Ottawa’s Wireless Policy is Chaotic and Needs to be Rebuilt, Terence Corcoran Claims

by Istvan Fekete on March 14, 2014

Ottawa’s plans to bring more competition through a fourth wireless competitor in every region seemed to finally be coming to fruition with the 700 MHz wireless auction: the results were positive, as Vidéotron emerged as a national player with aggressive extension plans. But shortly afterwards, Ottawa’s success suffered a hit as Pierre-Mark Peladelau, the man who controls 73% of the decisive votes in Quebecor/Videotron, announced that he has joined the Parti Québecois and the fight for Québec independence.

But this isn’t the only problem, according to Terence Corcoran. After analyzing the current situation in Canada, US and Europe, he concluded that the emerging structural trend is for wireless markets to converge down to three, or possibly even fewer, national players. In France, for example – the home of the Free mobile model touted by Videotron for Canada – Industry Minister Arnaud Montebourg has said that he favours a return to three wireless competitors, rather than four.
Corcoran points to the global trend of corporate realignments and takeovers as the French example or even the situation in Germany shows, he says. German firms and US firms are trying to consolidate, Corcoran says.

The issue, said Mr. Son, is scale: “We have the spectrum; we have the technology. But we need scale efficiency to make an investment in the network.” Sprint alone cannot make the scale grade. As reported by The New York Times, Mr. Son said: “We can start a small fight but it does not scale, it does not last, it’s not sustainable. We need to have a real fight—a long and deep and heavy fight. And for that we need scale.” For scale, he said, Sprint needs to be able to acquire T-Mobile.

The key appears to be the push for scale, but regulators and governments seem to be resisting the idea based on the economic idea that competition depends on the number of players in a market. But as the Canadian example shows, this doesn’t quite work: see the struggling wireless startups – Wind Mobile’s fate is as yet unknown, Public Mobile has been sold to Telus, and Mobilicity is looking for a buyer.

Consolidation is an inevitable trend Corcoran concludes: as industries mature, it appears inevitable that all nations will experience consolidation, a reduced number of players, and fewer national competitors, he says. For Canada, this means that only three players will win in the long run: Rogers, Telus and Bell.

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

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