OTTAWA—Canada’s wireless sector has seen big changes since the Conservatives made competition an overriding goal guiding policies and regulations, but the long-term impacts of that shift remain unknown.
Questions about a shakeup in the mobile phone sector have come to the forefront as the government defends a decision to allow Verizon, one of the largest wireless companies in the world, to enter Canada either through purchasing smaller companies or buying frequency spectrum in an upcoming auction the government will hold.
Industry Minister James Moore said the government cannot project the long-term impacts of allowing a large U.S. company like Verizon to enter Canada.
“It would be impossible for us to do a model analysis,” Moore told The Epoch Times.
Moore said the dynamics that would play out in the Canadian market would depend on how Verizon and the other dominant players carried out their business strategies.
But he said one thing is certain: more competition will bring lower prices and better service.
“If a large international player comes in, it provides more competition and obviously it will be good for consumers. It will provide some challenges for the incumbents,” he said.
Critics of Verizon’s possible entrance say the government is giving the U.S. giant what amounts to special treatment by not restricting it the way it has the big three providers—Telus, Rogers, and Bell.
That means Verizon could purchase one or more of the newer entrants and will not face the same restrictions in the upcoming spectrum auction.
In order to guarantee competition in the market, the government lifted foreign ownership restrictions on companies with less than 10 percent market share last year.
The move followed a tussle between the government and the CRTC when cabinet overruled a CRTC decision saying new entrant Wind Mobile had run afoul of foreign ownership restrictions.
The matter ended up in the courts after another new entrant, Public Mobile, sought a judicial review which found the government had overstepped in demanding the CRTC let Wind continue to operate.
Wind Mobile has a Canadian owner but is majority financed by Egypt-based Orascom.
War of Words
Moore has been touring the country in recent days selling Canadians on the government’s wireless policies, which has often meant touting the benefits of opening up the Canadian market to Verizon.
He is facing off against Canada’s homegrown telecom giants in a high-profile war of words that has seen the big three roll out what Moore describes as an aggressive campaign to push the government to change its wireless strategy.
Moore claims that strategy has already brought prices down by 20 percent, and says the big three are concerned about their bottom lines rather than consumers.
But while Verizon would need to compete to gain market share, some critics point to the fact that its U.S. pricing isn’t as competitive as some companies already operating in Canada.
New entrants, Wind Mobile, Public Mobile and Mobilicity have offered innovative price plans with unlimited options not seen in Canada previously.
Unfortunately, their networks haven’t been as reliable as the big three providers, partly because it takes time to develop them but also because the frequencies they operate on are not as powerful as those used by the big three. That means signal strength is low and complaints of dropped calls are frequent.
But that could change after the upcoming spectrum auction, with bidding set to begin in January 2014. The frequencies on the block that previously carried television signals are especially powerful.
Because two of the four blocks of the 700 Mhz frequencies will be reserved for companies with less than 10 percent market share, at least one of the big three providers will be left without a slice.
That has Rogers CEO Nadir Mohamed telling the Globe and Mail that no matter what, millions of Canadians currently subscribed to one of the big three will be left with slower wireless speeds.
Moore said it is still speculation as to whether Verizon will enter the market in Canada, but even if it doesn’t the auction would still bring benefits to Canadians.
“It is not just about prices,” he said. “It is also on the service side, like roaming rates and handsets, service standards. All of these things will benefit from competition.”