The IT Nerd

The big three telecoms have always claimed that they are in competition with each other. But Canadian mobile phone users have a different opinion, and that was reinforced over the weekend when it came to light via the CBC that Rogers, Bell and Telus all raised rates by exactly $5 over the last couple of months:

Rogers, Telus and Bell Mobility now all charge $80 per month for new smartphone plans with a new contract, $5 more than those same plans cost when they were introduced last year. The prices for other smartphone plans with more data cost upwards of $145. 

The price hikes affect every province except Manitoba and Saskatchewan.

The $80 a month plan includes 500 MB of data, unlimited nationwide calling, unlimited messaging, voicemail and call display.

No reasoning was given for the price increase, and no press releases were issued. Existing plans are unaffected.

Lovely. Now I’m going to guess that some of this is to pay for their participation in the 700 Mhz auction. But I am also thinking that the big three might also think that with no real competition in the Canadian marketplace, they can grab a few extra bucks. Either way, something is really suspicious about the fact that all three of these companies basically have the same pricing at more or less the same time. That highlights why Canada needs a strong fourth option in Canada to compete with these three companies.

So who won the 700 Mhz spectrum auction and will it radically change the wireless landscape? Let me tell you the winners and then I’ll tell you what I think will happen next.

First, underscoring the importance of social media, the results were announced on Twitter:

https://twitter.com/industrycanada/status/436270200636575744

So you could click the link above and read all the details, but if you want to save some time, here’s the list of winners divided by region:

Newfoundland and Labrador: Bell, Eastlink, Rogers, Telus

Nova Scotia: Bell, Eastlink, Rogers,TELUS

Prince Edward Island: Bell, Eastlink, Rogers, Telus

New Brunswick: Bell, Eastlink, Rogers, Telus

Quebec: Bell, Rogers, Telus, Videotron

Southern Ontario: Bell, Rogers, Telus, Videotron

Northern Ontario: Bell, Eastlink, Rogers, Telus

Yukon and Northwest Territories and Nunavut: Bell, Feenix, Telus

Manitoba: Bell, MTS, Rogers, Telus

Saskatchewan: Bell, Rogers, SaskTel, Telus

Alberta: Bell, Rogers, Telus, Videotron

British Columbia: Bell, Rogers, Telus, Videotron

One thing that you’ll notice is Videotron is now the proud owners of spectrum in BC, Alberta, and Southern Ontario as well as in their home province of Quebec. Given that they give the big three a run for their money on a frequent basis in Quebec, it is possible they can do the same thing elsewhere. Thus they could eventually become the fourth national player that Canada needs so desperately. Though we’ll likely have to wait at least a couple of years to see if that’s the case. Another thing to note is that most areas have a fourth company to provide wireless service. That might be a good thing as well. Finally you should note that the Canadian government pulled in $5.27 billion. That’s great for them.

Now, what do you think? Will this be good for Canadian wireless users? Do the big three have anything to worry about? Post a comment and share your thoughts.

So if you were wondering who won Canada’s 700 Mhz auction, wonder no longer. Minister James Moore Tweeted this:

https://twitter.com/JamesMoore_org/status/435898836267978752

Tune in at 5PM to see the results. I’ll be posting the results as soon as humanly possible after they are announced.

You may recall that I posted a brief story about the fact that the Industry Minister James Moore was going to make an announcement today. Well, the announcement in question was that there will be new rules for wireless companies planning to install antenna towers:

To help address the concerns of citizens about the number of new towers being built in their communities, in March 2013 the Harper Government announced changes to its telecommunications policy. These changes reinforced the requirement that any company wanting to build a new tower first had to look at sharing an existing tower or using an existing structure for its antenna.

The improvements to the Antenna Tower Siting Policy that were announced today will further strengthen the requirements for the wireless industry to consult with local residents, increase transparency for municipalities and improve communications throughout the tower siting process.

Specific changes will include:

• requiring a company to consult on all commercial tower installations, regardless of height;
• establishing a three-year limit between the time of consultation and the time a tower is built;
• ensuring residents are well-informed of upcoming consultations by requiring communications from the company to be clearly marked; and
• encouraging municipalities to get involved early in the tower siting process.

Furthermore, new measures will strengthen federal communications with the public on tower siting procedures. This will include:

• new online resources; and
• new reporting mechanisms to track tower issues and report back to communities.

When an issue or impasse arises that is related to a new tower site, the parties can approach Industry Canada for a determination.

The location of cell antennas have been an issue in Canada with people often getting very upset at the location of some of these towers. Here are a few examples of this from across Canada. So this announcement addresses that concern. Now the cynical side of me also looks at this announcement and sees it as another shot across the bow of wireless companies because this process continues the trend of the Canadian Government wanting public input while taking a shot at the big three among others. But many will see this as a positive move.

This could be interesting.

A media advisory is up on the Industry Canada website with this cryptic message:

The Honourable James Moore, Minister of Industry, will make an announcement regarding Canada’s wireless industry.

Minister Moore will be available to answer questions from journalists following the announcement.

That can mean almost anything from new legislation to announcing the winners of the 700 Mhz auction tomorrow. Your guess is as good as mine. Whatever the announcement is, it should prove interesting for both the wireless industry and those who use their services.

Here’s a question that I got in my inbox last night:

IT Nerd. I was wondering if you had a sense of how long the spectrum auction is going to last? Also, how long before the winners start using the new spectrum?

Thank you. 

Thanks for the question. The Canadian Government has already said that there will be no further comments while the auction is going on. But you can expect it to last until March based on what happened during the last spectrum auction. So, expect a press release from Industry Canada in mid to late March with the details on who won the auction and what they won.

In terms of how long it will take for companies to start using the 700 MHz spectrum. Expect a year to 18 months before services go live on that spectrum. The big hint that services are live on the 700 MHz spectrum is when the winners start to push phones that take advantage of that spectrum and you get encouraged to upgrade your phone.

Today is the start of the 700 MHz wireless auction that according to the Canadian Government was part of a strategy that was supposed to bring Canadians “More choice. Lower prices. Better service” to borrow a tagline that they’ve used. But as I type this, it appears that Rogers, Bell, and Telus will win three of the four 700 MHz blocks on offer. That’s because Wind Mobile dropped out of the auction at the very last minute. That leaves nobody to challenge the big three telcos as Wind Mobile was eligible to buy two blocks of 700 MHz specturm. So as it stands right now, it’s business as usual with Canadians paying among the highest prices in the world for cell phone service and no real competition in the wireless space. It also highlights how the Canadian Government’s wireless strategy has failed to bring about the change that the Government desired. This in stark contrast to the press release that Industry Canada put out today that seeks to give Canadians the opposite impression.

So, how did we end up here?

Let’s look at the Wind situation. The reason why they dropped out was that their biggest backer, Vimpelcom wouldn’t fund their entry into the auction. The reason allegedly being that Ottawa shot down an attempt by Vimpecom to take control of Wind because Ottawa was worried about giving a Russian entity (Vimplecom is a Dutch company but controlled by a Russian Billionaire) control of Wind’s network infrastructure. What didn’t help that situation is that the network infrastructure was built by Chinese telecom equipment maker Huawei who don’t exactly have the best reputation. Now add to that the recent decision by Ottawa to block the sale of another teleco, MTS Allstream, to Accelero Capital Holdings over “national security concerns.” Chances are Accelero’s association with North Korea might have something to do with the Government blocking the sale, but I doubt we’ll find out for sure. Keep in mind that Accelero is the investment arm of Egyptian telecom tycoon Naguib Sawiris, the man who originally bankrolled Wind Mobile before his interest was sold to VimpelCom because he’s “finished with Canada”.

Net result: It sends the impression that Canada is closed for business despite the fact that Ottawa says it’s open for business. If you’re a Verizon, T-Mobile, or any other foreign telco, you might looking at this and be concerned that any attempt to enter Canada would hit some sort of roadblock. Thus you’ll avoid Canada so that you don’t get caught up with that. That’s not a good impression to leave foreign telcos who are thinking of coming into the Canadian market if you’re the Canadian Government and you’ve made it clear that want to foster competition in the wireless space. So with that in mind, there’s only two ways that the Canadian Government can claim victory on the wireless front from where I sit.

The first one is to hope that Quebec based telco Videotron, who as I type this are still in the 700 MHz auction, becomes a national player. While they have been primarily focused in the Quebec marketplace, it  may see a strategic opening with the departure of Wind Mobile from the spectrum auction. So it is plausible that Videotron could pick up spectrum in Ontario, Alberta and British Columbia, which it could use give the big three something to worry about. What makes this even more plausible is the fact that Videotron has very deep pockets. However it’s a passive approach for the Government and one that may not happen as anything can happen in an auction.

The second way, and the only real solution in my mind, is for the Canadian Government to throw the doors wide open to foreign telcos and let them in and set up shop. But for that to be really effective, the federal Investment Canada Act which allows Ottawa to block any deal worth $299 million or more if it finds the takeover doesn’t provide “net benefits” to Canadians has to be changed. Specifically, that rule has to be relaxed so that a true free market can exist and a telco could come in and buy whomever they want rather than have to set up a network from scratch. That will encourage the Verizon’s and T-Mobile’s to enter Canada as they could buy a Wind Mobile for example and pour money into that operation to expand their network to challenge the big three. This is what the Government should have done in the first place if they really wanted to have “More choice. Lower prices. Better service” for Canadians, and it’s not too late to do that. All that’s needed is the political will.

The bottom line is this: If there is not an immediate change in course, Canadians will be stuck with the status quo in the wireless space for the foreseeable future. That’s not a good thing for consumers, and it’s an even worse thing for a government that wants to get re-elected 2015 as I am sure that consumers will remember that the Government failed to deliver on its promise of “More choice. Lower prices. Better service” when they go to the ballot box.

A few minutes ago, Industry Minister James Moore made an announcement regarding “consumer choice and better services in the wireless market.” Or at least that is what is what this media alert that was put out last night. The announcement is regarding another spectrum auction in 2015. This one is for the 2500 MHz spectrum. This spectrum is ideal for rural areas as it will cover large distances. There will be be rules in place including spectrum caps which will ensure that 4 or more providers use the spectrum. Speaking of using the spectrum, if companies don’t use it, they will lose it. Moore said that this is all designed to offer rural Canadians better wireless service among offering Canadians more and better service. Basically the tagline that the Government has been using for some time in their commercials that target the big three.

You can get the full details of the announcement from the Government’s perspective here.

When questioned by reporters about the fact that previous auctions have not created the level of competition that the government wants, Minister Moore admitted there have been challenges. But he points out that cable companies have been able to break into the wireless sector. Thus change can come in a short amount of time. One other thing he tried to do is dispel the notion that the government is battling the big three telcos saying simply that they sometimes have “robust debates.”

My take on this? This announcement comes just before the start of the 700 MHz auction next week. Thus the timing is interesting. It can also be seen as another attempt to lure a foreign telco to Canada. But that’s my $0.02 worth. I’ll be reaching out to my contacts at Rogers and Telus to see what they think. There is the chance that they can’t respond due to the upcoming 700 MHz auction, but it can’t hurt to try. I’d also be interested in what you think. Please post a comment and share your thoughts.