Day worried by Verizon arrival
Former minister says result may be less competition
OTTAWA — A former senior Conservative cabinet minister is urging the Harper government to push the pause button on a wireless spectrum auction that is expected to herald the arrival of U.S. telecommunications giant Verizon.
Stockwell Day, who is now a director at Telus, said the government is determined to guard the pocketbooks of average Canadians, but he says moving ahead on the auction as planned will actually hurt consumers and stifle competition in Canada.
“The government obviously wants to see a vibrant marketplace, and I fully support that,” Day said in an interview with Postmedia News Friday. “It would just be beneficial for them to take a step back and look at those auction rules.”
The government is planning to put up four blocks of prime wireless spectrum for auction under rules that were established several years ago and intended to help introduce foreign companies and increase competition in the Canadian market.
Canada’s three largest telecommunications firms — Rogers, Bell and Telus — will be able to bid on two blocks, while the other two will be saved for foreign firms.
Verizon’s interest in bidding has raised concerns because it is larger than all three Canadian companies combined.
The Canadian firms say moving ahead with the auction under the existing rules will lead to reduced competition by giving Verizon a massive advantage, in addition to its already massive size.
Day, who is now a director at Telus, said he believes the Harper government’s determination to protect Canadian consumers has blinded it to the arguments against giving Verizon an advantage.
“Protecting the consumer is the right position. I endorse that position,” he said.
“In making that case, which they should and which I support, you can miss some of the trees because you’re focused on the forest.”
He added that recent changes in government — such as July’s cabinet shuffle and the movement of senior federal bureaucrats between departments — may also have contributed to a failure to realize the ramifications of holding the auction under the existing rules.
“You’ve got a whole lot of portfolios changing hands,” Day said, “right from ministers to their advisers to the bureaucrats.
“That’s why, for the sake of the public, I think it would be wise for them to pause. They have delayed auction dates before. It’s not a big deal, it’s fairly common. And most of the public would understand if government is saying ‘We just want to take a little more time to get this right.’”
Industry Minister James Moore has been outspoken this week on the Harper government’s determination to push forward on the wireless spectrum auction despite the misgivings of Canada’s big three telecommuni- cations companies.
Moore has argued an influx of foreign companies, including Verizon, will lower wireless bills that have traditionally been among the highest in the world.
But Day predicted consumers will actually be hurt if a huge player such as Verizon comes in because it will focus on urban centres, stealing customers from existing Canadian players who will then be forced to stop expanding networks in rural areas.
The fact one of the Canadian companies will end up losing out in the auction also raises the possibility it won’t be able to compete with Verizon and the other two Canadian firms, Day said. That, he added could lead to consolidation in the industry.
“The unintended consequences eventually will be fewer players,” he said.
“Consumer choice ultimately will diminish and therefore ultimately prices will not drop. Prices have been dropping very consistently. But in the end, the consumer will not be best served.”