New wireless entrants frustrated by incumbent tactics

Anthony Lacavera, chairman and CEO of Globalive Communications Corp., is not surprised by incumbent tower/site-sharing and roaming agreement delays. But other new entrants – among them DAVE Wireless and Richtelecom – are more outspoken in their frustration. “The incumbents have substantial franchises to protect,” Lacavera tells Report on Wireless, reiterating comments he made last year in an interview. “I don’t think any of the new entrants should be surprised – it’s not really that the incumbents are dragging their feet so much as there is just not the incentive to enable more competition.” Other players might consider that to be an understatement. In a March 6 letter to the radio communication and broadcasting regulatory branch at Industry Canada, DAVE Wireless wrote that they “share the frustration and concern expressed by several of our fellow wireless new entrants, as the incumbent wireless carriers seem to be focused on frustrating the process.” Richtelecom, which picked up two licences in the spectrum auction – one in Dawson Creek BC, the other in Huntsville ON – is particularly concerned about roaming agreements. “We don’t have the roaming agreement in place yet, though it is scheduled,” says Jacob Sharawi, Richtelecom’s CTO. “They will fight you tooth and nail. All new entrants should be ready for a fight with incumbents to get these agreements in place and make sure they are fair.” In its letter to Industry Canada, DAVE Wireless – which spent approximately $243 million on 10 licenses across Canada covering 10 of the country’s 13 largest urban areas – wrote that as a result of discussions with other licensees regarding nationwide roaming, “it has become increasingly clear that certain incumbents are attempting to force exclusivity provisions upon requesting operators such that they would be unable to enter into roaming agreements with any other carrier.” DAVE Wireless adds that incumbent carriers seem unwilling to enter into roaming agreements at all without the insertion of such exclusivity, and has suggested that the government take action to prevent licensees from forcing such provisions upon new entrants. Richtelecom, however, is setting itself up as something of an example to the other new entrants. “We believe that with our plan we will probably be the first to get a network agreement done,” says Sharawi. “We think the others will look to us for assistance.” Sharawi says he believes this is true because as the smallest entrant his company poses the least threat to the incumbents. He says that Richtelecom is in good financial shape and will be ready to launch in the fourth quarter of 2009. “We are aware that the incumbents’ deep pockets will help them a little – they will ramp up your legal bill, raise your costs to make you less competitive,” says Sharawi. Tower and site-sharing is one area where DAVE Wireless wants licensees to act fast. The company says site sharing requests should include the site reference number, and a one week response time for a licensee to deliver a preliminary technical information package to a requesting operator for both site sharing and roaming. And when it comes to leasing agreements, DAVE Wireless says licensees should have a maximum of 30 days to place equipment having a bona fide use. For its part, Globalive says it is ready to compete, and is on schedule to launch. “We’ve been in this business for ten years,” says Lacavera. “If the new entrants think the big guys are going to make this easy they are dreaming. But it will have no effect on our launch schedule: we will launch in Toronto and Vancouver in late 2009, Calgary and Edmonton and Ottawa in early 2010, and the rest in the remainder of 2010 and 2011.” They had better – Globalive’s deep pockets resulted in $442 million being spent on 30 licences, and if they don’t follow through with the roll out, then many of the other new entrants will feel like they participated in an auction with falsely inflated prices. “If that money was not real then the price that was paid by everybody was not real,” says Sharawi, adding that prices would then have to be looked at again. Lacavera is confident that won’t be necessary. “Our business plan includes a $1.9 billion investment over 10 years,” says Lacavera. “The initial network build will be $300-$500 million. As we add network capacity we anticipate operating losses, but we expect to be profitable after five years.” Globalive, which has a $700-million investment from its parent Orascom Telecom, an Egyptian corporation, and another $300 million from vendor financing (Lacavera says the vendor will be announced in the next two to three months), will also need roaming agreements for Quebec, where it has no licences and will not be building any infrastructure. The company was officially given its licences by Industry Canada on March 16.

New wireless entrants frustrated by incumbent tactics

News | 03/31/2009 9:05 pm EDT

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