The government won't back down on allowing large foreign companies into Canada's wireless market, says Prime Minister Stephen Harper, adding that he is more interested in promoting competition than in protecting the big domestic telecom companies.
The Prime Minister acknowledged the major Canadian wireless companies must "protect their bottom line for shareholders," but is refusing to change the policies they say will give U.S.-based Verizon Communications Inc. an advantage, using rules intended to help smaller players get a start.
"Our government has pursued extremely consistently and extremely clearly a policy of fostering greater competition in this industry for the benefit of consumers," Mr. Harper told reporters while visiting Miramichi, N.B. "We have every intention of continuing that policy in the interests of Canadian consumers and the broad Canadian public, including proceeding with the auction as we have laid out for some time."
Under current rules, Verizon and other foreign-based carriers would be allowed to purchase more spectrum licences than the three large incumbents at an auction next year. The licences give the companies access to public airwaves to operate their networks. Foreign rivals would be allowed to also use existing infrastructure, such as cell towers, allowing them to expand rapidly and compete for customers of the Big Three.
They are also be allowed to snap up small domestic wireless companies such as Wind Mobile and Mobilicity that are currently off limits to BCE, Rogers and Telus. Verizon has been considering an acquisition of Wind and Mobilicity; if it bought both, it would gain a customer base of nearly 900,000 subscribers in Canada.
The biggest wireless companies, BCE Inc., Rogers Communications Inc. and Telus Corp., are engaged in a high-profile lobbying and advertising campaign to get a shift in government policy. But Mr. Harper's comments, which reinforce a similar statement last week by Industry Minister James Moore, suggest that their pleas are falling on deaf ears.
"They're important parts of the Canadian economy, and they have a responsibility to protect their profits and to protect their bottom lines for their shareholders, for the people who work for them," Mr. Harper said. "At the same time, the government has a responsibility toward a wider public interest, and Canadians are very clear about what that wider public interest is to us: They want to see enhanced competition, lower prices, better services in this area."
Wireless companies aren't dropping their demands, despite a steady chorus of senior government officials saying they will stick to the existing process. Companies that wish to bid for spectrum must place a deposit by Sept. 17. The actual auction is expected in January.
Bernard Lord, the president of the Canadian Wireless Telecommunications Association, said there is still time for the Conservative government to reconsider and force Verizon to compete with Canadian carriers without the advantages afforded to smaller domestic players.
"I'm not saying that's likely or probable," he conceded. "But it's not impossible. It wouldn't be the first time the Prime Minister has tweaked his position on a policy and probably wouldn't be the last time."
Telus Corp.'s chief corporate officer, Josh Blair, said his company welcomes competition, but doesn't understand why the government is making it easy for Verizon capitalize on rules that intended to help much smaller companies. Verizon's revenue of $116-billion (U.S.) is more than BCE, Rogers and Telus combined.
The company still believes the government has time to change course, Mr. Blair said, and suggested the auction could be delayed if a deeper review is required.
"At this point we've been given 30 minutes to present our thoughts to the Industry Minister," he said. "The auction can always be delayed if that's what it takes for the government to carefully review all the new information and new thoughts being put forward."
In a sign of how heated the debate has become, the Communications, Energy and Paperworkers Union of Canada put out a statement Friday saying it is "worried" that if Verizon is allowed into Canada, "it will pass Canadians' personal data to US intelligence agencies." Verizon is one of the telecommunications companies whose data is being used in a government surveillance program that was revealed by Edward Snowden, a former employee in the U.S. intelligence system.
With files from The Canadian Press