Rogers asks court to dismiss Telus challenge of spectrum-transfer rules

Rogers Communications Inc. is urging the Federal Court to dismiss Telus Corp.’s request for a review of Industry Canada’s new spectrum transfer rules and how they would apply to the potential acquisition of new-entrant wireless carriers, court documents show. In a legal challenge launched in July, Telus said the courts should prevent Industry Canada from imposing new spectrum transfer rules released in June that would require companies to seek the industry minister’s approval before acquiring other companies that hold spectrum licences. Telus argued it is outside the minister's legal powers to add the new rules and that the new requirement would interfere with the companies’ long-term business plans by preventing incumbent providers, such as Telus, from purchasing new-entrant carriers after five-year moratoriums on acquiring the smaller competitors expire. In documents filed with the Federal Court on Friday, Rogers said Telus’ request that the court reviews the new spectrum transfer rules is “premature” because it’s not yet known whether the minister would reject requests for “deemed” transfers of the new entrants’ spectrum, which are those in which spectrum assets are acquired through the purchase of a company. It added that it is not yet known whether the new policy would be detrimental to Telus’ business plans. “In Rogers’ submission, it is premature to speculate as to the nature of any specific decision by the Minister in respect of an application of a Deemed Transfer or the impact of such a decision on any player,” Laurence Dunbar, a lawyer with Fasken Martineau LLP representing Rogers, wrote in the company’s memorandum of fact and law. “There is no evidence before the Court on how the Minister will apply the criteria in the licence transfer policy in response to such an application, what decision he might reach, the parties involved and the impact of the decision on them.” Telus said in documents filed with the court last month that it crafted its long-term business plans around Industry Canada rules that prohibited the company from acquiring its new-entrant competitors for five years. The company said it would have bid more aggressively for spectrum licences in the 2008 Industry Canada auction had it known it might not be permitted to acquire the new entrants — and their spectrum — after the moratoriums expire. “In developing TELUS’ bidding strategy, TELUS relied on the Minister’s representation that the moratorium would expire after five years and that, in 2014, TELUS would therefore be free to obtain additional spectrum by acquiring control of or forming alliances with any new entrants,” Stephen Lewis, Telus’ vice-president of corporate strategy, said in an affidavit filed with the court in December. Rogers said in its submission that the court’s consideration of Telus’ request “should be limited to consideration of whether the mere requirement to file an application for approval of a Deemed Transfers (which could be approved or denied)” is detrimental to Telus’ business plans. It added that the court would be in a better position to determine what affect the policy would have on the industry after Industry Canada processes at least one deemed licence transfer under the new rules. “It is expected that at least one, and possibly more, applications for approval of deemed or other spectrum licence transfers will be forthcoming when the five year moratorium on transferring ‘new entrant’ AWS spectrum to entities that do not qualify as new entrants (such as Rogers) expires in the coming month,” Rogers said in its submission, which asks the court to dismiss Telus’ challenge of the rules. “These applications will give rise to specific decisions of the Minister and, in each case, concrete facts on the nature and the impact of the decision on the parties involved.” Telus’ application comes at a time when the federal government’s plan to instil more competition in Canada’s wireless industry is at a crossroads as wireless providers battle for new 700 MHz spectrum licences through an Industry Canada auction that started last week, and as new-entrant players from the last auction face uncertainty about their future operations. Mobilicity, which won spectrum licences as a new entrant in the 2008 auction, is currently in bankruptcy protection and trying to sell off its spectrum and other assets, or the company as a whole. Wind Mobile, another new-entrant carrier, pulled out of the 700 MHz auction last week after its majority equity owner, Amsterdam-based VimpelCom Ltd., declined to fund the company’s participation in the auction as it remains in discussions with the government about Wind’s future. Industry Canada rejected in June Telus’ bid to acquire Mobilicity (formally called Dave Wireless Inc.), stating that it would not waive the five-year prohibition on incumbents acquiring the smaller competitor. The department again told Mobilicity in October that it does not want to see the company’s spectrum licences transferred to Telus due to concerns related to spectrum concentration, though the department did not provide a definitive answer as to whether it would formally extend the five-year moratorium on incumbent carriers acquiring the new entrants’ licences. The moratorium on incumbents acquiring Mobilicity’s spectrum licences expires on Feb. 10, while the moratorium on acquiring Wind’s spectrum licences expires on March 12. Rogers has reached a deal with Shaw Communications Inc. that gives Rogers the option to buy the AWS spectrum Shaw acquired as a new-entrant carrier after the moratorium on incumbents acquiring that spectrum expires in September. Through a separate deal, Quebecor Inc.’s Videotron Ltd. subsidiary also has an option to sell its new-entrant spectrum in Toronto to Rogers. Niether Videotron nor Industry Canada provided comments Tuesday when asked whether Videotron had applied to transfer its Toronto spectrum licences to Rogers. While both of the Rogers deals would require the minister’s approval under the new spectrum transfer rules, neither would be considered a “deemed” transfer because they do not involve an acquisition of the company holding the spectrum. — With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Derek Abma at dabma@thewirereport.ca

Rogers asks court to dismiss Telus challenge of spectrum-transfer rules

News | 01/21/2014 8:28 pm EST

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