A new world for wireless telecom?

by Peter Nowak, CBCNews.ca

It's too bad the government's wireless spectrum auction hasn't ended yet because two key players took to the stage at the Canadian Telecom Summit today. Robert Depatie and Pierre Blouin - respective chief executive officers of Videotron and MTS Allstream - gave keynote addresses, but both skirted around the issue of wireless because of strict Industry Canada rules.

Depatie was the feistier of the two, not surprising given that Videotron – owned by Quebecor – looks to emerge from the auction holding a bunch of spectrum in Quebec and thus become a new cellphone carrier. Quebecor has also been active in trying to get spectrum in Toronto and along the 401 highway corridor, which probably means the company has ambitions outside its home province.

Depatie took shots at the incumbent cellphone carriers – Bell, Rogers and Telus – who last year argued against creating special auction rules that would encourage new entrants. Ted Rogers went so far as to call Quebecor CEO Pierre Karl Peladeau a "scallywag."

The government ended up setting aside about 40 per cent of the spectrum for newcomers, resulting in a flurry of bidding activity. The auction will rake in at least $3.7 billion, far more than the $1.5 billion that had been projected. In fact, as of yesterday, potential new entrants were responsible for $1.7 billion in bids.

"Eating words has never given us indigestion," Depatie said, quoting Winston Churchill. He also borrowed a euphemism from Newfoundland for describing the incumbents' earlier arguments, calling them "codswallop." Other than that, however, Depatie said he would only be able to share Videotron's wireless plans once the auction is over.

Blouin was more subdued in his comments regarding wireless, which was also not surprising given that MTS saw its plans for a national cellphone network evaporate just before the auction started, when its partnership with the Canadian Pension Plan and private equity firm Blackstone fell through.

The MTS CEO did suggest, however, that a partnership with one of the auction winners is possible: "Life in wireless does not end in the auction," he said. "The market will change. The telecom market after the auction will be a new world for customers."

If we were the betting kind, an alliance between MTS and Globalive would make tons of sense. MTS is almost solely geared toward the business market, while Globalive, which operates as Yak, caters largely to consumers. It's entirely possible MTS could rent airwaves from Globalive to provide its own business cellphone service across the country.