CEOs of Bell, Rogers oppose spectrum auction plan

TORONTO The CEOs of Canada’s two largest wireless providers argued Tuesday their smaller rivals shouldn’t get an advantage in the next auction for spectrum, the valuable blocks of airwaves that power mobile communications.

At a BMO Capital Markets telecom conference in Toronto, BCE Inc. CEO George Cope and Rogers Communications Inc. CEO Joe Natale weighed in for the first time on the federal government’s proposal to set aside more than 40 per cent of 600-MHz spectrum for new entrants in the name of fostering competition.

Both said they disagree with the proposal that favours wireless players with less than 10 per cent of national market share – namely, Quebecor Inc.’s Videotron and Shaw Communications Inc.’s Freedom Mobile. “Two of the largest cable companies in Canada shouldn’t be subsidized by taxpayers,” Cope said.

Spectrum auctions can bring in billions of dollars in government revenue. But the Ministry of Innovation, Science and Economic Development proposed so-called set asides instead of a completely open auction, contending the Big Three likely have the means to stop smaller players from acquiring spectrum in an open auction. It’s a similar framework to the 2008 spectrum auction that resulted in startups getting the asset for far cheaper than they would have in an open auction.

But Cope said the set asides for new entrants in the last auction were different because the bidders were startups such as Public Mobile (now owned by Telus Corp.), Mobilicity (bought by Rogers) and Wind Mobile (now Freedom).

Now, the definition of new entrant applies to well-established companies. Each of the Big Three incumbents has about 30 per cent of the market share in a country with more than 30 million wireless subscribers. Videotron and Freedom each serve less than 10 per cent of the market, with slightly less and slightly more than one million subscribers, respectively.

“I do take issue with the fact that we’ve got vibrant capable regional players that are being classified as new entrants and being given set aside opportunities when they’re not new entrants in the classical sense,” Natale said.

Both said they would make their views clear to the government and touted the importance of spectrum.