Critics says the deal shows the government has fallen short on its promise to boost competition in Canada's wireless industry.
June 25, 2015
by The Canadian Press
TORONTO — Whether a deal struck by Rogers Communications to purchase smaller wireless operator Mobilicity actually stokes competition in Canada’s concentrated wireless industry remains to be seen, but some outsiders say it marks a step in the right direction.
Rogers has received court approval to buy Mobilicity for about $465 million in an agreement expected to trigger a series of transactions that affects wireless customers in Ontario, Alberta and BC.
Under the plan, Rogers will sell spectrum to Wind Mobile, which has emerged as one of the leading challengers to Canada’s three biggest wireless companies.
Rogers spokesman Kevin Spafford said the deal has received approval from the federal Competition Bureau.
Rogers will also complete a previously announced purchase of spectrum from Shaw Communications.
Wireless spectrum, which is essentially a radio frequency, is a prized asset for any wireless carrier because it’s one of the crucial pieces of the service it provides customers.
Rogers chief executive Guy Laurence said in a statement that the company “got the spectrum we needed” in the Mobilicity deal while working with the federal government to put unused spectrum to work.
But consumer advocacy group OpenMedia said the acquisition of Mobilicity by Rogers shows the government has fallen short on its promise to boost competition in the wireless industry.
“The spectrum that was allocated to independent providers should not be ending up back in the hands of the Big Three under any circumstances,” said David Christopher, OpenMedia’s communications manager.
“This deal is most definitely going to reduce choice, and market dynamics mean this will likely lead to an increase in prices, or certainly reverse downward pressure on prices.”
Industry Canada had already approved the takeover of Mobilicity after blocking previous bids by Telus to buy the company.
Industry Minister James Moore declined an interview request. But in a statement he said the federal decision to approve the takeover of Mobilicity would offer greater choice.
“The approval of these spectrum licence transfers is a win for Canadian consumers,” he said. “A new wireless competitor has secured valuable spectrum it needs, and high-quality spectrum that went unused for almost a decade will now be deployed for the betterment of all Canadians.”
Telecom industry analyst Mark Goldberg likened the spectrum shuffle to a multi-player baseball trade between several teams, though it’s harder to quantify who’s getting what in the wireless deal.
Wind Mobile will acquire enough spectrum to put them “in a much stronger competitive position” as the fourth-largest carrier in the country, he said, while the sale of Mobilicity won’t broadly affect the consumer market.
“Mobilicity has not really been a competitive factor,” Goldberg said.
Mobilicity operates in five urban markets – Ottawa, Toronto, Calgary, Edmonton and Vancouver. Wind Mobile also competes in those cities and has about 800,000 customers or about one-tenth the subscriber base of any of the Big Three carriers – Rogers, Telus and BCE’s Bell.
Encouraging competition in Canada’s wireless industry has been a priority for the federal government, which launched a widespread campaign to encourage lower prices for consumers.
But a report last week from Ottawa-based consultancy Wall Communications Inc. – in co-operation with the CRTC – showed the outcome has been mixed. Canadians are still paying some of the highest wireless prices in the industrialized world, it said.
Talk-and-text service plans have dropped in price by 20% overall, while talk, text and data plans dropped 24%, the report found. Basic talk plans have seen prices increase by 14 per cent overall.
Still, telecom prices – which also include Internet and TV bundles – are cheaper than they were in 2008 when the new wireless incumbents launched, the Wall report concluded.
William Aziz, the chief restructuring officer of Mobilicity since April 2013, said Rogers’ offer for the company was “the highest price and the most executable” option.
“This will be the end of a long saga that will help strengthen the Canadian wireless industry,” he said after the court’s decision.
The federal government had blocked Telus over concerns that one of Canada’s three large national carriers would acquire wireless spectrum that had been set aside for newer companies, including Mobilicity.
But Aziz said his recent interaction with Industry Canada left him with the impression the government agency no longer has the same concerns it once did about spectrum concentration among a small number of Canadian wireless carriers.
© 2015 The Canadian Press