You have to hand it to the federal government: When it comes to trying to create more competition in Canada’s wireless industry, past failures don’t discourage it from trying again. The government set aside wireless spectrum for new players in 2008 in the hope of creating an upstart competitor to storm the gates of the Big Three. Six years later, Bell, Rogers and Telus still control 95 per cent of the business. The question that has to be asked now is, When does all this market manipulation go from being a laudable goal to a futile endeavour doomed by the realities of Canada’s marketplace?
Ottawa’s answer is “Never surrender.” Industry Minister James Moore announced Monday that the government will set aside the majority of speedy, data-rich new wireless spectrum in an upcoming auction for small players across the country. Once again, Mr. Moore is hoping to give the Big Three’s minuscule competitors a chance to establish themselves by letting them hoard spectrum – the most valuable asset a wireless company can accumulate. If an investor can be enticed by the sight of a smaller company’s basket of valuable spectrum, he, she or it might be willing to put up the money – and swallow the years of losses – that would be needed to turn that spectrum into loyal, paying cellphone customers.
This was the plan in the past, and it hasn’t worked. One smaller player that came into being after the 2008 auction, Mobilicity, is operating under creditor protection; another, Wind, has a frustrated foreign owner who is now unwilling to invest further in Canada. Quebecor, the Quebec giant, is making noises about getting in the game at the national level but wants assurances from Ottawa that it can get fair roaming rates when its customers roam on the big players’ networks. In other words, it wants its success guaranteed before it will invest.
It all seems like a losing battle. Even with Ottawa favouring new entrants in the marketplace, it is unlikely one will ever grow to the scale of the Big Three, which can offer customers bundled services that include TV and home Internet. It would be interesting to know why Mr. Moore thinks what didn’t work in 2008 will work in 2014, and whether Ottawa has a backup plan if things go awry once more.
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