Discussion heats up during CWTA spectrum auction forum

What was shaping up to be a love-in at the Canadian Wireless Telecommunication Association's (CWTA) one-day forum on the upcoming advanced wireless services spectrum auction came to a grinding halt during the first afternoon session. After the morning - when financial analysts debunked the conclusions of a controversial SeaBoard Group report criticizing the state of wireless competition and questioned the viability of a fourth national wireless player - Johanne Lemay, co-president of Lemay Yates Associates, set the stage - or fanned the flames - for the pricing and competition panel. She suggested that if Canada had kept pace over the past several years with the United States in terms of penetration growth, there would be 6.5 million more Canadian wireless subscribers. The subscriber gap is caused by slower penetration growth in Canada of 5% compared to the 8% annually in the US. "This goes a long way to convince me that a fourth carrier is viable," she said. Dean Prevost, chief strategy officer at MTS Allstream Inc., questioned the merit of the financial analysts' assessments regarding the viability of a fourth player as well as assumptions that lower penetration should be something that is acceptable. He opened his presentation in a tongue-and-cheek tone, noting that during the first half of the event he learned that Canada's lagging wireless penetration was acceptable and even 20 years since the availability of wireless services in Canada, "lagging penetration is still okay. And it's not just that lagging penetration is okay, but that lagging got materially worse - amazingly - since the departure of certain competitors from the marketplace." He was undoubtedly referring to the acquisitions of Clearnet by Telus Mobility and Microcell by Rogers Communications Inc. "The penetration gap that was actually closing now appears to be quite significantly. But that's okay it's all explainable by the time-to-market lag that happened 20 years ago."The Canadian wireless industry general attributes the lower penetration rate here to the fact that wireless services were launched approximately two years after services were introduced in the United States. Regarding a successful fourth player, Prevost was a little more serious. He raised the possibility of a new entrant offering the types of advanced and innovative 3G type services that are available in other parts of the world, suggesting that it is impossible to compare the services offered in Canada with those available elsewhere. Still, "don't think that that doesn't provide the chance or the opportunity for a new entrant," Prevost proclaimed, adding that it was "eye opening" to see how strongly opposed some "forces" are to the idea of a fourth provider.The MTS Allstream executive also took a swipe at the financial analysts' reports, noting that it is dangerous to present spreadsheets with a couple of assumptions built in because assumptions could turn out wrong. "So to presume and assume...that there's no room for a fourth new entrant just might be a touch dangerous," Prevost stated. Prevost also discounted the idea that one company operating multiple brands creates true competition. "Brands and price plans do not equal competitors. Brands, price plans, and MVNOs who are owned materially also do not equal competition."Report on Wireless will have more from the CWTA's one-day forum in the coming days, including an exclusive interview with Rogers Wireless president Rob Bruce.

Discussion heats up during CWTA spectrum auction forum

News | April 24, 2007

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