The old adage in real estate that it only takes one buyer held true in the Canadian 700 MHz spectrum auction. After potential new entrants such as Verizon declined to enter the Canadian market and Wind Mobile dropped out of the bidding at the last minute, many declared the spectrum auction a failure. Industry Minister James Moore and the government got the last laugh, however, with the auction generating $5.3 billion and the emergence of potential new national wireless player – Videotron (parent company is Quebecor). There had been some speculation that Quebecor might make a move outside of Quebec (Nowak, Corcoran) and seeing the company scoop up prime spectrum in Ontario, Alberta, and British Columbia offers renewed hope for a more competitive environment.
The possibility of Quebecor becoming a national player does not end there. The government’s move to regulate domestic wireless roaming creates the possibility of more competitive new entrants who can piece together national networks comprised of their own spectrum plus roaming on competitor networks in markets where they do not operate. There is also the possibility of Quebecor accelerating a national move by acquiring Mobilicity or even making a play for Wind Mobile.
Yet despite the optimism, there is still some lingering doubts about Quebecor’s plans. The company’s press release states “given the way the auction unfolded, Quebecor Media could not pass up the opportunity to invest in licences of such great intrinsic value in the rest of Canada. We now have a number of options available to us to maximize the value of our investment.” In other words, this was relatively cheap spectrum given bidding restrictions on incumbents and the limited number other bidders that was too inexpensive to pass up ($233 million for seven licences in Quebec, Ontario, BC, and Alberta).
Moreover, the company’s success in Quebec may stem in part from its ability to offer bundled services that include wireless, Internet, cable television, and home phone. Quebecor will be hard pressed to match the bundled approach outside its home province. If the company is a wireless-only player in Ontario, B.C., and Alberta, it may face many of the same challenges as the other 2008 new entrants.
From a consumer perspective, the possibility of more choice is great, however Quebecor is another large vertically integrated company with incentives to favour its own content. For example, in 2011, the CRTC ruled that it violated undue preference rules when it gave its video-on-demand service exclusive rights to some of its broadcaster programs. The Commission ordered the company to provide the programs to Telus and Bell.
For the moment, Canada is still dominated by the big three, who unsurprisingly bought the majority of available spectrum. But the spectrum auction outcome offers a ray of hope to those seeking a national wireless player who could shake up the Ontario, BC, and Alberta markets. Quebecor has a footprint of 500,000 wireless customers in Quebec and it just acquired prime spectrum on the cheap. If the government maintains its commitment of regulating wholesale domestic roaming and tower sharing, there may be the necessary ingredients to entice Quebecor to take a shot at becoming a viable fourth player in Canada’s largest provinces.