Industry Minister Christian Paradis unveiled the government’s plans for the next spectrum auction yesterday with a plan that hits many of the right notes but remains too timid in places. The reliance on spectrum caps is reasonable, but the foreign ownership restriction changes do not go far enough and the decision to forego mandated open access is a blow to Canada’s still-missing digital economy strategy. Overall, the plan (spectrum auction + foreign ownership policy) feels like one that a minority government would release as it seems designed not to generate too much opposition (incumbents and new entrants will see enough that they like that few – WindMobile excepted – will scream too loudly). 

The government’s vision of fostering new competition is somewhat limited. The primary goal appears to be the creation of a strong, national fourth carrier in the market. The spectrum caps and foreign ownership changes are both geared toward giving a fourth player the necessary spectrum and capital to compete with Bell, Telus and Rogers. That suggests consolidation of the current smaller players in the hope of a single, stronger competitor – possibly foreign owned – challenging the incumbents. Given the current environment, it is not clear that this generates significant new consumer choice. 

While the headlines have focused on changes to the foreign ownership rules, the new changes are rather timid. There is an opening for a foreign competitor to enter the marketplace by buying some of the smaller players or aggressively bidding on spectrum, but there is no vision of throwing the market open to full-scale competition that might include a major international player entering the market by buying an incumbent. That would shake up the competitive landscape far more than the incremental, go-safe approach in this policy.

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