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ROB Insight is a premium commentary product offering rapid analysis of business and economic news, corporate strategy and policy, published throughout the business day. Visit the ROB Insight homepage for analysis available only to subscribers.

Shareholders of Canada's three wireless giants are happy that Verizon Communications isn't entering the Canadian wireless market. But BCE Inc., Telus Corp. and Rogers Communications Inc. don't sound so triumphant: they're worried as ever about a federal government that seems hell-bent on making their lives miserable, or at a minimum, complicated. They have good reason to worry.

The Harper government picked a fight with the wireless giants, and knows it has a winner on its hands with voters, many of whom share a distaste for the entrenched players. The big three carriers' public campaigning effort this summer to get the government to change their wireless policies fell flat with Canadians and the Conservatives fought back with a campaign of their own.

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Whether prices are actually too high, or competition is sufficient or not, is beside the point. Putting the giants in their place is good retail politics – the Conservative Party even capitalized on the telecom regulator's new, consumer-oriented wireless code to push for donations.

Consider the rhetoric on Industry Canada's website. The site argues that the government's decision to set aside wireless spectrum for new players in a 2008 auction preceded the emergence of new competitors, offering greater choice, lower prices and more jobs, but concedes that the three biggies remain in control of 90 per cent of the customers. "Our work is not done," the site reads. Now the Big Three may wish Verizon had come to Canada instead of whatever Ottawa cooks up next.

The upcoming auction for new wireless spectrum was supposed to create more competition, but with the deadline for deposits just two weeks away, that likely won't happen. If the government finds itself unable to increase the number of economically viable carriers, however, there are all kinds of levers it can pull to achieve its other goal: lower prices. That may lead to unpleasant results for the incumbents.

On the heels of the Canadian Radio-television and Telecommunications Commission's wireless code, a newly activist and consumer-focused CRTC seems to be working up a new initiative to mandate roaming rates for carriers. More, not less regulation seems in store for an industry that was largely unregulated for the previous 15 years.

But the greater-competition angle isn't dead just yet. In 2008, Ottawa insisted that new entrants had to eventually build their own physical infrastructure, such as their own towers. Now, the Feds could change up the rules after the upcoming auction by opening the floodgates to "mobile virtual network operators" (MVNOs), which piggyback on existing networks and resell service they buy from incumbents to their own customers. MVNOs now exist, though they have to reach commercially negotiated terms with the carriers, and some have groused that the Big Three have been less than co-operative in striking deals. What if the government not only mandated the incumbents had to strike such agreements, but even dictated terms, forcing them to sell access at low rates, creating a spate of low-cost rivals?

That might seem excessive and unfair after holding an auction, and deter investment by the incumbents. But given the interventions by the Feds thus far, it might not be so far-fetched. The government could even say it had no choice if the auction yields no new entrants and the three stumbling upstarts can't find saviours – other than the incumbents the government has blocked from buying them.

The Verizon threat turned out to be a bogeyman for the three incumbents. But something even scarier likely awaits them.

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Disclosure: I own a number of Verizon shares.

Sean Silcoff is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow Sean on Twitter at @seansilcoff.

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