Globalive Inc. is asking Canada’s telecom regulator to temporarily suspend the agreements struck between Rogers Communications Inc. and Videotron Ltd. as part of Rogers’s takeover of Shaw Communications Inc., arguing that the terms of those deals are so favourable to Videotron that they will have a negative effect on Globalive’s re-entry into the wireless market.
In order to win regulatory approval of its $20-billion takeover of Shaw SJR-B-T, Rogers RCI-B-T has agreed to sell Shaw’s Freedom Mobile, Canada’s fourth-largest wireless carrier, to Quebecor Inc.’s QBR-B-T Videotron for $2.85-billion.
The two-step deal, which the companies are aiming to close by Feb. 17, still requires signoff from Industry Minister François-Philippe Champagne, whose department is reviewing the transfer of Shaw’s wireless licences to Videotron.
Speaking to the House of Commons industry and technology committee on Monday, Mr. Champagne said he is “not bound by any artificial deadline” and would come to a decision once he has reviewed all of the relevant facts.
Globalive, which founded Wind Mobile in 2008 and eventually sold it to Shaw (which renamed it Freedom Mobile), recently announced that it hopes to re-enter Canada’s wireless sector by acquiring airwaves from now-defunct Manitoba carrier Xplore Mobile Inc.
Along with the sale of Freedom Mobile, Rogers and Videotron have entered into a number of commercial agreements for wholesale access to Rogers’s network infrastructure at terms that are described by the parties as highly favourable to Videotron. Those agreements are intended to ensure that Videotron can maintain the level of wireless competition that Freedom Mobile currently provides.
However, independent internet service provider TekSavvy Solutions Inc. has filed an application asking the Canadian Radio-television and Telecommunications Commission to review the rates and terms of the deals between Rogers and Videotron. Teksavvy argues that the deals violate the Telecommunications Act and could stifle competition through price discrimination.
Globalive filed a submission with the CRTC on Monday in support of Teksavvy’s application, saying that the preferential rates will cause “irreparable harm” to potential new entrants and should be suspended until the CRTC completes its review.
“Rogers has provided Videotron with highly advantageous, off-tariff commercial agreements to enable them to compete and we want to ensure that all competitors have access to these rates should these agreements be permitted to stand,” Anthony Lacavera, Globalive’s founder and chairman, said in a statement.
“In addition to participating in the TekSavvy CRTC intervention, we will be filing our own intervention this week to more specifically focus on the highly-favourable wireless roaming rates that Rogers has offered Videotron,” he added.
Xplore Mobile, which was launched after BCE Inc. spun off some assets as part of its takeover of Manitoba Telecom Services Inc., was shuttered last August, citing regulatory delays that the carrier said left it financially unviable.
In addition to buying wireless airwaves from Xplore Mobile, Globalive has said it is in talks with Vancouver-based Telus Corp. about expanding their tentative network- and spectrum-sharing deal to include Manitoba. That deal was announced last May, and was originally contingent on Globalive being the successful bidder for Freedom.
Globalive is also requesting that the exact terms of the agreement between Rogers and Videotron, which are confidential, be made public, at least in an abridged form.
“There is a strong public interest in ensuring that the preferential terms and rates are known so that competitors can seek similar access, and that any bundles are not crafted such that no other competitor could access similar rates or terms, or even access similar services,” Globalive wrote in its application to the CRTC.
Last month, several Conservative members of Parliament published an open letter urging Mr. Champagne to await the outcome of the CRTC probe before signing off on the licence transfer and permitting the takeover to go forward.
The Globe and Mail previously reported that Rogers and Videotron were in talks Friday over a number of commercial issues, including domestic roaming rates, in the hopes of securing Mr. Champagne’s approval.
Globalive said in its letter to the CRTC that those negotiations mean that the rates Videotron has secured from Rogers “are getting more and more preferential to Videotron every day.”