For the past five years, the federal government has tinkered with wireless industry regulations in hopes of spurring more competition and enabling a fourth national carrier to emerge. As the September registration deadline for the next spectrum auction approached, it looked like the government might finally get its wish. Speculation ran wild that U.S. giant Verizon Communications was interested in expanding to Canada. Now that the company has quashed those rumours, the government’s efforts have suffered a serious setback. If the Conservatives are still dead set on lowering wireless prices to win points with consumers, more drastic action may be required.
Upstart carriers Wind Mobile, Mobilicity and Public Mobile have all struggled since entering the market three years ago. Both Wind and Mobilicity are up for sale. Egyptian billionaire Naguib Sawiris and Wind CEO Anthony Lacavera are said to be angling for full control of the company, and considering a merger with Mobilicity. Ghose doubts that arrangement would change the wireless landscape very much. “Given Wind’s lack of success under Sawiris’ investment umbrella and Anthony Lacavera’s management, we wonder if anyone really fears a potential…Wind/Mobilicity combination,” he wrote in a recent report. Wind, the biggest newcomer, controls only 2% of the market.
The limited scale of the new carriers is not surprising. “If the cards are stacked against them as they are right now, I can’t see how they will succeed,” says Steve Anderson, executive director of digital policy advocacy group OpenMedia.ca. Anderson points to a Toronto company called Ting, which purchases network access from Sprint in the U.S. at wholesale prices and resells it to mobile consumers on a pay-as-you-go basis. Ting boasts it can save consumers at least 50% on their bills, but it hasn’t been able to negotiate deals with Canadian carriers, and therefore cannot offer service here. “The government is going to have to step up and stop the big three from blocking independent providers from reaching Canadians,” Anderson says. The CRTC, meanwhile, is analyzing roaming charges and has not ruled out regulating fees when roaming in the U.S. to ensure consumers aren’t gouged.
Rather than additional regulation, however, removing foreign-ownership restrictions in telecom might be a better way to bring about more competition. That was one idea recommended by a federal telecommunications policy review panel back in 2006, but the current government has yet to fully embrace the suggestion.
Gerry Wall, founder of consulting firm Wall Communications, says part of the reason the upstart carriers have struggled is that the spectrum they own is of a lesser quality, and limited the range of devices they could offer consumers. The spectrum in the upcoming auction can travel farther and is better able to penetrate walls. “They really need this to make a difference,” Wall says.