Bell has become the latest Canadian wireless company to cry foul over telecom rules, taking out a two-page newspaper advertisement to tell Canadians the current regime favours giant U.S. competitor Verizon.
Like its rivals Rogers Communications and Telus, Bell is calling on Ottawa to change its policies over foreign entry into the Canadian wireless marketplace.
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With Verizon Communications, a U.S. wireless provider with 100 million customers, eyeing the Canadian market with a potential takeover of startup Wind Mobile or Mobilicity, the big three Canadian telecom companies say federal rules put them at a competitive disadvantage.
Last week, Telus Corp. chief executive officer Darren Entwistle warned of a "bloodbath" in wireless competition unless the rules are changed, and yesterday Rogers CEO Nadir Mohamed criticized federal rules in a chat with analysts.
Bell's argument, signed by CEO George Cope and bolstered by quotes from analysts and the business press, lays out what it calls three "loopholes" in the rules that Verizon would be able drive right through.
According to Bell, these loopholes are:
- Verizon could bid on two blocks of Canadian spectrum set aside for new entrants to the market in auction later this year. Because the big three Canadian firms are not permitted to bid on these blocks, they are likely to be sold at a lower price.
- Verizon would not have to build its own networks to remote or rural communities, but would be able to piggyback on existing networks.
- Verizon can bid to acquire small Canadian companies such as Mobilicity or Wind, but Bell, Telus and Rogers are forbidden from bidding on them.
"A company of this size certainly doesn’t need handouts from Canadians or special regulatory advantages over Canadian companies," Bell says in its ad. "But that is exactly what they get in the new federal wireless regulations."
"We’re ready to compete head to head, but it has to be a level playing field," Cope said in a TV interview, echoing Rogers CEO Mohamed, who also called for a "level playing field."
Cope said Verizon would scoop up easy business in big urban centres, but his company would be forced to provide it with access to more remote areas.
"That would be akin to Wal-Mart coming to Canada and the government saying to Canadian Tire, they have to give Wal-Mart 20 of their best stores and put Wal-Mart’s products on their shelves," Cope said.
In June, when the new federal rules were introduced, then-industry minister Christian Paradis said the federal government wants to increase competition in the wireless market and had created the regulations to encourage new entrants.
The two blocks of spectrum set aside for new players were intended to encourage the small startups to grow and address perceptions that Canadians pay too much for wireless services.
But the potential entry of Verizon, a company Bell says is four times the size of any Canadian telecom, has spooked the wireless industry.
Bell, the main operating unit of BCE Inc., called on the federal government to allow Canadian carriers to bid on the startups like Wind and Mobilicity and to require any U.S. operator entering the market to serve all of Canada.
It also calls for opening up of the auction on Canadian spectrum to all players. Four blocks of spectrum come up for auction this fall, but the three large Canadian companies can bid on just two of them.
Nervous about competition
John Lawford, executive director of the Public Interest Advocacy Centre in Ottawa, says the big three telecom companies don't want to face a fourth, powerful competitor.
"They should be scared because chances are they're going to have more competition in the Canadian market if Verizon comes in and they are going to have to lower their prices and compete harder," Lawford told CBC News.
"It's pretty rich of them to be talking about unfairness" when they already control 90 per cent of Canadian spectrum, he added.
Lawford speculated that the telecoms are taking their fight to the Canadian public because they’re not getting a sympathetic hearing in Ottawa back rooms.
"What I'm seeing is an effort, a public effort, by Canada's major wireless carriers to try to scare the government into changing its course on trying to lower wireless prices for customers by introducing another competitor," he said.
Canadian prices don't compare well
While the three large Canadian telecoms make themselves out as the little guys in their recent statements, an OECD study of telecoms in leading industrialized countries confirms that Canadians aren’t wrong in believing they pay high prices for service here.
Canada is one of the most expensive countries in the OECD for data-only plans — third most expensive in a field of 34 — and is among the 10 most expensive for wireless plans, the report, released every two years by the OECD, shows.
Canadian carriers have the third-highest revenue-per-user in the G8, and the fourth-highest across the whole OECD.
Telecom expert Michael Geist points out that high prices have discouraged wireless use in Canada.
"The expensive pricing surely has an impact on wireless subscriptions," he wrote in a recent post. "Canada ranks last in the OECD in wireless subscriptions per 100 inhabitants, second last in households with a mobile telephone, and 23rd (of 34) in wireless broadband subscriptions per 100 inhabitants."
Geist points out that competition has brought prices down in other markets and more players are needed in Canada.