Create new agency to fix wireless regulation, says Hoey

Industry Canada’s close relationship with the wireless carriers and the CRTC’s willingness to turn a blind eye to the lack of competition in the mobile services sector needs to be reversed, according to a one of the country’s most outspoken telecom consultants. Speaking with Report on Wireless, Eamon Hoey says Canada needs a complete “rethink” to its wireless regulatory structure. The senior partner at Hoey Associates Management Consultants Inc. says it’s high time that a new agency be created to manage both spectrum matters and competition-related issues. “We need to get rid of CRTC and Industry Canada, and merge them together. At least merge their authority together to create a brand new agency,” he says. The idea of a converged regulator for wireless has been bandied about before. The Telecommunications Policy Review Panel recommended that Industry Canada’s spectrum management functions be shifted to the CRTC. Technical aspects of spectrum would remain with the department. But Hoey goes further with his concept for a single regulator, insisting dramatic change needs to take place if a new agency is to work. “One of the rules is that anybody who worked for the CRTC and Industry Canada in spectrum management cannot apply, nor can they get a job in the new agency. In other words, we want to ensure that we have a brand new agency with new thinking.” Hoey’s comments come after a Report on Wireless commentary earlier this month suggesting Industry Canada refrain from using sealed-bid, second-price auctions because it was clear that some of the players in the recent auction of previously unassigned 2300 MHz and 3500 MHz licences gamed the system. One company in particular bid an amount 45 times higher than it closest rival, but only had to pay the second highest price under the auction’s rules. In an email, Hoey exclaimed that we should score one for the little guy for figuring out how to game the system just like the big wireless operators have done for years. But his note was meant to show how Industry Canada’s spectrum management system didn’t work and needed to be fixed. “This auction is just another example of the bankrupt nature of the Industry Canada’s approach to awarding spectrum,” he wrote. Industry Canada is no longer a neutral regulator, Hoey says, pointing to retired department bureaucrats finding work in the regulatory departments of the carriers. “They’re bureaucrats and they’re not in touch with the public,” he says. “They consider their public to be the Canadian Wireless Telecommunications Association rather consumers and the end users of the structure that they put out.” More regulation of mobile required Industry Canada’s spectrum management policies have allowed the large mobile operators to acquire a significant amount of spectrum, more than other carriers around the world have and need, according to Hoey. Canada’s largest mobile operators have more spectrum than Verizon, a direct result of the lifting of the spectrum cap, he says, which has in turn resulted in a dismal Canadian wireless market. “When we look at what have we accomplished in the last 30 years in wireless, the report card is not very good,” he tells Report on Wireless. “We’ve got poor penetration in terms of wireless, and I’m talking about plain vanilla wireless voice services. We’re a tail-ender in that by contrast to other countries around the world just looking at the Nordic countries as an example.” Hoey also suggests that the wireless carriers should be forced to give back their 850 MHz spectrum, mostly retired after the switch off of analog cellular, and that they shouldn’t be allowed to participate in the 700 MHz spectrum auction to be held at some point in the future. As well, spectrum caps should be reinstituted. Asked whether the market should be allowed to play out following the entry of a new slate of competitors in the market later this year and next following the 2008 Advanced Wireless Services spectrum auction, Hoey was direct. “How many more years are we going to wait? How many more years are we going to wait for consumers to continuously, daily get screwed in the marketplace because we have an oligopoly?” he asked rhetorically. “You’ve got to go back and look at the structure of the market then you look at the behaviour in the market. And if you judge on their behaviour you got to say at the end of the day that the forces of competition are not working in that industry. Because if they were working, there would be downward pressure on pricing and upward pressure on service. We’re not seeing either one of them. That’s not happening.”

Create new agency to fix wireless regulation, says Hoey

News | July 28, 2009

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