Thursday, November 29, 2007

Huge Leaps Made in Fostering New Competition in the Wireless Arena

I've been saying for some time now that we need more competition in the Canadian wireless industry, and now it finally looks like we might get it. On May 27, 2008, an auction will be held for the Advanced Wireless Services (AWS) spectrum, which is essentially the airwaves required for cellular service to operate. The Canadian government's Ministry of Industry, the Honourable Jim Prentice, said yesterday that 105 MHz of radio spectrum would be made available: 65 MHz will be offered to the existing players so they can build upon advanced features and services. But the big news is that 40 MHz will be set aside exclusively for new players. Needless to say, it's a happy day for any company trying to get its foot into the door of the Canadian wireless arena.

Of course the current wireless players, Bell, Rogers, and Telus, aren't too happy about the decision.

"Telus is deeply disappointed with the Government's decision on the rules for the upcoming AWS auction," said the company's Executive V.P. or Corporate Affairs, Janet Yale. "It is inconsistent with this Government's stated policy of relying on market forces to deliver benefits to Canadian consumers. It also rewards companies that have both the resources and the motivation to bid openly for new available spectrum. As a consequence, Canadian taxpayers will receive less than full market value for the new spectrum."

The current players feel that the fair method of auction would have been to give the open spectrum to the highest bidder. Hmm...who would such a decision favour? Oh yeah - the guys with the big bucks! It would be like putting a gun into Tony Soprano's hand, then asking a bunch of wanna-be gangsters to fight him. Of course you have a chance guys...just try your best! Is this fair? I'd say not, as does Mr. Prentice.

"We want to ensure that new entrants have the same opportunities and the same access to networks and infrastructure as existing providers have had in the past and have today: no more, and no less," he said. Prentice added that the three current providers control a whopping 95% of the market right now!

Prentice also pointed out something that I, and many studies, have noted in the past: that Canadians pay more for our wireless service than most other countries; especially when it comes to data like Internet and e-mail access. If new carriers are added to the mix, pricing could consequently come down as each carrier is forced to fight much more aggressively for consumer's bucks. And with number portability available in full force in Canada (the ability to switch from one carrier to another, but keep your current telephone number), new players entering the market could mean a major shake-up in the industry.

"The introduction of new service providers will help make Canada's wireless market more dynamic, more competitive, and more innovative to meet the growing needs of Canadians," Minister Prentice added.

I commend the Canadian government on this decision: it's about time! Let's keep our fingers crossed that we see a new, rejuvenated wireless industry in 2008 and beyond. Perhaps then, Canadian customer's level of satisfaction with their wireless service will be a little less abysmal than it is today.

[Photo: Industry Minister Jim Prentice announces details of the upcoming AWS spectrum auction to be held on May 27, 2008.]


BWelford said...

I very much agree with the sentiments here. If enough of us shine the spotlight on this, hopefully the oligopoly of Bell, Rogers and Telus will have to allow the Canadian market to get competitive with the rest of the world.

maceyr said...

I am hopeful that this will help change the stranglehold that the 3 national carriers have on Canadians. It's truly unbelievable that the CWTA comes up with a study that Canadians are paying the lowest prices in North America LINK. But then, we are talking about the cellular wireless association so a slight conflict of interest.

I am very hopeful that this is the beginning of the opening of the competition. I really think that if the foreign ownership is relaxed that it can do so much to competition. Imagine if Verizon, Vodafone, AT&T were able to really come in? Right now, even with the wireless spectrum, the guys like Quebecor and Manitoba Tel are at least a few steps behind since they don't have the clout nor the technology to truly compete. But hopefully, sometime in the future, the profit grab also known as System Access Fee and the 3 year contracts will be a sad memory.

I am skeptical but remaining hopeful.