Spectrum auction rhetoric flies at Rogers’ Canadian Club speech

Never one to pass on an opportunity to speak out about the communications industry's competitive landscape, Ted Rogers, president and CEO of Rogers Communications Inc., took the podium at the Canadian Club yesterday in Ottawa and lambasted rivals for demanding access to spectrum and other measures to ensure their success in the upcoming advanced wireless services (AWS) spectrum auction. He criticized companies such as Vidéotron ltée and MTS Allstream Inc. as being well-financed, deep-pocketed competitors that are more than capable to hold their own in a spectrum auction without the assistance of spectrum set asides or other regulatory intervention. "We just think that new entrants should buy the spectrum in an open auction like everyone else," he said. "They are large, well-financed companies and they should put their money up like every other wireless provider." Reserving spectrum for these companies would amount to a discount on spectrum "worth hundreds of millions of dollars" and would be "a direct gift and subsidy from the tax payers of Canada," Rogers stated. These well-financed communications companies "would be the all-time corporate welfare bums in Canadian history." MTS Allstream isn't so sure though that it would be able to succeed in an open, unfettered auction because those types of rules only play into the hands of the Big Three wireless carriers. President and CEO Pierre Blouin categorically stated during an investors conference in Toronto last week that the company wouldn't enter an open auction. "I think the government including the new minister, Minister Prentice, understands very well the position of each party, understands the impact of the decision, understands that if there is just a straight auction, it's very clear we're not going to be involved. We're not going to bid for this and I don't think there's anybody else that may do it in that type of setup," Blouin said. Highlighting the significance of the pending decision on the spectrum auction rules, the MTS Allstream CEO and former Bell Canada head of consumer markets noted that new large-scale competition is unlikely to come to the market after this auction. "This is a window of potential opportunity that is opening and it's probably the last time that in Canada there is an opportunity to launch a new wireless player of whatever size. After that penetration will be probably too deep. going to be just much more niche," he said. During his own speech Rogers' went to great lengths to criticize the mud-slinging efforts of companies such as MTS Allstream and Vidéotron as almost un-Canadian, yet took every opportunity to throw a few handfuls himself, particularly at Vidéotron. He called the Quebec-based cable TV company to the carpet for exiting the wireless market years earlier when it divested of its interest in Microcell Telecommunications during the former national competitor's tough times, yet now wanting back in the wireless game when the industry is finally showing profits. "They only now want to bet on a sure thing, backed by the credit of the Canadian government," Rogers stated. Any move though on the part of the government to explicitly encourage new competitive entry is unwarranted, he said. The state of competition in the Canadian wireless sector should serve as evidence that the current approach of light regulation has worked and should be maintained. In addition to highlighting Canada's competitive wireless prices, Rogers warned the government there could be dire consequences if it reserves spectrum and at the same time eliminates restrictions on foreign investment. "It would be a grave mistake for the government to subsidize the new entrants. For one thing these folks may not be in the business for the long haul. In a few years, the foreign ownership regulations may well change and the new entrant may be able to take the spectrum they just bought and very well flip it to a US, European or Asian carrier who wants to enter Canada," he said. "Instead of creating competitive advantage for Canada the government may be financing some instant ‘flippers' who sell it to foreign interests. Have we not experienced enough hollowing out of corporate Canada already?"All indications coming from Industry Canada suggest that the minister will release the rules this fall in time for an AWS spectrum auction to be held early next year.

Spectrum auction rhetoric flies at Rogers’ Canadian Club speech

News | September 20, 2007

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