Auction limits sought
Wind Mobile owner wants giants blocked
TORONTO – The European telecom conglomerate backing startup wireless provider Wind Mobile is issuing a warning to the federal government: if a forthcoming auction of key airwaves is not structured to safeguard new entrants to the market, it is unlikely to participate.
Ossama Bessada, chief of European and North American operations for VimpelCom Ltd. is also critical of what the company believes to be a potential doubling back on a commitment from Ottawa to introduce sustained competition in the $18-billion sector.
“We invested over a billion dollars in Canadian wireless under the promise of a real competitive landscape in this country,” he said.
In a statement, Wind’s Amsterdam-based partner said Industry Canada must parcel off a portion of the new airwaves and prohibit incumbents BCE Inc., Rogers Communications Inc. and Telus Corp. from bidding on it. Wind, which has been funded by Vimpelcom since being acquired last year, says it cannot afford to pay the rates established players are prepared to pay.
“Without set-asides … the incumbents will simply pay what’s necessary to keep the new entrants out,” the company said.
The public comments are the company’s first on the contentious matter.
BCE urged this week no special treatment be extended to any competitor, big or small. It wants unfettered bidding, otherwise it is threatening to restrict investment to only more profitable major markets.
“We’re eager to extend next-generation mobile service to rural and remote communities, just as we’ve consistently done with earlier mobile-network-technologies. But fair and equitable access to spectrum is crucial,” Wade Oosterman, Bell’s chief of mobility and residential businesses said.
Radio spectrum is the lifeblood of wireless companies, which use the frequencies to carry voice and data signals from wireless devices. The upcoming auction is of particular importance because the bands are ideal for transmitting through dense building walls and over long distances.
In 2008, federal officials set portions of higher bands aside in the last auction, allowing Wind and three other companies, Mobilicity, Public Mobile and Videotron in Quebec, to enter the market. The effect has been a decline in industry pricing, until recently ranked among the highest among industrialized countries, according to Bank of America Merrill Lynch.
Until now, Vimpelcom has taken a passive role in the debate, relying on Canadian lobbyists and Wind executives to advocate for it. In the statement, Vimpelcom contends that without the added spectrum, there is no business case to remain, and warns that competition will again be foreclosed on by BCE, Telus and Rogers.
“We fully expect that the government will do the right thing and live up to its commitment to build a thriving, viable wireless market by setting the conditions for new entrants to fully participate in the upcoming auction and disallow the incumbents to outbid the opponent in order to stave off competition,” the company said.
The Harper Conservatives are expected to announce the rules shortly, perhaps in connection with the federal budget next month. A cap model is believed to be preferred by Industry Canada.