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Telus boss rips ‘favours’ to Verizon as auction deadline nears

Darren Entwistle, Telus Corp.’s chief executive, is pictured on May 9, 2013. Mr. Entwistle launched his harshest attack yet on Ottawa’s telecom policy on Aug. 8, 2013.


Telus Corp.'s chief executive launched his harshest attack yet on Ottawa's telecom policy, arguing that federal intervention in the wireless market has fuelled such "consternation and confusion" that it is harming Canada's reputation as a good place for companies to invest.

Darren Entwistle said in an interview that Ottawa is creating doubt that Canada possesses a stable regulatory environment.

And he accused the government of offering "handout gifts" to U.S. companies – namely, Verizon Communications Inc. – at a time when other pivotal industrial files, such as the proposed Keystone XL pipeline, are facing hurdles in Washington.

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"We have a very important project for a very important sector in our country, oil and gas, that is experiencing, not just significant inertia, but public commentary from the highest levels of Washington as to what Canada needs to do if it is going to have a hope of progressing that project," Mr. Entwistle said.

"So why do we need to be handing out favours to the U.S. when not only is there not reciprocity, but we have asymmetry right now leading the day?"

His comments came as two of Telus's rivals also ramped up their criticism of Ottawa's approach to wireless policy, with the CEO of Quebecor Inc. saying that a potential entry by Verizon would have "catastrophic" consequences for smaller regional new entrants.

The heightened criticism is the strongest sign yet that Canadian carriers are worried about losing in an auction of wireless licences that will set the competitive environment for years, maybe decades, in the telecom industry.

Large existing wireless carries such as Telus and BCE Inc. are engaged in a frenetic campaign to get the government to change the auction rules ahead of a Sept. 17 deadline for bidders to put down deposits.

Verizon, which is mulling expansion into Canada, would qualify as a "new entrant" carrier under current rules, which means it could purchase more spectrum than incumbents while using its deep resources to outbid regional carriers.

The U.S. telecom giant would also be allowed to acquire struggling start-up carriers such as Wind Mobile and Mobilicity that are off limits to major domestic carriers, while using mandatory roaming and tower-sharing rules to ride on existing networks.

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But Ottawa's market meddling risks spooking foreign investors over the long term, said Telus's Mr. Entwistle. In that regard, he notes that Wind's financial backer, Amsterdam-based VimpelCom Ltd., was able to enter Canada under new rules that allow foreign telcos to wholly own small Canadian carriers, but is now finding it difficult to sell Wind for an "optimal" price.

"What do you think that signals to the rest of the world when they are thinking about coming to Canada – that it is one set of rules on the entry and a different application of those rules on the exit?" Mr. Entwistle added.

Quebecor's Vidéotron Ltée unit, meanwhile, argued that Ottawa's policies risk harming sustainable new entrant carriers.

"The potential consequences could therefore be catastrophic to regional new entrants such as Videotron, as four prime spectrum blocks could end up being shared between only three players, resulting in new entrants ending up empty-handed," said Quebecor CEO Robert Dépatie.

Quebecor is asking that Ottawa "set aside one prime 700 megahertz spectrum block per region to new entrants under Canadian ownership" – making that spectrum off limits to BCE, Telus, Rogers Communications Inc., and Verizon or other foreign players. Otherwise, regional carriers will "bear the brunt of the American giant's foray into the Canadian market," Mr. Dépatie said.

BCE's chief executive, George Cope, said the most problematic rules are those that would provide Verizon the ability to piggyback on incumbents' networks.

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"Quite frankly, our product is our network," Mr. Cope said on a conference call with analysts. "I don't think someone's going to ask our competitors in the retail world, like Canadian Tire, to give a Wal-mart access to their stores when they entered Canada. I don't think anybody asked Tim Hortons to give Starbucks access to their coffee when they entered into Canada. So why we would ever have to give access to our network to Verizon when they entered Canada, to me, makes no sense."

BCE, the parent company of Bell Media, owns 15 per cent of The Globe and Mail.

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