any market that is truly under served," the company writes. Opponents offer up variety of solutions to Telus application While there is general consensus that Telus shouldn’t receive preferential treatment under spectrum cap rules, which would result if the department granted Telus’ request, each of the companies has offered up a potential solution to the dilemma. Some want the process opened up, while others prefer a stop-measure of temporary relief for specific regions. Rogers Wireless suggests that as a more equitable solution to the request, Industry Canada should simply open up the process to all wireless providers. "The spectrum cap has outlived its usefulness. The benefits sought by the department in its 1995 policy framework have been fully achieved since new entrants no longer require support and competition is flourishing," the company states. "RWI recommends that the department immediately initiate a review of the spectrum cap as it applies to all players." On the other hand, Bell Mobility would support temporary relief in a particular geographic area. Three years ago, Clearnet was granted temporary relief from the spectrum cap in its bid for an additional 3.7 MHz of ESMR spectrum in the Golden Horseshoe area in southern Ontario (RoW, Feb. 15/99 and Nov. 9/98). "This approach would be more reasonable than undertaking an across the board, nation-wide modification to the spectrum cap, especially when a major review of the cap will likely be conducted in the foreseeable future," Bell Mobility states. But the relief would be for a specific amount of spectrum and be pending the outcome of the full-scale review. Microcell is alone in calling for the review of what it says are more pressing issues, which it believes need to be dealt with prior to any review of current spectrum aggregation limits, temporary or not. Dean Proctor, VP regulatory affairs, writes that Industry Canada needs to initiate and complete a review into foreign ownership, the current licence fee regime for mobile services, the ability to disaggregate mobile spectrum holdings, and the overall validity of the current spectrum cap policy. "We urge the department not to accede to Telus’ request and give in to the temptation to make important policy decisions piecemeal, without considering the other, necessarily related, pieces of the policy puzzle," Proctor writes.

Opposition to Telus Mobility ESMR petition widespread among industry players

News | 06/24/2002 4:00 am EDT

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