James Moore, the federal Minister of Industry, faces a momentous decision for the future of wireless communications in Canada, for consumers and investors alike. He should take time to consider this important element of his newly conferred portfolio. The three leading Canadian companies, BCE Inc., Rogers Communications Inc. and Telus Corp., all argue that the terms for the auctioning of prime 700-megahertz spectrum in January do not constitute a “level playing field,” especially with the prospect of a bid by Verizon Inc., an enormous American company.
In business, playing fields are rarely – if ever – level. A degree of tilt is in the nature of things. Nonetheless, the terms and conduct of an auction should be fair and consistent, especially when the auctioneer is the federal government, acting on behalf of the people of Canada.
The tilting here may have been the result of a drafting error. The government set out to favour struggling newcomers by deciding that “new entrants” could bid for two out of the four blocks of the new spectrum, while the three “incumbents” could bid for only one each. A year ago, George Cope, the CEO of BCE – which has a 15-per-cent minority interest in The Globe and Mail – was told by “senior bureaucracy” at Industry Canada that it would simply not happen that a very large foreign company would bid for two blocks, taking advantage of the special treatment intended for startups. But Verizon is now considering doing just that.
Sept. 17 is the day by which bidders are required to make deposits. That time should be extended, and so should the auction day itself. Summer is here, and many Canadians are on holiday, but Mr. Moore should make a decision not later than the end of autumn. All bidders should be equally free to bid on one or two blocks. In the near future, the spectrum should be put to use for the benefit of Canadians, both as its vendors and its users.
Some of the concerns of the incumbents cannot be resolved promptly. They understandably feel aggrieved at the thought of sharing the infrastructure they have built up over the years, with a company such as Verizon, four times larger than the three of them put together. But the complex equities and inequities of the mixture of public and private interest in those assets cannot be sorted out any time soon. The show must go on, even if a bit later than originally scheduled and even if the purity level of the playing field is somewhat compromised. Waiting for Verizon to build its own network of communication towers would bog things down.
Mr. Moore needs some time to verse himself in this complex industry and adjust the spectrum auction rules. It is to be hoped that he will treat Canadian and foreign companies equally.
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