Telus Corp. is taking the federal government to court over its wireless policy, arguing Ottawa has unfairly disrupted investment plans by changing the rules governing the transfer of spectrum licences between carriers.
The legal bid is a sign of growing tension between major industry players and policy makers. It comes as Telus, Canada's No. 2 carrier, is engaged in a broader public battle with the federal government over its strategy to spur more competition in the cellular phone market – one where the Big Three incumbents are accusing Conservatives of favouring big foreign firms such as Verizon Communications Inc. at the expense of domestic companies.
In an application for a judicial review filed in Federal Court on Monday, Telus contends that Ottawa has indefinitely extended what was supposed to be a five-year ban on major carriers purchasing spectrum initially set aside for new entrants into the market.
Telus has a major stake in the matter. Last month the federal government rejected Telus's $380-million bid to buy Mobilicity, a small, struggling wireless company which itself had spent $243-million acquiring advanced wireless services (AWS) spectrum in a 2008 auction. Mobilicity had preferential access to the spectrum as a new entrant.
Last month, then-industry minister Christian Paradis toughened the spectrum transfer rules, saying all requests that would result in undue concentration of spectrum and diminished competition would not be permitted. He announced that future decisions on transfer requests would be reviewed on a case-by case basis.
Telus says this is unfair for participants of the 2008 AWS auction where the rules, established by Ottawa at the time, said the spectrum could be resold, even to incumbents, after five years. The company noted the minister at the time suggested these rules were written in a framework document that said "the policy decisions contained in this paper are final."
It argues the industry minster's rule changes interfere with rights granted to investors in the 2008 auction. "The minister did not have the statutory power to interfere with those vested rights," Telus said in its court filing.
"The results of the new policy, if implemented, will be that changes in control of [advanced wireless spectrum] licensees who received spectrum through the set-aside will no longer be permitted after the expiry of the moratorium except with the minister's approval, contrary to the clear, unambiguous and unqualified representations the minister made in the AWS framework and in the AWS licences that the moratorium would expire after five years," Telus said.
None of the allegations has been proven in court.
Telus, Bell and Rogers have all in recent weeks argued they should have a right to buy Mobilicity and new entrant rival Wind Mobile if deep-pocketed Verizon, which is considering expanding in Canada, has the right to do so. The U.S. carrier is considering buying both start-up carriers.
Mr. Paradis, the former industry minister, announced a review of the government's policy of spectrum licence transfers between carriers after Rogers signed an "option" deal to eventually acquire fallow spectrum from Shaw Communications Inc. during the fall of 2014, and Telus began talks with Mobilicity. (Rogers later announced a similar option deal to purchase undeployed spectrum in the greater Toronto area from Quebecor Inc.'s Vidéotron Ltée unit.)
Separately on Monday, Industry Minister James Moore met privately with senior executives of wireless companies amid the industry's building opposition to a Canadian government strategy the telcos argue would grant preferential treatment to big foreign firms such as Verizon.
The get-togethers took place in the wake of signs that corporate Canada is increasingly united in its concern about the manner in which the Harper government is trying to entice a fourth wireless player in all of the country's regional markets.
Wireless players were granted half an hour with Mr. Moore, who just took over the portfolio in the July 15 cabinet shuffle. Mr. Moore's office would not discuss the meetings. "The minister is meeting with representatives from various sectors. These meetings are private," director of communications Jessica Fletcher said.
"They have given all the CEOs 30 minutes with the minister. They set it up," said an industry source.
"We were just told they had heard 'rumblings' and wanted to talk to everyone."