Bell was in full lobby mode yesterday with major advertisements and a new website arguing against a spectrum set-aside that could open the door to Verizon entering the Canadian market. CEO George Cope’s starting point is that “Bell welcomes any competitor, but they should compete on a level playing field.” Both aspects of this statement merit closer scrutiny.
Of all the incumbent telcos, Bell has been the most persistent in trying to limit or delay the removal of foreign investment restrictions that would open the door to new competitors. For example, Bell Canada’s July 2010 submission to the government’s consultation on changes to the foreign investment rules for telecommunications argued that no changes were needed since there were no problems in the Canadian market:
As Canada is among the world leaders in terms of recognized network infrastructure, the introduction of innovative products and services and price indicators, and since Canadian firms continue to have access to financing from foreign investors, it is not clear what problem this Consultation is intended to solve. Accordingly, the Government should not implement fundamental changes to foreign ownership rules based on ill-defined problems, particularly changes such as those embodied in Reform Options 2 and 3, which as explained below, will harm the Canadian companies providing the bulk of the investment, innovation and jobs in the Canadian communications industry and ultimately undermine the Government’s goal of eliminating the rural-urban digital and ICT divide in the medium and longer term.
Five years earlier, Bell also argued for delays in changes to Canada’s foreign investment rules as part of the Telecom Policy Review Panel. The Bell submission sought a full regulatory overhaul before the government tried to address foreign ownership:
The liberalization of ownership restrictions is likely to be inevitable given the globalization of world economies. That being said, Bell Canada believes that any change to current rules must only be enacted after the government has updated the overall policy and regulatory framework for the telecommunications industry.
Bell’s opposition to competition has not been limited to foreign operators. During the 2007 spectrum auction consultation, it also argued against any set-aside that many believed was essential to the entry of new competitors, stating:
It is Bell Canada’s firm belief that a spectrum auction should not be used as a vehicle to make artificial adjustments to the level of competition in the market.
Part of Bell’s argument has focused on the size of Verizon, with CEO George Cope claiming that the policy was intended for small players and that Verizon’s use of the provisions would somehow constitute a “loophole.” Yet there is no public record to suggest that the set-aside was intended solely for small players. In fact, during the 2007 spectrum auction consultation, Bell argued that the new entrants would be big companies:
it is likely that any new entrants would be well-financed firms currently well positioned in the industry with strong economic bases that would allow them to move into the wireless market without government assistance.
But what is particularly rich is the second part of Cope’s statement, namely Bell’s insistence that all it wants is a level playing field. As the company with a 133-year head start on a new foreign entrant surely knows, the playing field is not level for any new entrant. Bell and the other incumbents would have big advantages over a company like Verizon that include restrictions on foreign ownership for broadcast distribution, its extensive broadcast assets that Verizon could not touch, millions of subscribers locked into long term contracts, far more spectrum than Verizon would own, and its shared network with Telus that has saved both companies millions of dollars. If the government is planning to provide an entry point for a foreign operator (and Rogers says that it is actively courting Verizon), it is only because the Canadian market is already so heavily tilted toward the incumbents and limited competition.