Canadians love to hate the country’s big phone companies, a reality that Telus Corp. chief executive Darren Entwistle needs to change in short order as he ramps up a campaign for what he calls a “level playing field” in a looming battle with U.S. giant Verizon Communications Inc. for wireless customers.
As Verizon reiterated yet again Thursday that it is exploring a Canadian market entry, Mr. Entwistle was on the road making his case that Canadians are well served with reasonably priced cellphone services.
It’s a message aimed at Canadians in general, but also their government, which is courting Verizon in hopes of salvaging a policy promise of having four solid wireless competitors in every regional market.
Mr. Entwistle said he can live with Verizon coming to Canada and competing with Telus, but he does not want the government to give a company that is larger than all of Canada’s major telcos combined special advantages that he argues were designed to help nurture start-up wireless companies. The pushback from Telus echoes that of BCE Inc., putting two-thirds of the Big Three wireless companies on the record as opposed to Verizon’s entry being allowed under conditions that give the U.S. company a leg up. Only Rogers Communications Inc., the largest provider, has remained silent.
“All we are asking for is not to be punished. And if we are going to compete against foreign entrants such as Verizon, we feel we have earned the right to a level playing field by the investments that we have made in this country,” he said in an interview Thursday, noting the cumulative operating investments of the big three telcos have totalled $420-billion since 2000. Telus alone has invested $100-billion in Canada over the last 13 years.
The Canadian phone industry’s problem, he acknowledged, is that the it has done a poor job of getting their message across.
That message, Mr. Entwistle said, is that Canadian telecom companies have invested heavily in providing service that he argues is priced competitively relative to other developed countries.
That has enabled the government to beat up on the phone companies in a bid to lower wireless prices through competition, a so-called “kitchen table” issue that gets votes.
In a July 4 study, Ottawa-based consultants Wall Communications Inc. called Canadian telecom service “middle of the pack in terms of how our telecom rates compare with five other surveyed countries,” and noted that prices for a basket of mobile phone services have fallen by 13 per cent over the past year. Wall Communications was commissioned by Industry Canada and the CTRC to produce the study.
During Thursday’s interview, Mr. Entwistle cited a study by the Organisation for Economic Co-operation and Development this year, which pegs Canada as the third-lowest among the G-7 countries in terms of the cost of 100 calls plus 2 gigabytes of data.
“We’ve done a crap job of educating Canadians,” he said.
Mr. Entwistle’s main concern is that the government appears set to allow Verizon to buy assets that are off limits to Telus, BCE and Rogers. Verizon is in talks to buy two of Canada’s small wireless startups, Mobilicity and Wind Mobile, as a beachhead. Mr. Entwistle has already tried to buy Mobilicity, but Ottawa said no. He said he would also be interested in a bid for Wind. However, that too would almost certainly run afoul of Ottawa.
Perhaps more pressing are rules for a key auction of licences to use radio waves that are crucial for rolling out more data-intensive wireless networks. The government will auction off licences for the 700 MHz frequency of spectrum, the airwaves used to carry cellular service. BCE, Telus, and Rogers are capped at a maximum of one section apiece of “prime” spectrum, which are the frequencies best suited for a wide range of cellular devices. Verizon, as a foreign entrant, would be allowed to buy two. Spectrum is an increasingly scarce asset that telecommunications executives say is the lifeblood of the industry.
“That’s not a level playing field where they get to buy two times as much spectrum,” Mr. Entwistle said, questioning whether Canadians would accept the government providing preferred access to other public assets such as mineral leases to foreign companies over Canadian companies.
Verizon’s Chief Financial Officer Fran Shammo said on a conference call Thursday that the company’s discussions in Canada are “exploratory.” The Globe and Mail has reported that Verizon has tabled a preliminary bid for Wind valuing the company at about $700-million, and is also in discussions with Mobilicity, which is short of cash and facing a restructuring if it can’t find a buyer.
Mr. Entwistle said he has not ruled out fighting back against Verizon by making another bid for Mobilicity if Verizon does. “I think we have righteousness on our side,” he said.
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