SaskTel cries foul over wireless licence auction

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The federal government is perpetuating a "myth" by suggesting an upcoming auction of wireless licences will benefit rural Canadians with improved cellular service, say top executives at one of this country's largest regional carriers.

Saskatchewan Telecommunications Holding Corp., or SaskTel, is Canada's last provincially owned telecom. It had roughly 612,000 mobile subscribers at the end of 2012 and is poised for more growth this year as its network expands into more rural communities. That growth, however, is dependent on SaskTel's ability to buy more spectrum licences – such as those for the 700 Megahertz frequency.

Competition for that spectrum is fierce. The 700-MHz band is coveted because of its ability travel long distances and penetrate buildings with the use of fewer towers. Additionally, it is especially well-suited to facilitate data traffic which is skyrocketing as consumers stream video on smartphones.

But chief executive officer Ron Styles said Ottawa's rules for that auction, which is set to begin Nov. 19, will put regional carriers, such as SaskTel, at a disadvantage and could hurt competition. And despite government promises to provide rural residents with advanced wireless services, he says the rules provide no incentive for other carriers to expand into rural areas.

Ottawa's goal of ensuring at least four carriers in every regional market is teetering toward collapse, with three other small carriers up for sale.

"It doesn't foster competition and it doesn't help with rural coverage," Mr. Styles said during an interview in downtown Toronto on Wednesday. He later added: "Give us a level playing field and we will play on it. But when it is tilted against us, don't try to tell me later on you're looking for competition."

John Meldrum, vice-president corporate counsel and regulatory affairs, was blunt: "You know they have a vision of four carriers, right? In Saskatchewan, we have four carriers, but if anything, this auction is going to hurt the fourth carrier. It doesn't make sense if your goal is to foster competition."

Although SaskTel controls 73 per cent of the province's wireless market, it says the auction is biased toward the larger carriers that it competes against, including Rogers Communications Inc., BCE Inc. and Telus Corp.

Industry Minister Christian Paradis, however, has said that rural coverage is a priority.