The IT Nerd

I must admit that this was a plot twist that I didn’t see coming. The Canadian Government has said “nine” to a proposed buyout of Mobilicity by Telus. Here’s what what Industry minister Christian Paradis said:

“Our government has been clear that spectrum set aside for new entrants was not intended to be transferred to incumbents,” Paradis said Tuesday at a news conference in Ottawa.

He doesn’t stop there. If anyone else was thinking of buying a upstart wireless company, that likely isn’t going be allowed:

Under the rules of the 2009 auction through which Mobilicity came into existence, any new wireless carriers were prohibited from selling their spectrum to an incumbent within five years. That came into question last month when Telus emerged with a $380-million bid to take over Mobilicity.

“We will not waive this condition of licence and will not approve this, or any other transfer of set-aside spectrum to an incumbent [within the five-year limit],” he said.

This alone isn’t going to mean lower prices for cell phone users in Canada, but it does show that the Canadian Government doesn’t like the current situation. However, I still think that they need to take stronger action to bring Canada in line with the rest of the world in this regard. Let’s see if they do more to help consumers.

If you’ve been hoping for lower cell phone bills, you may want to stop hoping. The purchase of upstart cell provider Mobilicity by Telus which I reported on previously has been approved by an Ontario court:

The deal has already been approved by Mobilicity’s bondholders, which means final OK from Canada’s Competition Bureau and Industry Minister Christian Paradis are all that remain in terms of regulatory hurdles.

The issue with that approval will be what happens to Mobilicity’s spectrum licence, which is currently set to expire in 2014.

So there are still hurdles to overcome. But quite honestly,I do not see those hurdles as being an issue. The net result is that there will be one less player in the market at the end of this. As a result, consumers will still continue to pay the highest cell phone rates on planet earth. That’s a horrible distinction to have. Sadly, the Canadian Government’s desire to do something about that isn’t something that is on their to-do list.

My thoughts on this go something like this. Mobilicity approached Telus to make this deal happen according to this Telus press release. That says to me that they couldn’t make a go of it and are looking to Telus to keep them as a going concern. This may be a trend as rumor has it that Wind is looking for a buyer as well. What that means is that the Canadian Government’s attempt to lower cell phone prices, which are among the highest in the world down has failed. If this deal were to go ahead, that would not change.

Now that’s likely going to make someone ask “what will change this situation?” The way I see it, there are only two choices. the Canadian Government could pass legislation to force incumbent cell companies (read: Rogers, Bell, Telus) to share infrastructure. This was done before when the government wanted new players in the the telephone space years ago. Now I’m not in fan of heavy handed tactics like this, but it does work to a degree so I would be okay with it. What I think is the better choice is for the Canadian Government to create the environment to allow deep pocketed telcos on the scale of Orange, Vodafone, or Deutsche Telekom (aka: T-Mobile) to come in and set up shop in Canada. I suspect if that happened, the incumbents would instantly be forced to drop their prices in order not to run over by these players. Now that’s something that has been hinted at, but never actually been put into action. Perhaps it’s time that it did happen.