No sign of foreign competition
There was no sign of foreign competition in the list of potential bidders for a piece of Canada’s wireless market, with the names of the country’s three main telecom carriers joined by familiar regional players.
A total of 15 Canadian participants—including Rogers, Bell, and Telus—put down a refundable, five percent deposit for the Jan. 14 auction, according to the list released yesterday by Industry Canada.
Hopes of a foreign entry were dashed after U.S. giant Verizon dropped its plans for expansion north earlier this month—taking with them dreams of wireless deals for Canadian consumers.
“Ultimately, what would have been great is to have a well-capitalized start-up, a feisty competitor coming in,” noted telecom analyst Troy Crandall of investment firm MacDougall, MacDougall and MacTier.
“That would have been the best thing for consumers,” he said.
The Canadian wireless market continues to be dominated by Bell, Rogers, and Telus with a total of about 25 million subscribers.
Two private equity firms in Toronto also were on the list—a subsidiary of Birch Hill Equity Partners and Catalyst Capital, a major debt-holder for small, struggling Mobilicity.
Wind Mobile’s parent, Globalive Communications, was on the list, too.
Both Mobilicity and Wind Mobile—two new small wireless carriers—were reported earlier this year to be under consideration for purchase by Verizon before it announced it dropped its interest in Canada.
The private equity firms could end up selling any spectrum they obtain, or licensing it to other players, rather than working to get a new wireless carrier off the ground.
Canaccord Genuity analyst Dvai Ghose described the list as “an embarrassment for the government” that had attempted to encourage more competition by relaxing foreign investment restrictions for carriers with a market share of less than 10 percent.
Bell, Rogers, and Telus had waged a vigorous publicity battle against the new rules, arguing they gave the advantage for prime spectrum bidding to new entrants.
The federal government has said it wants to have four wireless competitors in each region of the country to give more choice to consumers.
“In addition to this auction, our government will continue to aggressively pursue policies that ensure consumer interests are at the core of all government decisions,” Industry minister James Moore said in a statement.
But advocacy group OpenMedia.ca said the main three carriers appear set to continue their stranglehold over the market and is asking for the government to open up Canada’s wireless networks to affordable, independent providers.
The 700 megahertz auction of radio waves has been compared by analysts to bidding on valuable “beachfront property.”
The waves allow cellphone signals to reach into elevators, deep into underground parking lots, traffic tunnels, and basements where calls often are dropped, and help meet consumers’ growing use of smartphones and tablets.
The signal also can travel greater distances and, in rural Canada, will require fewer cellphone towers to provide coverage.