BCE joins Telus’ campaign against auction cap rule

BCE Inc. aligned itself with Telus Corp.'s campaign to change the government's wireless auction policy, running ads in daily Canadian newspapers that identify potential competitor Verizon Communications Inc. as a $120-billion conglomerate four times the size of Canada's wireless sector. “he government inadvertently left holes in the wireless rules that would give big US corporations the same extraordinary advantages as the small startups,” said a two-page advertising spread, featuring an open letter from BCE chief executive George Cope, which ran Thursday in The Toronto Star, the Ottawa Citizen, and The Globe and Mail. “Verizon has said it's looking at taking advantage of this unique opportunity. We do not believe a US company 4x the size of Canada's entire wireless industry combined requires special help from Canada,” the letter said. Faced with a potential market entry and competition from Verizon Communications, BCE, Telus, and Rogers Communications Inc. are heading up a summer lobbying campaign to “level the playing field” and push for an “open auction” for wireless licences, in advance of a Sept. 17 deadline to submit initial applications and deposits to participate. This month, members of the boards of Telus, BCE and Rogers registered individually to lobby Industry Canada, the Prime Minister's Office, and other departments and agencies on telecom policy issues, including spectrum, according to the federal registry of lobbyists. On Thursday, BCE, whose board members registered this month to lobby the Prime Minister's Office only, launched a webpage for its campaign, called “Play Fair.” BCE also issued a press release that said: “Verizon Wireless is part of the $120-billion Verizon Communications conglomerate—in comparison, Bell Canada, the country's largest communications company, has annual revenue of approximately $18 billion. Verizon is not a company that needs special advantages or subsidies to compete.” Canada's incumbent providers are primarily pushing for changes to the auction rules, which limit each incumbent to purchasing one of four available “prime” spectrum blocks per licence area, while new entrants and deep-pocketed foreign players like Verizon could purchase up to two per licence area. With an eye to the wireless auction in January, Verizon is looking at entering the Canadian market through a possible purchase of new entrant Wind Mobile, controlled by Globalive Wireless Management Corp. (and Amsterdam-based VimpelCom Ltd. has a non-controlling a 65 per cent equity share). Verizon has also held talks to purchase new entrant Mobilicity, operated by Dave Wireless Inc. Telus chief executive Darren Entwistle has conducted media interviews and editorial board meetings this month, presenting arguments about how government policies favourable to a Verizon entry would hurt the Canadian economy. The Canadian Wireless Telecommunications Association, of which Telus, Bell, and Rogers are members, also took out three-quarter page ads in the Tuesday and Wednesday editions of The Globe and Mail newspaper, presenting a series of “facts” that show Canadian prices are lower than those in the United States, The Lobby Monitor reported this week. In its release Thursday, BCE said Industry Canada's auction cap policy would permit Verizon to purchase “twice as much new wireless spectrum in the upcoming auction of Canada's 700 MHz airwaves as Canadian carriers at a lower overall price"; get a “free ride” by roaming on Canadian carriers' networks without building out rural services; and acquire Wind Mobile and Mobilicity at “fire-sale prices” while the incumbents are blocked from doing so. “Verizon would not need to build its own network throughout Canada, invest in rural communities or support job growth as Canadian companies do. Verizon can easily afford to build its own networks and should do so if it wants access to Canada's airwaves,” the BCE release said. Mirko Bibic, BCE’s senior vice-president of regulatory affairs, said in a phone interview with The Wire Report Thursday that BCE is not concerned about competition with Verizon or a company of that size. BCE will “pull up its socks and compete,” he said, though the company is concerned about the competitive advantages the wireless policy gives to Verizon. Bibic said that, based on conversations with government last year, it's his understanding that the government did not intend for its policy to create such favourable conditions for a foreign player like Verizon. “When we talked about this over 12 months ago, we were told, 'Naw, that won't happen,'” he said. BCE hopes to have a meeting with Industry Minister James Moore's office as soon as next week, Bibic said. The advertisement containing the open letter run again in Canadian dailies on Saturday, with additional placement in regional and community newspapers, he said. The advertisements are directed at the Canadian public, though BCE also intends to address its message to the government, Bibic added. “It's rare. I don't know when a Bell CEO wrote a letter like that to the entire public,” Bibic said. In its release, the company cited a report released this month by Wall Communications, commissioned by the CRTC and Industry Canada, and said wireless pricing “is competitive with developed countries,” up to 40 per cent lower than in the U.S. Former industry minister Christian Paradis cited the same report this month to argue that the federal government's wireless policies since 2008 have successfully lowered wireless prices by spurring small, new entrants and increasing competition. “We will not hesitate to use any and every tool at our disposal to protect consumers and promote competition in every region of the country,” said Paradis, who was replaced by James Moore in a cabinet shuffle this month. Industry Minister Moore was not available to comment, though his spokesman, Sébastien Gariépy, said in an emailed statement: “Our Government's view has been clear, we want effective competition across Canada. Competition that will strengthen Canadian industry and serve consumers. Greater competition means better prices for Canadian consumers." BCE said the government should “promote head-to-head competition” by permitting any carrier to bid on two blocks of prime spectrum in the upcoming 700 MHz auction and allow the incumbents to make offers for Canadian new entrants, despite the new entrants' purchase of spectrum licences in 2008 that were set aside for small players. Veritas Research analyst Neeraj Monga said in an interview on BNN Thursday that he does not expect the incumbents' campaign to be successful, in part because Industry Canada's final auction policy was released last year and the incumbents are making a late push for changes. Amending the rules now would send a message that government policy is vulnerable to strong lobbying campaigns, Monga said. Cope was not available for an interview for this story. The chief executive called for a fair playing field in an interview Thursday morning on BNN, a BCE-owned news channel. —With reporting by Simon Doyle at sdoyle@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

BCE joins Telus’ campaign against auction cap rule

News | 07/25/2013 7:59 pm EDT

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