Rogers favours open Canada over ‘flawed’ policy
TORONTO — Ottawa should scrap foreign ownership limits on telecommunications companies rather than stick with the current “flawed” policy that favours global competitors such as Verizon, says Canada’s largest wireless carrier.
“If the end objective for government is to say ‘let’s open up the market,’ then we’d rather have it open than flawed in terms of the structure that is currently in place,” Rogers Communications chief executive Nadir Mohamed said. “It’s not a level playing field.”
Mohamed and his counterparts at BCE and Telus are pressing the Canadian government to change its national wireless policy which they say handicaps the country’s three biggest carriers against a potential new entrant like Verizon. The New York-based company, whose market value of $135 billion US is close to double that of BCE, Telus and Rogers combined, said in June it’s weighing a bid to buy Wind Mobile, the largest of three new Ontario-based carriers.
While Mohamed said he would prefer scrapping foreign ownership restrictions over the status quo, his first preference would be to change the current rules.
The government has been trying to boost competition for BCE, Telus and Rogers, which together control about 90 per cent of the domestic wireless market, and has pledged to foster four competitors in each region of the country. In a spectrum auction in January, incumbents will be limited to bidding on just one of four blocks of prime 700-megahertz airwaves while new entrants, including potentially Verizon, could bid for two.
The New Democratic Party has triggered parliamentary hearings on the auction that must begin by Aug. 27 under the rules of the legislature.
“The overarching point for us is to make sure regular Canadians aren’t left out of the debate and aren’t forgotten in this controversy,” said NDP MP Chris Charlton, adding she hopes the committee completes its study before the Sept. 17 deadline for companies to apply to bid in the auction.
The NDP is concerned ser- vice for rural residents may be threatened, and wants to ensure privacy safeguards and support employment in the wireless industry, she said. The party would like to call Industry Minister James Moore as a witness, as well as Canadian phone companies, Verizon and consumer groups.
“Committees set their own agenda,” Jessica Fletcher, a spokeswoman for Moore, said in an email when asked for a comment about the NDP move. “Our position is clear.”
Moore said he will not change the timing of the auction or rules on block allocations.
Asked if the government would consider eliminating the remaining restrictions on foreign ownership of phone companies, Moore said that “our policy is to encourage more competition, and our rules in this auction we think will arrive at that.”
Current rules prohibit any foreign company from buying a carrier with more than 10 per cent market share, which includes BCE, Telus and Rogers.
Moore said claims by Canada’s telecommunications companies for a level playing field are self-serving because they already have an advan- tage over any potential entrant into the wireless market.
Rogers and Telus are the Canadian carriers that would be hardest hit by Verizon because they draw nearly twice as much of their pre-tax profits from their wireless businesses, said Tim Casey, an analyst with BMO Capital Markets in Toronto.
“It’s specifically about government artificially creating rules that subsidize a large foreign incumbent to take advantage of rules that were set for new players,” said Mohamed. “We’re open for competition, just on terms that are the same as ours.”
If the government wants to really open up the country to foreign ownership, then it should postpone the spectrum auction and first address that, Mohamed said.