Rogers Communications Inc. has struck a deal to buy wireless spectrum in greater Toronto from Quebecor Inc.’s Vidéotron unit for $180-million.
The purchase adds pressure to the federal government as it considers how to advance its policy of creating more competition in the wireless sector. The government sold spectrum – publicly-owned radio waves used by mobile carriers to transmit phone calls and data – to Quebecor and other companies in 2008 in order to create alternatives to the three primary players in the industry: Rogers, BCE Inc. and Telus Corp.
But the Rogers-Quebecor deal is the third time in recent months that one of the big three has proposed buying that spectrum. Just a couple of weeks ago, Telus Corp.’s $380-million deal to acquire struggling mobile carrier Mobilicity raised similar questions about whether Ottawa’s attempt to produce more competition in the sector has failed. Before that, Rogers proposed buying unused spectrum from Shaw Communications Inc.
All three deals require government approval. Regulations set up by the federal would prevent Quebecor from transferring its license to Rogers until January 2014.
The government plans to sell another round of the wireless spectrum into the market later this year in an auction. While the government has pledged to “encourage investment, innovation and competition in the sector,” Canadian wireless consumers have been slow to embrace smaller companies like Mobilicity and Wind Mobile, which have smaller networks.
In the case of Telus and Mobilicity, the firms argue the government should allow the acquisition or risk the failure of Mobilicity, which has suffered heavy financial losses since it began offering service in 2010.
Along with the transfer of wireless spectrum, Rogers and Videotron also agreed to share the cost of setting up and running a long-term evolution (LTE) network that will offer high-speed data for cell phones. This network will operate in the province of Québec and the Ottawa region.
“Data usage is exploding and customers want to continue to enjoy the fastest possible speeds and throughput. Our plan is to put this unused spectrum to use to meet this demand, especially in a dense urban area, like Toronto,” said Rogers chief executive officer Nadir Mohamed.