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Report on Business Ottawa looking to balance tensions between telecom carriers, consumers

The federal minister responsible for telecommunications said Wednesday that the Liberal government is very aware that there’s a tension between the needs of consumers and Canadian wireless carriers.

Innovation Minister Navdeep Bains told an industry conference that he’s heard their warnings that future investments in communications networks could be threatened by policy changes.

But Bains also told the audience that he and other members of the Trudeau government hear frequently from the public that high-speed internet and wireless is unaffordable for many people.

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“It’s really a reflection of the fact that people are more and more online. The kids are more and more online. They work online,” he said.

But they’re upset that Canadian prices for wireless data are among the highest in the world.

The telecom service providers have countered that Canada’s relatively high wireless prices are justified by the quality and size of their networks, which are considered among the best in the world.

Bains acknowledged the billions of dollars spent by Canada’s carriers on equipment and wireless spectrum, but said the Liberals want more consumer-friendly policies that bring down prices.

“We’re trying to find that spot where we continue to see prices go down but not at the expense of investments. And I don’t know where that is,” Bains said.

He make the remarks shortly before his ministry was to reveal some of the rules for the federal government’s 2020 wireless spectrum auction.

The spectrum licences will be an important building block for their fifth-generation wireless networks, which are expected to revolutionize communications and stimulate the Canadian economy over the next decade.

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Because of the technical capabilities of the 3,500 megahertz spectrum to be auctioned next year, it may be even more important to Canada’s wireless companies than this year’s 600 megahertz auction, which raised $3.47 billion for the federal government.

The three national wireless carriers – Rogers, Bell and Telus – are expected to be major players in the 2020 auction but the industry has been waiting to see whether the government will reserve some spectrum for smaller carriers.

Another long-standing question to be answered is how much of the 3,500 MHz spectrum that’s currently licensed to Rogers and Bell will be taken from them and re-auctioned next year.

The announcement by the Innovation, Science and Economic Development Department was to be released after markets closed Wednesday, with a technical briefing to follow.

Bains declined to reveal details ahead of the official announcement, citing concerns that they could have an impact on shares of Canada’s publicly traded telecom companies.

The national carriers have argued against rules that would prevent them from bidding on spectrum set aside for smaller carriers, arguing they’re now well-established competitors and the set-asides tend to push up overall spectrum prices.

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But an even greater concern is the potential for all current wireless network operators to be required to sell capacity, at regulated wholesale prices, to rivals that haven’t invested in their own spectrum and facilities.

The president of the Canadian Wireless Technology Association, former P.E.I. premier Robert Ghiz, said Tuesday that facilities-based carriers must be assured that they can reap the financial rewards of investing in wireless infrastructure.

Citing an Accenture report commissioned last year by the CWTA, Ghiz said that the initial rollout of 5G will cost $26 billion between 2020 and 2026.

“This does not include the cost of wireless spectrum,” he added.

Ghiz warned that their confidence in the future could be eroded by a change in policy announced by Bains in February, as part of the government’s attempts to reduce Canadian wireless pricing and improve affordability.

In March, the Canadian Radio-telecom and Telecommunications Commission said it would look more favourably on mobile virtual network operators, or MVNOs, that compete without building their own networks.

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Ghiz said that all Canadian facilities-based providers will have less incentive to make investments if they are forced by regulatory policy to provide wholesale capacity to companies that haven’t built networks or invested in spectrum.

“If we go down this road, Canada’s regional providers – we believe – would be the hardest hit. The very companies that governments have been trying to encourage, and who have made important contributions to sustainable competition and lowering prices in Canada.”

Canada’s two public companies with facilities-based wireless businesses are Freedom Mobile’s owner, Shaw Communications, and Quebecor Inc., owner of Videotron, which participated in the 2019 spectrum auction.

Other bidders in the 600 megahertz auction held in March included Bragg Communications, the private owner of Eastlink, TBayTel of Thunder Bay, Ont., the Saskatchewan government’s SaskTel, and Xplornet Communications Inc.

Xplornet, a national carrier that primarily serves customers just outside urban centres and remote areas through a combination of wireless, satellite and fibre optics, said earlier this year it planned to spend $500 million over five years to provide 5G wireless and faster internet in rural parts of Canada.

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