Industry Minister Christian Paradis surprised some analysts this morning by announcing that the government would not approve Telus plans to purchase Mobilicity. The decision is entirely defensible. The government established clear rules on transfers of spectrum that was set-aside in 2008 that prohibited transfer to incumbents within the first five years. The Telus deal (along with the proposed purchase of Shaw spectrum by Rogers) violated that requirement. To kill the deal is actually to provide greater marketplace certainty by making it clear that the spectrum policy rules will be enforced.
The problem is that the government appears to be doubling down on a single bet – that the combined spectrum of the new entrants (Mobilicity, Wind Mobile, etc.) can be pulled together into a single, viable competitor. That was the message the government sent when it lifted foreign investment restrictions for the new entrants and allowed them to grow beyond a ten percent market share. Yet by maintaining a host of other barriers to a strong, competitive wireless environment, the government’s policy is still on the verge of collapse. All the new entrants are struggling and the incumbents continue to bet that those competitors will eventually disappear or be acquired after the five year moratorium expires.
The government needs to do more than simply buy time by enforcing the five year spectrum set-aside rule. As I argued this week, there are a host of other possibilities, including fully opening the market to telecom and broadcast distributors (so a new foreign entrant can offer bundled packages that includes television), tough rules on domestic roaming and tower sharing, a full set-aside in the forthcoming spectrum auction, or a regulated wholesale market to create a strong class of MVNO competitors. Some would go further. For example, Peter Nowak argues today for structural separation.
Regardless, the government’s half-measures and incremental policy moves are a failure. Yesterday, the CRTC took care of its side of the bargain by firmly addressing several longstanding consumer concerns and establishing an enforceable code of conduct. It now falls to the government to admit that its approach to date has failed and that it stands ready to aggressively address the competition concerns within the Canadian wireless market.