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OpenMedia drumming up support for smaller wireless players

Canada's Industry Minister Christian Paradis.


An activist group, best known for galvanizing a public furor over usage-based billing, is now hoping to spark an uproar about the federal government's upcoming auction of wireless licences., whose online petition against UBB has garnered more than half-a-million signatures to date, is set to launch a new consumer campaign on Wednesday entitled "Stop The Cell Phone Squeeze."

The non-profit organization wants Canadians to pressure Ottawa to set aside, or reserve, wireless licences for smaller companies in the next spectrum auction. Failing to do so, it warns, would destroy wireless competition and lead to higher consumer prices.

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Industry Minister Christian Paradis is widely expected to unveil the government's auction policy for the coveted 700 MHz frequency in the coming weeks. That policy will likely clarify whether Ottawa will hold an open auction or set aside wireless licences for smaller players as it did in a previous auction in 2008.

Steve Anderson, OpenMedia's executive director, argues a set-aside is necessary to prevent the big three wireless incumbents (Rogers Communications Inc., BCE Inc. and Telus Corp.) from using their financial might to dominate the auction, hoard spectrum and "shut out" wireless newcomers.

"Canadians, en masse, across the country, understand that our telecom market is broken," said Mr. Anderson in a telephone interview on Tuesday.

He later added: "The reason we have the kind of anemic competition that we have in wireless is because there was a set-aside last time. And the idea of not doing that again ... means that prices will go up, contracts will get worse, bad customer service will get worse."

The 700 MHz frequency is highly desired by wireless companies of all sizes because it is well suited to providing ubiquitous mobile broadband networks at high speeds - such as those required for implementing Long-Term Evolution (LTE) technology. Faster speeds, for instance, are key to delivering mobile video on smartphones and other devices.

Still, analysts say only key blocks of the 700 MHz frequency are considered ideal for LTE purposes – roughly 46 MHz of the total 58 MHz expected to be put on the auction block.

Given that overall availability is scarce, Open Media wants at least 10 MHz of that "prime" spectrum to be set aside for smaller wireless players, Mr. Anderson said.

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New entrants such as Globalive Wireless Management Corp., which operates as Wind Mobile, and rivals Public Mobile and Mobilicity have also argued for a set-aside of wireless licences for the next spectrum auction.

Mr. Anderson, though, said OpenMedia's consumer campaign is an independent initiative, confirming the group has not received funding from any wireless upstart.

"These are critical issues. And we respect and fully support the efforts of independent organizations like OpenMedia, who play such an important role in informing the public and making sure that the ordinary Canadian consumer's voice is heard in Ottawa," said Simon Lockie, chief regulatory officer of Globalive's parent company, Globalive Communications Corp.

For their part, Rogers, BCE and Telus are lobbying for Ottawa to hold an open auction, arguing that wireless newcomers no longer require special treatment.

"This is all about the consumer and giving them access to the best, most advanced networks in the world. A fair and open auction will mean Canadians, both in urban and rural communities, will have access to the benefits of LTE," said Rogers spokeswoman Patricia Trott in an e-mail late Tuesday. "Let's be realistic – the government should recognize who is actually going to the use 700 spectrum to deliver this technology to Canadians."

Telus, though, has stated that it would also support caps that limit how much spectrum each company can purchase in the auction. One proposal that was under consideration by Ottawa is to potentially place a cap at 10 MHz of bandwidth.

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Michael Hennessy, senior vice-president for regulatory and government affairs at Telus Corp., said caps would ensure "multiple winners" in the wireless industry, while also enabling telecom incumbents to make LTE network investments in both urban and rural settings.

Set-asides, he added, are problematic because they create a lot of "distortion" in the bidding process, meaning industry players end up overpaying for spectrum.

"We figure, last auction, the new entrants probably paid about 40 per cent more than comparable rates in the U.S., and the incumbents paid another 40 per cent above that," he said in an interview late Tuesday.

He added: "If you are not over paying for spectrum, they actually you have more money left to invest in the actual infrastructure."

The federal government, meanwhile, is also mulling potential changes to sector's the foreign investment rules to help stimulate more competition.

While current law restricts direct and indirect foreign investment in telecom companies to a combined total of 46.7 per cent, Ottawa is considering whether to allow 100-per-cent foreign ownership of telecom firms with a market share of 10 per cent or less.

Depending on the timing of Mr. Paradis' announcement on foreign investment and the government's auction policy, the auction itself could take place later this year or in early 2013.

As a result, Mr. Anderson argues that his group has limited time to raise consumer awareness of the issue.

OpenMedia's advocacy, though, has proven highly successful in the past. Its previous "Stop The Meter" campaign against UBB (launched in November, 2010) was widely credited for spurring then-industry minister Tony Clement to send Canada's telecom regulator back to the drawing board on that contentious issue.

That petition had collected about 330,000 signatures when Mr. Clement announced in February, 2011, via Twitter, that the government would overrule the CRTC if it did not rescind a decision that would have effectively spelled the end of "unlimited use" Internet plans offered by smaller providers.

The CRTC then held a new set of hearings and delivered a compromise decision on UBB last November. As of Tuesday, Open Media's "Stop The Meter" petition had amassed more than 502,000 signatures.

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