Bell is ready to compete with any wireless carrier on a level playing
But 3 loopholes in federal regulations give special benefits designed
for wireless startups to major US wireless players like Verizon
Advantages include special access to Canadian infrastructure and our
All Canadians will be paying to help a giant American carrier - 4x
bigger than Canada's wireless sector combined - get benefits denied to
Ottawa gets nothing in return - Canadian companies can't get the same
subsidized access in the US or any other country
MONTREAL, July 25, 2013 /CNW Telbec/ - Bell Canada today called on the
federal government to immediately close loopholes in its wireless
policy framework that favour major US wireless carriers at the expense
of Canadians and our country's world-class wireless industry and
"Federal wireless policies intended to help small startup competitors
unintentionally give the same advantages to major US wireless companies
that want to enter Canada - advantages paid for by Canadians and denied
to the country's major wireless carriers. With the potential impact on
the country's airwaves and infrastructure, it's an unprecedented
situation that affects all Canadians," said George Cope, President and
CEO of Bell Canada and BCE.
"Bell is ready to compete with any wireless company. Our national team
takes pride in delivering world-leading networks, the best mobile
devices and competitive pricing to customers in cities, small towns and
rural locations throughout Canada. We can succeed against US giants in
a fair marketplace, because we'll invest more in Canada. But our
federal government is unintentionally underwriting the success of US
companies in Canada. We ask that Ottawa allow Canadian wireless
companies a fair chance to compete by closing these loopholes."
3 loopholes in the rules
US giant Verizon Communications has already indicated it is poised to
exploit the federal regulations originally designed to assist
competitive startups. These 3 loopholes in the rules would allow
Buy twice as much new wireless spectrum in the upcoming auction of
Canada's 700 MHz airwaves as Canadian carriers at a lower overall
Canada is getting ready to auction 700 MHz spectrum - the best airwaves
for carrying your future mobile calls and data. Able to operate equally
well in both rural and urban areas, 700 MHz is the most technologically
advanced spectrum ever auctioned by the Canadian government. There are
4 prime blocks of this spectrum available. Canadian carriers like Bell
can only buy 1 each - but big US carriers like Verizon can actually buy
2. The way the auction is structured, American companies would pay less
and get more spectrum, reducing the government's auction revenues at
the expense of Canadians. As well, one of Canada's own major wireless
carriers could be shut out of the auction for our country's airwaves
Get a free ride on the world-leading networks funded and built by
Government rules give a company like Verizon the option to offer
wireless service simply by riding on the networks of Canadian carriers,
world-class wireless infrastructure funded by Canadian investors and
built by Canadian workers over the last 30 years. Verizon would not
need to build its own network throughout Canada, invest in rural
communities or support job growth as Canadian companies do. Verizon can
easily afford to build its own networks and should do so if it wants
access to Canada's airwaves.
Acquire smaller Canadian wireless companies at fire-sale prices.
If wireless start-ups are financially distressed and looking for buyers,
government rules prohibit them from being sold to Canadian carriers
large enough to buy them like Bell, Rogers or TELUS. That depresses the
value of the startups - and lets a US company like Verizon acquire them
at cut-rate prices and gain all their assets, including their existing
wireless spectrum already subsidized by Canadians.
Verizon Wireless is part of the $120-billion Verizon Communications
conglomerate - in comparison, Bell Canada, the country's largest
communications company, has annual revenue of approximately $18
billion. Verizon is not a company that needs special advantages or
subsidies to compete.
Even Verizon doesn't agree with these kinds of handouts - at least in
its home country of the United States. Last March, Verizon told the US
Federal Communications Commission "there is no basis for the Commission
to give certain large companies a regulatory hand-out so they can
acquire spectrum… at a substantial discount over the price that would
otherwise be received."
In May, Verizon also said "The industry should be concerned about kind
of picking winners and losers in something like that [US spectrum
auction]. We have been very vocal in a responsible way with everyone in
Washington about the importance of a level playing field."
No reciprocity: Canadians denied similar access in the US
It's important to note that Canadian carriers are not being given any
kind of similar special access to the US wireless market - which means
Ottawa would be giving US companies these advantages and getting
nothing for Canada in return.
"With the loopholes in the rules, Canadian companies cannot even try to
acquire startup wireless companies at any price, but American companies
can. And they can bid for more of our country's airwaves and at a lower
price. Favouring US companies over Canadians threatens our national
communications industry and its place in Canada's future growth,
productivity and prosperity," said Mirko Bibic, Bell's Chief Legal and
Regulatory Officer. "These special rules were intended to help new
competitive start-ups. We ask how the federal government could now hand
over Canadian spectrum, infrastructure and capital to US corporations -
especially when Canadians do not have similar rights south of the
Impact on Canadians
Industry experts predict that US operators like Verizon would use the
lower capital and operational costs enabled by the loopholes to target
Canada's largest and most profitable urban markets. Not only would they
be free to ignore small town, rural and remote Canada, the network
access loophole discourages them from investing in infrastructure by
guaranteeing them the right to use the networks of Canadian companies.
Analysts further predict that Canadian carriers would be required to
concentrate their own efforts in the very largest cities, while cutting
costs and investment in order to compete. Canadian telecom industry
employment would be adversely affected, and entire regions of the
country would be left out of new waves of wireless innovation and
access to the digital economy.
Canada's wireless industry is now one of the most vibrant in the world.
Our world-leading networks serve 99% of the population, thanks to
annual investments of almost $3 billion by the Canadian carriers
(Canadian companies invest more per capita in telecommunications than
any other country in the G8). Pricing is competitive with developed
countries, and according to an independent report prepared for the
CRTC, up to 40% lower than in the much larger US market. Smartphone
penetration is also higher in Canada than the US.
A fair and straightforward solution
To ensure all Canadians can continue to benefit from a world-class
wireless industry, Bell is urging the government to support a fair and
open marketplace by closing the loopholes:
If Ottawa is allowing US carriers access to Canadian airwaves, promote
head-to-head competition by permitting any carrier to bid on two blocks
of prime spectrum in the upcoming 700 MHz auction - not just US
Require US carriers that enter Canada to build out to the entire
country, as Canadian companies have done, rather than allowing them to
simply enjoy access to the world-leading networks built by Canadians.
Allow major Canadian carriers the opportunity to bid against the big US
companies to acquire wireless start-ups seeking buyers, with full
review by the Competition Bureau.
To learn more about this situation, please visit Bell.ca/PlayFair.
Headquartered in Montréal since its founding in 1880, BCE (TSX, NYSE:
BCE) is Canada's largest communications company, providing leading
wireless, TV, Internet, home phone, and business communications
services from Bell Canada and Bell Aliant. Bell Media is Canada's
premier multimedia company with leading assets in television, radio and
digital media. For more information, please visit Bell.ca.
The Bell Let's Talk mental health initiative is a national charitable
program that promotes Canadian mental health across Canada with the
Bell Let's Talk Day anti-stigma campaign and significant funding for
community care, research and workplace best practices. To learn more,
please visit Bell.ca/LetsTalk.
SOURCE: Bell Canada
For further information:
Jean Charles Robillard
BCE Investor Relations