Eyes on Quebecor following 3500 MHz auction

As the dust settles on the results of the 3,500 MHz auction announced Thursday, much of the initial interest amongst analysts and industry watchers has centered not on the $7.31 billion spent by the so-called big three incumbents — BCE Inc., Rogers Communications Inc, and Telus Corp. — but rather on the roughly $830 million spent by Quebecor Inc. and on its purchases outside its home province of Quebec. 

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Court of appeal dismisses Quebecor challenge in TVA Sports fight with Bell

The Federal Court of Appeal has dismissed an attempt by Quebecor Inc. to overturn a CRTC decision that ordered the company to continue to provide its TVA Sports broadcast to BCE Inc. subscribers after Quebecor yanked the feed in April 2019, just as the puck dropped on the opening game of the Stanley Cup playoffs. 

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Gov announces plans for Digital Safety Commissioner to combat online harms

The federal government intends to create a new Digital Safety Commissioner in its effort to combat online harms in five categories — terrorist content, hate speech, non-consensual distribution of intimate images, and content that incites violence and sexually exploits children — and force online platforms to remove illegal content within 24 hours of being flagged.

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BREAKING: 3500 MHz auction nets $8.9B, $7.3B from incumbents

Canadian telecom companies — and wireless service hopefuls — have spent some $8.91 billion on the 3,500 MHz band of spectrum, according to preliminary results released Thursday afternoon by the Department of Innovation, Science, and Economic Development (ISED).  

The 3,500 MHz band is widely seen as crucial to the roll out of 5G networks. 

Rogers Communications Inc. was again the big spender in the auction, shelling out almost $3.33 billion for strips of spectrum along the valuable band, purchasing 325 licenses covering a population of just under 35 million people. 

““This investment in 5G spectrum will build on our existing 5G assets and enable us to deliver the world-class connectivity Canada needs to increase productivity, fuel innovation, create jobs, and compete in a global economy for decades to come,” Rogers CEO Joe Natale said in a release.

The $3.38/MHz/pop figure on Rogers’ spending is significantly higher than the $1.71/MHz/pop the company spent in 2019. 

Two years ago in the 600 MHz auction, Rogers spent some $1.7 billion licenses in that band of spectrum, while BCE Inc. decided to keep its checkbook in its pocket. 

This time around Bell splashed out $2.07 billion for 271 licenses, covering a population of 34.3 million. 

“Acquiring this significant additional 3500 MHz spectrum will drive Bell’s ongoing leadership in 5G, a critical component in our multibillion-dollar program to accelerate investment in Canada’s next-generation network infrastructure and services,” Bell president and CEO Mirko Bibic said in a statement. 

Telus Corp. shelled out nearly $1.95 billion for 142 licenses covering a population of 24.9 million. 

The $8.91 billion figure came in even higher than the $8 billion estimate first reported by the Globe and Mail that raised eyebrows from some analysts and industry-watchers. The announcement of big spending in Canada’s 3,500 MHz auction tracks with large numbers seen in other countries, like in the United States where the auction of a similar band of spectrum saw companies spend an eye-watering $80 billion.

While incumbents spent the vast majority of the money, other big spenders included Quebecor Inc., whose Videotron subsidiary spent just shy of $830 million on 294 licenses covering a population of just under 30 million. Videotron acquired a number of spectrum assets in Ontario, Alberta, and British Columbia.

Quebecor CEO Pierre Karl Péladeau recently teased the idea of taking the company’s Videotron wireless service national and purchasing Shaw Communications Inc.‘s wireless assets should the Competition Bureau mandate they be put up for sale as part of the review of that company’s merger with Rogers.  

Shaw decided to sit out this spectrum auction on the heels of the announcement of its deal to be acquired by Rogers. 

Cogeco Inc., one of the companies that could stand to benefit from the CRTC’s new mobile virtual network operator policy (which mandates that regional carriers with some level of spectrum be allowed to buy access on incumbent wireless networks), spent $295 million on 38 licenses covering a population of 10.3 million. Of its total, Cogeco spent $205 million for licenses in the greater Toronto area, the company said in a release. 

“These spectrum investments, together with the recent CRTC regulatory decision on wireless services and our robust and growing regional broadband network, position Cogeco to further develop plans to enter the mobile wireless services market in a financially disciplined way in all of our core markets in Canada,” Cogeco president and CEO Philippe Jetté said in a Thursday statement.

Xplornet Communications Inc. likewise spent $244 million for 263 licenses covering a population of 16.6 million. 

In a statement accompanying the release, ISED touted the results as a victory for smaller companies and competitiveness. 

“In all 172 service areas, there is now at least one small or regional provider holding spectrum for the purpose of deploying new services to Canadians,” the release read. “Together, these small and regional providers have increased their total mobile spectrum holdings by over 50 per cent, strengthening their ability to offer competitive services.” 

“As intended, small and regional providers have gained access to significantly more spectrum, meaning that Canadians can expect better wireless services at more competitive prices, which has never been more important for working, online learning and staying connected with loved ones,” Innovation Minister François-Philippe Champagne said in a release. 

— Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Jenna Cocullo at jcocullo@thewirereport.ca 

CRTC’s fibre wire access decision ‘nail after nail after nail in the coffin of competition’: CNOC 

The CRTC’s decision against mandating access to fibre in-building wire (IBW) in multi-dwelling units (MDUs) — on the basis that wire inside apartment buildings can easily be duplicated and that there is sufficient competition in the market — is “very anti-consumer,” according to an advocacy group and smaller telecommunications companies.

Tuesday, the CRTC released a decision that companies using BCE’s Inc.’s fibre IBW must now reach a commercially negotiated agreement with the company after determining access to fibre IBW in MDUs is not an essential service and can be duplicated. 

“We are disappointed that the CRTC has reversed another major telecommunications decision, once again in favour of big telecom profits and at the expense of increased consumer choice and competition,” Gary Kenning Co-Founder of CloudWifi Inc., said in a written statement to The Wire Report. “This ruling delivers a blow to the millions of Canadians who live in condos and apartments across the country, making it even more difficult to find high quality, reasonably priced alternatives to the big phone and cable companies.”

Tuesday’s decision follows a long 2018 dispute between CloudWifi and Bell in which the former requested the CRTC order Bell to give it access to its fibre connections. The CRTC, in June 2019, ruled it would extend those rights to the small ISPs, and initiated a consultation proceeding to determine if MDU access should be extended to all carrier ISPs, and potentially to all TSPs.

Companies now have 180 days to cease and desist their use of Bell’s fibre IBW in MDUs unless they reach an agreement, according to the decision. 

The CRTC’s analysis that fibre IBW is duplicable and that there is enough competition in the market is “simply not true,” Geoff White, executive director of Competitive Network Operators of Canada (CNOC), told The Wire Report in a phone interview.

He said small competitors successfully negotiating with the incumbents is unlikely because the large companies have the power to set whatever rates they want in the absence of regulation without commercial incentive to provide competitive rates.

If small competitors want to wire buildings themselves it would be difficult to gain access from the owners and front the costs for labour, space charges, and materials, White added, arguing that it is in fact not a realistically duplicable asset.

What’s causing some of the most controversy over the CRTC’s decision was its analysis that the public good consideration does not apply to the essentiality test when determining if fibre IBW is an essential service.

“The public good policy consideration does not apply to access to fibre IBW because such access does not have a strong connection to social or consumer welfare, public safety, or public convenience. In addition, the commission does not consider that competition and consumer choice qualify as public good considerations,” it wrote in its decision.

“That’s an error of facts, which leaves this decision very vulnerable to challenge,” White said. “This decision has the effect of saying they don’t think residents in multi-dwelling units deserve a realistic choice, because there will be no realistic choice with this decision if it is left to stand.”

Telecommunications consultant Mark Goldberg told The Wire Report in a phone interview that many people took the CRTC’s written analysis on the public good consideration “out context” and interpreted it to be talking about competition and consumer choice.

“That’s not at all what they were saying. They were talking about the public good test under essentiality, which is a specific test,” he said, noting that public good is an economic term for a good with no capacity constraints to it.

“That’s not really the case for fibre, and you’ve got to also keep in mind that they preserved the essentiality of in-building copper wire and actually expanded access to the copper wire that’s in-building,” he added, referring to the commission’s decision to extended modified MDU access to all carrier ISPs who will now have access to copper IBW on the same basis as local exchange carriers (LECs).

Goldberg said he does not think the decision hinders competition and what the industry will start to see is property owners running their own fibre and getting into the in-building wiring business, which he said has been “a pretty good business” in the United States where there is also no mandated access. He added that it is “reasonable” that the CRTC did not set rates because there is a “huge variation” in the cost of running fibre based on the configuration of each building.

Andy Kaplan-Myrth, VP Regulatory & Carrier Affairs for TekSavvy Solutions Inc., said this decision is the latest in a “very clear pattern of issuing bad decisions for competitors and consumers” by the CRTC and that it openly defies cabinet’s mandate to the CRTC to promote competition and consumer interests.

He said Wednesday that the decision “underscores the urgency of TekSavvy’s recent petition to cabinet seeking Ian Scott’s removal as CRTC Chair for his apparent bias against consumers and competition.”

Kaplan-Myrth was referring to the company’s decision to file a formal petition to cabinet asking the Liberal government to overturn the CRTC’s decision to reverse wholesale high-speed internet access rates and remove Scott as chair.

White also said that it is time for the government to revisit Canadian telecommunications policy as the CRTC’s recent decisions are “out of line with the Telecom Act” and Scott’s 2019 bar meeting with Bell CEO (then chief operating officer) Mirko Bibic raises the issue of regulatory capture as a number of its senior staff come from big telecom.

“This just made things a lot more difficult for the smaller competitors who are already struggling, after the years-long wholesale rates debacle,” White said. “And now we’re faced with this other decision. It’s just nail after nail after nail in the coffin of competition and so we’re escalating a number of issues now to political influence.”

Kenning said CloudWifi is still weighing all its options before it makes a decision on what to do regarding the latest ruling by the CRTC and in the meantime, the company is moving on with business as usual.

— Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Hannah Daley at hdaley@thewirereport.ca

 

Comp. Bureau asks court for info from Bell, Telus, Quebecor, Xplornet in its review of Rogers-Shaw deal

The Competition Bureau is asking the Federal Court for an order compelling the release of information from BCE Inc., Xplornet Communications Inc., Quebecor Inc., and Telus Corp. — information the bureau says it needs in its ongoing review of the proposed merger between Rogers Communications Inc. and Shaw Communications Inc.

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