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Michael Geist's Blog

Time for a New Plan: With Government's Wireless Strategy in Tatters, Regulation May Be Only Option

The federal government's spectrum auction starts today with its wireless strategy in tatters. Late yesterday, Wind Mobile announced that it was withdrawing from the auction, creating a new entrant vacuum that seems likely to leave some of the prime spectrum in major markets such as Ontario, Alberta, and British Columbia unlicensed and the hope for a renewed competitive wireless environment all but dead. Indeed, the marginal competitive gains of the past few years are now at risk and the government's vision of four strong competitors in every market looks like a pipe dream. The big three managed to scare off Verizon, while the federal government's mixed messages on foreign investment appears to have kept everyone else out.

Having made wireless competition a key policy priority - supported by a national advertising campaign and commitments in the Speech from the Throne - Industry Minister James Moore has little choice but to pursue a different strategy. The government had placed its bets on improving the competitive environment organically through foreign investment and new entrants. With that strategy a failure (a government spokesperson claimed the auction will still be positive for consumers but made no reference to improved competition), it is time to focus instead on regulatory solutions. The move toward regulated domestic roaming represents a starting point (and presumably Wind Mobile's best hope given its lack of spectrum), but more will be needed. Removing all foreign investment restrictions, establishing a regulated mobile virtual network operator market, and even considering structural separation are some of the regulatory choices still available.

If the government still believes that a competitive wireless environment remains a crucial economic concern, it cannot simply sit back as the big three carriers solidify their dominance in the upcoming spectrum auction and the prospect of viable competitors steadily disappears. The government should complete the spectrum auction and then move quickly to address the wireless mess with a strategy supported by targeted regulatory reform.
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