Millions of Canadians are likely to find their wireless speeds lagging behind if Verizon Communications Inc. makes its way to Canada, says the head of Canada's largest wireless company, who called on Ottawa to postpone an auction that will decide which companies get the spectrum needed to build the next generation of networks.
Rogers Communications Inc. chief executive officer Nadir Mohamed said the current rules for the January spectrum auction mean one of the country's three largest telecommunications companies could miss out on the chance to buy the spectrum needed for faster wireless access.
The spectrum being auctioned is in the 700-megahertz range and will be used to improve services on a wider range of devices. Verizon and other foreign players would be able to buy two of four blocks under existing rules, which were created to encourage new players to enter the country's wireless market. That would leave Rogers, BCE Inc. and Telus Corp. to fight over the remaining two blocks.
The company that is left out would find its service increasingly marginalized as its rivals use their new spectrum to increase wireless Internet speeds, Mr. Mohamed suggested. That would affect millions – even the smallest of the Big Three has more than seven million customers – at a time when subscribers are using wireless Internet more than ever.
"It's really important that we all understand the importance of spectrum," Mr. Mohamed said in a meeting with The Globe and Mail's editorial board. "We have a tremendous resource that is an asset and shouldn't be seen any differently than any other scarce resource that Canada has."
The CEO's argument marks a new tack in a debate that has occupied the major telcos and Industry Minister James Moore for weeks. The Big Three launched an extensive advertising campaign called "Fair for Canada" to draw attention to rules that they say will allow a large foreign competitor to enter the market with an unfair advantage. Up to this point, the campaign has focused on the risk to jobs and the need for a "level playing field" in the auction, but the government is standing by its policy.
Spectrum licences give wireless companies access to public airwaves to operate their networks. Foreign rivals would be allowed to use existing infrastructure, such as cell towers, allowing them to expand rapidly and compete for customers of the Big Three.
Spectrum is crucial to the country's carriers: They can add new customers to existing networks by building more towers, but they can't increase the speed of those networks without new spectrum.
The 700-MHz auction is set for January, but the telecom industry would like to see that delayed to allow for a review of the existing rules.
"The more users they have to entertain for a given network capacity, the less capacity there is for users," said Michael Connolly of Midelcon Spectrum Consulting. "Speed goes down."
Mr. Mohamed reiterated the wireless industry's argument that the country doesn't need a fourth national player to increase its competitiveness, a claim disputed by Prime Minister Stephen Harper later in the day. Mr. Harper brushed aside the major telcos' concerns about the viability of a fourth player in every regional market, saying the government feels strongly that Canada's wireless sector is not sufficiently competitive.
He said his government is confident Canadians are behind his approach. "Our considered view, upon examining market structures here and elsewhere, is that we could use more competition in the Canadian marketplace. We believe that consumers strongly support that," the Prime Minister said during a stop in Whitehorse, Yukon, during his annual summer tour of Northern Canada.
Mr. Moore, the new Industry Minister, is touring the country to speak in support of the government's wireless policy. And the Conservative Party of Canada has funded a website, consumersfirst.ca, that tries to rebut the advertising campaign launched by the major telecoms.
Mr. Harper said he's happy to receive input from telecom firms but said Ottawa is determined to move ahead with a policy it considers best for Canada.
"We certainly understand that these are important Canadian companies that make a good contribution to our economy and our society. We take the input of everybody seriously. That said, the ultimate responsibility of government is not to act in the interests of companies but to act in the broader public interest."