Ottawa’s New Spectrum Transfer Rules Could Grant Access to Verizon in Canada

by Istvan Fekete on July 2, 2013

Ottawa has published the new rules on spectrum licence transfers that the wireless industry has been waiting for. Under the updated rules, spectrum transfers will become a hard nut to crack for large wireless players, but the good news is that it could open the door for Verizon Communications to enter the market.

Industry Minister Christian Paradis emphasized once again the government’s commitment to creating a competitive wireless landscape. As he pointed out, the new rules will require all spectrum transfers to be reviewed case-by-case, and those “that would result in undue spectrum concentration — and therefore diminish competition — will not be permitted.” Furthermore, to increase transparency, each case will be reviewed publicly.

“The Harper Government is committed to promoting at least four wireless providers in every region of the country to support greater competition in the market,” said Minister Paradis. “We are working to provide Canadian families with access to the latest technology at better prices.”

“Important progress has been made, and Canadians can count on our government to continue to promote lower prices and increased choice for their families,” added Minister Paradis. “The Harper Government will not hesitate to use any and every tool at its disposal to protect Canadian consumers and to promote competition.”

The government relaxed its rules on foreign investment in the telecom market last year, and Wind Mobile was the first poised to become 100% foreign owned. Well, that was until its backer, VimpelCom, withdrew its application last month after eight months of back and forth with the Canadian government, forcing the wireless startup back into limbo.

Turns out Christian Paradis’ requests for foreign investment were heard: Verizon has reportedly placed a $700 million bid to acquire Wind Mobile; and, as several sources have whispered, it opened talks with Mobilicity regarding a potential merger.

From this perspective, Canada’s new wireless spectrum transfer rules come as a potential green light for new entrants such as Verizon. Although the rules forbid the wireless spectrum licence transfers to incumbents, they would allow a transfer to a new player, which in this case could be Verizon.

The catch is that the incumbents control more than 90% of the wireless market, so a Verizon–Wind–Mobilicity deal would meet the government’s conditions for foreign investment, which allows 100% foreign ownership for telcos with up to 10% market share.

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Written by: Istvan Fekete. Follow by: RSS, Twitter, Facebook, or YouTube.

{ 1 comment }

Mikebrassil March 1, 2014 at 2:52 am

Grant Access is taking the federal government to court over its wireless policy, arguing Ottawa has unfairly disrupted investment plans by changing the rules governing the transfer of spectrum licences between carriers.

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