Shaw hits back at Big Three on spectrum auction

Shaw Communications Inc. had fighting words for the Big Three wireless players in its final submission to the federal consultation on an auction for radio frequencies needed to power Canada’s mobile networks.

The Calgary-based owner of Freedom Mobile on Friday reiterated its strong support for the Ministry of Industry, Science and Economic Development’s proposal to give new wireless entrants an advantage when it auctions spectrum licences in the 600 MHz band, a particularly valuable block of low-frequency waves that help improve cell reception in tricky spots such as concrete buildings.

Shaw called this an opportunity to correct a “huge imbalance” in spectrum holdings between the Big Three players and competitors like Freedom.

“It will help break the status quo and end the game where the Big Three win and Canadians lose,” Shaw president Jay Mehr said in a press release. “If the Big Three have the chance to block strong competitors from the market, they will.”

In August, the government launched a consultation on the auction framework with final submissions due this week. It proposed setting aside a big chunk of spectrum (43 per cent) for new entrants such as Shaw’s Freedom, Quebecor Inc.’s Videotron and Bragg Communications Inc.’s Eastlink to “address issues of market power.”

The three largest providers Rogers Communications Inc., BCE Inc. and Telus Corp. serve a combined 90 per cent of Canada’s 30-million wireless subscribers and control more than 90 per cent of the low-band spectrum.

All three have vehemently opposed the set-asides.

Their chief executive officers have argued the cable companies entering the wireless business shouldn’t be classified as new entrants. Unlike players in the 2008 spectrum auction, which ushered in upstarts such as Public Mobile (now owned by Telus) and Wind Mobile (now owned by Shaw), these companies are worth billions.

“They no longer require any further subsidies from the Canadian taxpayer,” Rogers wrote in its submission last month.

“Videotron and Shaw have already made hundreds of millions of dollars of profit by simply flipping licences.”

Quebecor alone made approximately $300 million from selling spectrum outside Quebec to Rogers and Shaw earlier this year.

The Big Three CEOs also note their companies have invested billions of dollars to make Canada’s networks among the fastest in the world.

Rogers argues that setasides and caps give Bell and Telus an advantage since the telcos share a network across much of the country.

But Shaw argues all three have enjoyed spectrum advantages over the years and that smaller players are needed to bring competition to the market. It contends a substantial setaside is needed.