Small cell operators hoping to win big in upcoming bandwidth auction

Consumers are getting fed up with the high cost of cell phones (Photo:Jacob Morgan)

Jacob Morgan
jacobam89@gmail.com

Canadian activist groups and a Halifax MP are calling for government intervention in the wireless industry. The aim is to lower cell phone bills.

Geoff Regan, Liberal MP for Halifax West, published an open letter on his website on Jan. 11. The letter urges more space be set aside for new companies in the upcoming wireless spectrum auction.

In an auction, the big players are the ones that pay the most, says Regan. “It’s easy to dominate the market. That’s why it’s so important to have set asides to ensure competition.”

The federal government will sell off sections of the 700 MHz bandwidth, originally used for television airwaves, to cellphone and Internet providers. An exact date has not yet been announced; it is expected to take place at the end of the year.

“This particular (700 MHz) band is important for covering long distances,” said Regan. “Many of the small new entrants only serve places like Toronto, Montreal and Vancouver.”

With a big chunk of the spectrum, businesses could provide cell phone coverage in rural and distant areas, without having to cover the countryside with signal towers.

The biggest three wireless providers in Canada are Rogers, Bell and Telus. In the first spectrum auction in 2008, approximately 40 per cent of the available bandwidth was reserved for smaller companies to bid on.

A non-profit organization based in Vancouver, Open Media, says the so-called Big Three already control too much of the market, and an open auction could allow them to elbow out all competition. The group has launched a campaign, Stop The Cell Phone Squeeze.

Three companies “control about 94 per cent of the cell phone market,” says Lindsey Pinto, communications manager for Open Media. “We really do have a very monopolistic cell phone market.”

A previous Open Media online petition against Internet usage-based billing amassed more than half a million signatures. The current campaign, which launched on the same day as Regan’s letter, gained 25,000 names on the first day. It is now at more than 40,000.

“Canadians must come together and force the government to take notice,” said Pinto. “We are paying (among) the highest rates in the world with the Big Three having the power to regulate the market themselves.”

According to a study of 34 western countries conducted in 2010 by the Organization for Economic Co-operation and Development (OECD), Canada ranked the highest for mobile roaming fees.

Leigh-Ann Popek, a Rogers spokesperson, says, “Canada is already a very competitive marketplace. Consumers have the choice of numerous providers.

“An OECD report in June 2011 found that in the categories closest to Canadians (sic) usage patterns, we were among the cheapest within the OECD countries – 5th and 10th least expensive for wireless.”

Marie-Ève Francoeur, associate director of media relations at Bell Canada, said by email it would be unfair for the federal government to grant special treatment to certain companies.

“Setting aside spectrum for some companies and not others would impede the ability of major carriers like Bell to roll out the latest wireless services across Canada, especially in rural and remote regions,” said Francoeur.

Public Mobile, Mobilicity and WIND Mobile are three independent carriers that appeared in Canada after the 2008 auction. While none of these options are presently available in Halifax, WIND Mobile is planning to expand its operations here within the year.

WIND Mobile is based in Toronto and is a subsidiary of the Canadian company Globalive Communications Corp. Globalive’s major investor is an Egyptian company, Orascom Telecom.

Simon Lockie is the chief regulatory officer for WIND Mobile. He says there’s more and more wireless competition in Canada, and set asides in the upcoming auction are necessary for this trend to continue.

Lockie confirmed that, in 2009, as Wind and other new entrants were just getting established, Canada was ranked last among OECD countries for wireless penetration.

“Canada has had a very protected oligopoly,” said Lockie. “We are the first real alternative to the Big Three in decades.”

EDITOR’S NOTE: In the original, Jan. 18, edition Simon Lockie’s name was spelled Locke. Globalive was incorrectly called an Egyptian company. The mistakes were corrected on Jan. 19.