Ottawa’s new fighting words
If you accuse someone of lying, you’d better be able to back it up. If you’re a government minister, backed by all the force and credibility that goes with the position, that goes double.
Industry Minister James Moore, as a newcomer to his portfolio, had a chance to dial down the noisy confrontation between Ottawa and Canada’s Big Three telecom firms. Instead, he and Prime Minister Stephen Harper chose to up the ante. In his latest comments in the war over wireless, Moore accused BCE Inc., Rogers Communications Inc. and Telus Corp. of “dishonest attempts” to manipulate public opinion through “misleading campaigns.”
Them’s fighting words. Moore, as representative of a government with immense power over a crucial and highly regulated industry, should spell out just how he believes the telcos have been “dishonest” in their campaign to stop Ottawa from going ahead with an auction for wireless spectrum in a way they say will favour the U.S. giant Verizon Communications. Oddly enough, Moore threw out the accusation of dishonesty without actually specifying what the telecom companies are being dishonest about.
That becomes ever more important as a Sept. 17 deadline for companies to take part in the auction approaches. At stake is the right to use wireless spectrum in the 700-megahertz range — the so-called “beachfront property” of radio waves that allows providers to offer the highest quality service in the exploding market of talk, texting and streaming data. Ottawa has set aside two of four new blocks of spectrum for new entrants to the Canadian market. It was always thought that meant upstart firms like Wind and Mobilicity that would challenge Bell, Rogers and Telus. But it’s now apparent that the key newcomer is likely to be Verizon, which all by itself is several times larger than Canada’s Big Three.
Rather than being an unintended loophole in a well-meaning federal policy of fostering more competition, it seems to be the deliberate result of Ottawa actively courting Verizon to enter the Canadian market. Senior Rogers executive Phil Lind told the Star’s editorial board recently that the Harper government is doing just that, and no one denied it. And on Wednesday came news of a May visit by Verizon executives to Ottawa to facilitate the move.
That’s an extraordinary way for a Canadian government — especially a Conservative one — to act. Deliberately manipulating the market to tilt the playing field in favour of a big U.S. player makes no sense. Can anyone imagine Washington doing the same for a Canadian company eyeing the U.S. market? Aside from the future impact, Ottawa’s intervention has already had a dramatic impact on the value of Canadian telcos. Market capitalization of the Big Three is down close to $20 billion; that hits Canadian shareholders and pension funds big time.
Ottawa’s policy also goes way beyond its proclaimed goal of encouraging competition. As the Star has said before, the government deserves credit for making it easier for new companies to get into the wireless market and for introducing a code of conduct to cap roaming fees and shorten cellphone contracts. Leaning on the industry has lowered the price of mobile service in Canada by about 18 per cent since 2008, something all consumers can applaud.
Giving Verizon preferential access to half the available new wireless spectrum would have other perverse results. Among other things, it stands to depress the price Ottawa stands to get from the auction. Allowing all players, including Canada’s Big Three, to bid on all of it can only raise the price Canadians get for this valuable public asset. The last auction five years ago brought in $4.3 billion, and even more is at stake this time.
Consumers hoping for lower prices and better service from Verizon also risk being disappointed. It’s one of the highest-cost carriers in the U.S. and ranks near the bottom in customer satisfaction. Be careful what you wish for.
It isn’t likely to happen, given his latest rhetoric, but Moore would be wise to press the pause button on this process. At the very least, he should stop casually accusing his opponents of lying.