Canada’s dominant telecom players faced off against upstart Wind Mobile Tuesday, warning shifting government policies are stifling investment in the wireless industry.
Wind, in turn, said the rules surrounding wireless competition are doing their job to help smaller firms compete.
Executives from Telus Corp., BCE Inc. and Rogers Communications Inc. said policies mandating wholesale access to their national networks by smaller players with less coverage will stifle innovation rather than spur competition, adding the federal government’s approach to the sale of wireless spectrum licences has left deals in limbo.
(BCE owns 15 per cent of The Globe and Mail.)
Wind released new operating numbers at an industry conference in Toronto intended to counter critics who have dismissed it as failing, and said the government’s policies are necessary to support its continued growth.
Chief executive officer Tony Lacavera said the company now has 735,000 wireless customers and added 26,000 net subscribers in the first quarter of the year, while approaching break-even results on earnings before interest, taxes, depreciation and amortization.
Wind also said about 55 per cent of its subscriber base is now comprised of more-valuable postpaid customers, still less than figures posted by the major players but higher than some observers previously expected.
Analysts said the new details Wind shared indicate the company is making operational progress, although it still poses little real threat to the established players.
Mr. Lacavera told a lunchtime crowd that uncertainty over a path to full control of its Canadian asset prompted Wind’s foreign owner VimpelCom Ltd. to write down the value of its investment in the country in March and withdraw its financial backing for the startup carrier to participate in this year’s auction for cellular airwaves in the 700-megahertz frequency.
“It’s no secret that … financing has been hard to come by,” Wind’s chief regulatory officer Simon Lockie said during an earlier panel discussion. “We’ve been on a shoestring budget from a marketing perspective and despite all those constraints, we’ve been very successful.”
Mr. Lockie said the government’s policy that requires incumbents with large national networks to sell wholesale roaming access to competitors with limited regional coverage is crucial to Wind’s ability to attract new investment and build up its network.
Although many believed that airwaves set aside for new entrants in the 2008 spectrum auction could be sold to the Big Three after a five-year moratorium expired, Ottawa has since indicated it will block such deals. As The Globe and Mail first reported in May, Telus has walked away from its $350-million bid to buy Mobilicity – Ted Woodhead, senior vice-president of regulatory affairs for Telus, confirmed that publicly Tuesday – and Rogers said it is unclear what will happen to unused mobile spectrum it hoped to buy from Shaw Communications Inc. and Quebecor Inc.
Ken Engelhart, senior vice-president regulatory at Rogers, said he recognizes Ottawa has the legal power to block spectrum deals, but added he did not believe that was Industry Canada’s original plan when it drafted the rules for the 2008 auction. Mobilicity and Wind launched after buying set-aside spectrum in that auction and Mobilicity, which is under creditor protection, has been unable to sell its licences to Telus.
“I certainly think from five years ago to today, there was a definite change in thinking as to what would happen with that new entrant spectrum,” Mr. Engelhart said.
“I think the important thing is that we try and keep principles the same,” he added, noting that means continuing to advance a model of competition among companies that invest in infrastructure rather than supporting wholesale reselling by players with no facilities of their own or little interest in putting further money into what basic networks they do own.