James Moore, the Ministry of Industry, said on Wednesday that the just-completed auction of 700-megahertz wireless spectrum had been successful, and had supported "more choice for Canadians by enabling a fourth wireless carrier in every region of the country." The key word is "enable," a tentative word also used in his ministry's background paper. Did the auction enable greater wireless competition? Yes. But it hardly guarantees it.
The "new" wireless player outside Quebec is Quebecor Inc. It now owns spectrum in the four most populous Canadian provinces, thanks to rights purchased for $233-million. If the company actually builds a national wireless business on the back of this purchase, that could mean more choice and more competition in the telecom market. But that promise will go unfulfilled if Quebecor is allowed to turn around and sell its spectrum to one of the three major incumbent telcos. The point of the auction was to sell spectrum to companies that will use it to create operating businesses, which will benefit consumers, not businesses built on flipping virtual real estate.
When the government embarked on this process, the "new entrants" it had in mind were not the kind it actually got. Neither plucky little startups nor a foreign behemoth such as Verizon materialized.
Admittedly, it's not easy to foster competition in telecom. Even in as populous a country as the United States, the market shares of the four biggest wireless companies add up to about 95 per cent. This month, antitrust officials of the U.S. Department of Justice warned the two smaller firms in that foursome (Sprint and T-Mobile – together holding a 26-per-cent market share) against even thinking about a merger.
The next Canadian spectrum auction is scheduled for April, 2015. By that time, the government may have other ideas about what it hopes to achieve. But with this year's auction, it should continue to press for spectrum to be used to deliver services to consumers – not merely for "enabling." If you bought it, you've got to use it.