Mobilicity’s failure ‘inevitable’

Wireless firm never stood a chance due to weak federal support: founder

Mobilicity’s attempt to compete in Canada’s wireless market was doomed from the start by Ottawa’s lacklustre efforts to create sustainable conditions for a fourth carrier, the mobile company’s founder said in response to the discount brand’s impending demise.

“It’s sad but inevitable,” John Bitove said in an interview a week after Rogers Communications Inc. disclosed plans to fold Mobilicity’s 150,000 subscribers into Chatr, its other low-cost brand, less than a year after it bought the foundering company for $465 million.

“There was a lot more (the government) said they’d do that they never did ... they took the money and ran,” he said.

Bitove, who also headed Sirius XM Canada and founded the Toronto Raptors, contends Ottawa lured Mobilicity into entering the wireless game — it bought $240 million of wireless spectrum in a 2008 government auction that netted $4.26 billion, about a third of which was from new entrants — with promises of providing support for real competition in an industry dominated by three big players: Rogers, Telus Corp. and BCE Inc.owned Bell.

But Bitove said the government never followed through on rules regarding roaming, tower sharing and foreign ownership, measures that would have fostered sustainable competition.

“It was just one knife after another,” he said. “It was always about the auction and maximizing the proceeds from the sale of the spectrum and much less about making sure there was competition.”

Mobilicity went under courtsupervised creditor protection in 2013 before Rogers bought it in 2015. It wasn’t the only upstart that couldn’t last on its own. Wind Mobile is now owned by Shaw Communications Inc.

Critics of the Conservatives’ fourth carrier policy argue this proves it was an ill-fated attempt at intervention, but advocates (particularly consumer groups) lament the loss of competition in a field with high barriers to entry. Still, Bitove doesn’t think the fourth carrier dream is dead, pointing to uncertainty about how the new Liberal government will approach telecom policy.

The Liberals were largely quiet on the file until they rejected a Bell petition last week and sided with CRTC plans to require large providers to sell smaller players access to fibre networks at wholesale prices. It remains to been seen whether the Competition Bureau will approve Bell’s plans to buy MTS, Manitoba’s largest provider.

Bell argues the deal will foster competition by creating three strong players in the market on faster networks, whereas critics and consumer advocates say it will raise wireless prices in a province with comparatively cheap rates.

Meantime, Bitove and Mobilicity’s U.S. investor Quadrangle continue to pursue a $1.2-billion lawsuit against the federal government in the Ontario Superior Court. They allege Industry Canada (now called Innovation, Science and Economic Development Canada) duped them into investing in wireless spectrum with false promises of protection against the big players.

There was a lot more (the government) said they’d do that they never did ... they took the money and ran. JOHN BITOV E , founder, Mobi li city