Wireless auction rules now expected after this month’s federal budget

Wireless carriers are advocating their positions on the 700 MHz spectrum auction rules that are now expected to be released after the federal budget is tabled March 29. The Conservative government has been silent about the coming auction rules and any changes to the foreign ownership regime since Industry Minister Christian Paradis met with telco executives to discuss the auction last August. The government was expected to announce the spectrum auction rules by the end of February but a decision did not materialize. One industry source with knowledge of the situation said the government now plans to release the framework after the budget is tabled March 29. Since Paradis’ meetings last year, senior bureaucrats and other federal officials have declined to discuss the matter with industry executives, Ken Engelhart, senior vice-president of regulatory affairs at Rogers Communications Inc., said in an interview. “Other than those meetings, anyone at Industry Canada, whether political staff or public servants, will not talk about this file at all,” he said. Carriers have instead taken their positions on the auction rules into the public space, issuing releases, backgrounders, and letters. On Monday, new entrant Mobilicity issued a release about a letter it wrote to Paradis and Prime Minister Stephen Harper last week to encourage the creation of “spectrum screens,” a regulation that would limit a carrier's share of the spectrum available in a given market. Mobilicity did not release the letter, but in a release said the letter drew “a stark comparison between a Spectrum Screen, which ensures a carrier’s holdings do not exceed a predefined threshold, and an auction ‘cap,’ which specifies how much spectrum a carrier can purchase in a single auction.” Engelhart asked whether Bitove’s letter to the minister was appropriate when the government is no longer consulting on the issue and Industry Canada's “time period for letters ended last year.” In an interview with The Wire Report, John Bitove, Mobilicity’s executive chairman, said a spectrum screen is necessary to stop “dominant players” in the industry from acquiring spectrum to prevent smaller competitors from getting access to it. “If I’m sitting on spectrum and I’m not utilizing it, in theory, the Canadian consumer is missing out,” Bitove said. Mobilicity said the U.S. Federal Communications Commission (FCC) “recently applied a Spectrum Screen to help block the proposed AT&T/T-Mobile merger out of fear that one carrier would hold too much spectrum.” Andrew Seybold, an independent telecom consultant in the U.S., said in an interview that the FCC sought to ensure the proposed merger—which AT&T Inc. withdrew in December—did not create markets with only a single carrier. Seybold said the U.S. has not used spectrum screens for more than half a decade and that there is no longer a “high-end limit” to how much spectrum a single carrier can hold in a market. “There’s no spectrum cap per say, but there is also no way that a single operator can own 100 per cent of the spectrum in a given market,” he said. “It’s dealt with on a case-by-case basis.” Mobilicity and other new entrants, including Wind Mobile (a Globalive Communications Corp. subsidiary) and Videotron (a Quebecor Media Inc. subsidiary), have called on the government to set aside blocks of 700 MHz spectrum for small players as a part of the auction framework. The auction rules are expected to include a cap regime, which would limit the amount of spectrum each provider could purchase in each market, or set asides. Industry sources told The Wire Report in background interviews Monday that the government may include an announcement on changes to the telecom industry’s foreign ownership rules in the federal budget and follow it up with legislation. That process would be similar to the way it removed the foreign ownership rules for the satellite sector in 2010. The sources added that they believe Industry Canada has submitted its proposed rules to cabinet, where a final decision awaits. Bruce Kirby, Public Mobile’s vice-president of strategy and business development, told The Wire Report in January that the department needed to release the rules by the end of February if it intended to hold the auction this year. Simon Lockie, chief regulatory officer at Wind, said in an interview Monday that he no longer expects the 700 MHz auction to take place this year. It is more likely to happen in the spring of 2013, he said. “Even that window is going to close if they can’t announce a decision until after the budget,” he said. Lockie said Wind and other players are growing frustrated as the government deliberates on the rules without further consultations with industry. He pointed to the changing spectrum landscape in the United States and its impact on the type of devices that Canadian new entrant carriers can offer with their existing spectrum holdings, and said the issue calls for further consultation. Lockie said delays to the auction and auction rules, and frequent speculation about when the announcement will come, is becoming “a joke” within the industry. “But it’s not a very funny one when your future depends on it,” he said. Paradis' office did not respond to a request for comment. —With files from Simon Doyle nkyonka@thewirereport.ca

Wireless auction rules now expected after this month’s federal budget

News | March 6, 2012

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