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Wireless auction, UBB dominate telecom summit

As Canada's telecommunications industry holds its breath for several key government policy announcements and awaits crucial regulatory hearings, the sector's main annual conference is being dominated by two central questions.

First, should there be some kind of limit on the amount of wireless licences that large wireless companies can buy from the government? And second, what does convergence between telecom companies and content creators such as broadcasters and media companies mean for the industry - and for Canadian consumers?

For the second consecutive year, the question about the structure of wireless auctions is dominating discussions at the Canadian Telecom Summit in Toronto. In the absence of firm federal policy on how the government will structure an upcoming auction of the wireless airwaves, Canada's large, established wireless companies are jockeying for position - and public perception - with their smaller, new rivals, which were allowed to offer service after an auction that took place in 2008.

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The CEO of Quebecor Inc.'s Videotron unit, Robert Depatie, used a keynote address on Wednesday morning to argue for the implementation of a "cap" on the amount of wireless spectrum licences wireless companies can purchase in an auction to be held in late 2012 or early 2013. Mr. Depatie gave a similar position last year a few months before his company began offering wireless service. He argued that where companies did not already have similar wireless spectrum licences to the ones being auctioned, they would be allowed two "blocks" of the spectrum; those who already own some can buy only one block of the licences, which cover certain geographic areas.

"We asked Industry Canada and its new minister, the Honourable Christian Paradis, to get this model serious consideration," Mr. Depatie told the crowd.

At the same conference on Tuesday, Rogers Communications Inc. president Rob Bruce said such a limitation on his company's ability to buy wireless licences would be a "slap in the face" to its 9 million subscribers. In an interview, Mr. Depatie said that his competitor's arguments hide the fact that companies such as BCE Inc. and Rogers already have a vast, unused supply of such spectrum licences, which are allocated by the government.

"They cannot be taken seriously," Mr. Depatie said.

In a panel discussion on Wednesday, Rogers' senior vice-president for regulator affairs Ken Engelhart argued back, saying the most sensible way to organize the auction was to hold a completely open auction of wireless licences. Critics including Mr. Depatie, of course, say that open auctions benefit those with the deepest pockets.

"An auction says you put your money where your mouth is," Mr. Engelhart told a large crowd in a conference centre near Toronto's airport. "No one is smart enough to micro-manage a spectrum auction."

At the same time, and ahead of a hearing in late June at the Canadian Radio-television and Telecommunications Commission on vertical integration in the sector, companies were busy arguing back and forth in panel discussions here how the industry needs to be structured. As telecom companies use big revenues from cable, Internet and wireless service to buy up media companies - Shaw Communications Inc. recently bought CanWest, Bell recently bought CTV Inc., Quebecor owns the TVA Group broadcasting empire and various French-language media, and Rogers has long owned various media properties - there are a number of questions being raised about how the federal regulator, the CRTC, should approach the industry.

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Chief among concerns raised were about Netflix and so-called usage-based billing, and whether Canadian Internet service providers - which also own broadcasters - were protecting their TV businesses by imposing download limits on consumers who wanted to live-stream and download their video entertainment, a process that uses a lot of bandwidth. Chris Peirce, the regulatory chief at Manitoba Telecom Services, argued that usage-based billing - a process where consumers are charged for how much they download - was a form of "double billing."

Non-traditional TV broadcasters, known as "over-the-top" services, are a key concern for large telecom companies - not only do they allow consumers to cut their cable cord, they avoid regulation, such as paying into Canadian Media Fund and simultaneously increase the strain customers put on their Internet providers.

"Over the top is moving very fast, it has people very frightened," Konrad von Finckenstein, chair of the CRTC and a former head of the Competition Bureau, told reporters. He added that, "if this is a paradigm shift," he wanted to see all the data before him, so that he could figure out how best to approach the problem.

Mr. von Finckenstein's key concern, however, was the structure of the telecommunications industry in general ahead of the upcoming vertical integration hearings. The CRTC chairman is known for speaking his mind, even when the CRTC's political masters are opposed to his ideas, and he said that the framework set up to deal with telecommunications in Canada is not ideal.

"We would benefit from a rethink in light of (industry) convergence," he said on a panel discussion on Wednesday. "Have we got the best set up, institutionally and legislatively? No."

John Lawford of the Public Interest Advocacy Centre also argued on Thursday that consumers could be disadvantaged from convergence, as companies jostle to offer the most valuable, up-to-the-minute content to their own customers, as the expense of Canadians on other providers. He predicted a day where some consumers may not switch to a competition wireless provider because they couldn't get their favourite show via mobile TV.

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