Telus files case against spectrum bid rules; Verizon’s Vodafone talks could push Canadian entry off the agenda

2 Sep 2013

Canadian quadruple-play telco Telus filed an application with the Federal Court on 20 August challenging the power of the country’s Industry Minister to set criteria dictating which companies can bid for wireless frequency licences, reports the Financial Post. The action follows a case Telus launched the previous month opposing the minister’s power to make unilateral changes to spectrum licence transfer policy. Ted Woodhead, Telus’ senior vice-president of government and regulatory affairs, said in an emailed statement: ‘We are asking the court to determine whether it is lawful for the Industry Minister to single-handedly establish a new eligibility criterion for the issuance of spectrum licences – something he did when he determined that a ‘large wireless service provider,’ such as Telus, will not be issued a licence for more than one prime block of 700MHz spectrum in the upcoming auction while other competitors are eligible for two prime blocks.’

As with its court case regarding spectrum trading rules, the latest lawsuit from Telus opposes federal rules which are ostensibly designed to ensure at least four effective wireless competitors in every region of Canada, but which Telus – and its two nationwide cellular rivals Rogers and Bell – argue in effect offer a ‘loophole’ which a foreign new entrant can exploit to gain an advantage in the 4G mobile segment by acquiring more new prime spectrum than the three domestic national incumbents. US giant Verizon is currently mulling whether to embark on just such a strategy by entering Canada’s 700MHz auction in January 2014 (with a deadline for applications set for 17 September). Industry Canada, the ministry with ultimate responsibility for licensing and spectrum policy, is not thought likely to vary any of the fundamental rules it has set for the 4G licensing process, despite lobbying from Rogers, Bell and Telus. Industry Minister James Moore’s director of communications Jessica Fletcher, said in an emailed statement referring to Telus’ court applications: ‘Our policies put consumers first, and we will continue to move forward with our agenda.’

Meanwhile, according to a report from the Globe & Mail, Verizon’s current talks on proposals to buy out the 45% stake in its wireless business owned by the UK’s Vodafone Group could lead to it cancelling its Canadian expansion plans to focus on taking full control of its US operations.

Opposition to Verizon’s proposed Canadian entry has come from a variety of groups, not just established cellcos. Two of the country’s largest unions – the Communications, Energy & Paperworkers Union and the Canadian Auto Workers – have held a rally in Toronto to protest against federal policy on the issue, but their concerns could prove to be unfounded if the latest speculation on Verizon freezing its cross-border expansion plan is accurate.