Reports in the Globe yesterday that U.S. telecom giant Verizon has offered $700 million for Wind Mobile as part of an entry into the Canadian wireless market (which could also include buying Mobilicity and bidding in the upcoming spectrum auction) caused significant reverberations throughout the industry. The news sent the stock price of the Canadian incumbents plummeting and analysts – who only days ago were assuring clients such a move would not happen (“highly unlikely” said Scotiabank’s Jeff Fan; “what a joke” a telecom executive told Cartt.ca) – scurrying to assess the potential impact of a Verizon entry. Some have argued Verizon would have little interest in a smaller market like Canada, yet the company has actively promoted the elimination of foreign investment restrictions including in a 2008 submission to the Competition Policy Review Panel that detailed how “it had a long-standing presence in the Canadian telecommunications market”.
There remain many questions about a Verizon entry into the market via Wind Mobile, particularly with respect to the use of different wireless technologies and spectrum, but there is little doubt that the company could use its buying power to offer better deals on devices and North America-wide plans that leverage its U.S. network to offer significantly better roaming services. Moreover, the U.S. footprint could appeal to the corporate sector, offering the chance to steal customers from the current incumbents.
Less discussed would be the potential impact on broadcast rights and distribution.
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Earlier this month, Bell and Quebecor, two giants in the Canadian broadcasting and telecom landscape, became embroiled in a dispute over Sun News Network, the recently launched all-news network. At first glance, the dispute appeared to be little more than a typical commercial fight over how much Bell should pay to Quebecor to carry the Sun News Network on its satellite television package. When the parties were unable to reach agreement, Bell removed Sun News Network, leaving a placeholder message indicating “the channel has been taken down at the request of the owners of Sun News Network.”
While the dispute is now before the Canadian Radio-television and Telecommunications Commission – Quebecor claims Bell is violating the legal requirement against “undue preferences”- more interesting is Bell’s claim about the value of Sun News Network signal.
According to Mirko Bibic, senior vice-president of regulatory affairs at Bell Canada, the market value of Sun News Network is zero because Quebecor makes the signal available free over-the-air in Toronto and is currently streaming it free on the Internet. Given the free access, Bell maintains that the signal no longer has a market value.
My weekly technology law column (Toronto Star version, homepage version) notes Bibic’s comment may be posturing for negotiation purposes, but it highlights the larger problem for Canadian broadcasters and broadcast distributors such as cable and satellite providers.
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Appeared in the Toronto Star on May 21, 2011 as Can Canadian Broadcasters Compete With Free? Earlier this month, Bell and Quebecor, two giants in the Canadian broadcasting and telecom landscape, became embroiled in a dispute over Sun News Network, the recently launched all-news network. At first glance, the dispute […]
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