We’ve heard it all before.
Our politicians love to talk tough about cracking down on wireless carriers that turn a profit by speculating on valuable spectrum licences. This time, of course, it’s happening during a federal election campaign in which party leaders are purporting to have the backs of consumers.
Liberal Leader Justin Trudeau and Conservative Leader Erin O’Toole, in particular, seem eager to outjockey each other over who plans to wield the biggest stick with carriers. They’re pitching competing “use it or lose it” spectrum policies, ostensibly to compel carriers to utilize the wireless licences they acquire through government auctions. Their duelling proposals are meant to address concerns that it’s still too easy for industry players to stockpile spectrum and later flip those fallow airwaves at much higher prices.
A spectrum sparring match is exactly what’s needed to spice up this snoozefest of an election. But don’t get too excited, my fellow telecom nerds – this isn’t a substantive policy discussion. Although the Liberals and the Conservatives are vowing to stop spectrum speculation, their proposed solutions are, in a word, weak.
Spectrum – the invisible radio waves that carry wireless signals – is a limited public resource and the very lifeblood of the industry. Canadians can’t live without their smartphones and are counting on legislators to learn from past mistakes and maximize spectrum use as carriers roll out their 5G networks.
“Use it or lose it” is not a novel concept. That’s why it’s disappointing that both the Liberals and Conservatives have failed to take a tougher stand on enforcement, even though Canada is preparing to auction off more valuable airwaves in 2023 and ‘24.
The Liberals, for instance, are suggesting they’ll put pressure on companies to actually build out their networks – as if that wasn’t always the expectation.
“With this use-it-or-lose-it approach, Canada’s large national carriers will be required to accelerate the rollout of wireless and high-speed internet in rural and northern Canada by progressively meeting broadband access milestones between now and 2025,” the Liberal platform reads. “If these milestones are not met, we will mandate the resale of spectrum rights and reallocate that capacity to smaller, regional providers.”
Sounds nice in theory, but let’s not forget that smaller regional providers may not have the financial wherewithal to pick up that slack. In fact, Western Canadian cable company Shaw Communications Inc. is selling itself to Rogers Communications Inc. precisely because it determined that 5G investments would be too costly to handle on its own.
The Conservatives are offering equally uninspired solutions, partly recycling eight-year-old talking points from former industry minister James Moore.
“We’ll speed up the spectrum auction process to get more spectrum into use and apply use-it-or-lose-it provisions to ensure that spectrum is developed‚ particularly in rural parts of our country,” Mr. O’Toole said.
If you managed to read his entire quote without falling asleep, congratulations. Spectrum is sexy stuff, but our political leaders are proving once again that Canada is the land where smart industrial policy goes to die.
It’s a shame both Mr. Trudeau and Mr. O’Toole are so unimaginative. Loopholes in Canada’s wireless policies that allow carriers to flip spectrum for massive profits are well documented.
Our Parliamentarians cannot afford to give carriers the kid-glove treatment.
All eyes are now on Quebecor Inc., which picked up 294 wireless licences across the country in the recent 3,500 MHz spectrum auction. The company is vowing to break the oligopoly in English Canada, but there are plenty of reasons to be skeptical of its renewed national wireless ambitions.
Not only has Quebecor flirted with national expansion twice before, it has previously resold unused spectrum because of shifting business priorities. In 2008, for instance, Quebecor purchased a block of advanced wireless services spectrum in Toronto for $96.4-million. It later sold those fallow airwaves to Rogers in 2017 for $184.2-million, earning a profit of $87.8-million.
That same year, Quebecor made a $243.1-million profit after selling to Shaw seven 700 MHz and 2500 MHz licences it had previously acquired in Southern Ontario, Alberta and British Columbia.
Quebecor president and chief executive officer Pierre Karl Péladeau also raised eyebrows when he told analysts on Aug. 5 that while his company will continue to invest in building a full 5G network, “we consider there is no rush to do that.”
It was a curious comment given that Innovation, Science and Economic Development Canada (ISED) recently boasted that its rules for the 3,500 MHz auction included the “strongest deployment requirements to date.”
If the Liberals and Conservatives are serious about deterring spectrum speculation, they need to adopt policies with real teeth.
For instance, there needs to be tougher financial penalties for non-compliance under the Radiocommunication Act. Currently, the maximum penalty for a first violation is $10-million, and the ceiling is set at $15-million for a subsequent infraction. Those paltry sums are hardly sufficient deterrents.
Although the ISED publishes information related to financial penalties on its compliance and enforcement webpage, there are currently only two notices.
Moreover, the ISED rarely revokes wireless licences because of non-compliance.
No wonder carriers aren’t scared of our regulators. They face no consequences for breaking the rules.
Sadly, this federal election is yet another missed opportunity to stop spectrum speculators in their tracks. Colour me unsurprised. Lax enforcement is the Canadian way.
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