Telus-Mobilicity

Canadian Government: No Established Wireless Company to Buy Mobilicity

February 12, 2014 - Written By Cory McNutt

Business customers in the U.S. complain about how much the government interferes in their lives, but they have it easy compared to our Canadian brethren, specialty when it comes to mobile communications.  The Canadian Government is very strict when it comes to overseeing their wireless business – Mobilicity, considered a startup, needs a buyer and soon or it will cease operations, yet the Government still opposes any “established” wireless company, such as TELUS to buy them.

As part of the government rules from the 2008 agreement, it prohibited transfers of wireless frequencies to foster the growth of competition within their wireless industry that includes only three large companies, Rogers, Bell, and TELUS.  The government’s motives are noble, they want to foster a competitive atmosphere that will hopefully lower prices for their wireless customers. The five-year ban on the transfer of spectrum ends on Wednesday and many are expecting TELUS to make its third bid to buy Mobilicity, although TELUS declined to make a comment about its intentions.

When the government was asked if they planned to extended the spectrum transfer moratorium and they are determined not to allow more frequencies going to the established companies.  Jake Enwright, a spokesperson for Industry Minister James Moore stated:

“The minister has made his position clear already on spectrum transfers.  We’ve been clear that we will not approve any spectrum transfer that results in undue concentration.”

Rogers, Bell, and TELUS already own about 85-percent of the airwaves in Canada that customers use for wireless services and when the results of the most recent auction of 700 megahertz are announced, that 85-percent could very easily increase.  If TELUS is allowed to purchase Mobilicity, that concentration of the top three will certainly increase.  There is some talk that the Government may allow the sale to go through, only because without it, many creditors will lose money and many customers will be affected if Mobilicity is allowed to simply fail.

Rogers has already orchestrated two separate deals to acquire spectrum from Quebecor, Inc. and Shaw Communications.  Quebecor and Wind Mobile both startups in the wireless industry because of the 2008 auction are also potential buyers of Mobilicity, but neither has the ability to offer near what TELUS could offer.  TELUS is also asking for a judicial review of the current spectrum transfer policy. When ll of the dust settles, it will be interesting to see who will win this battle – the big three, the Government, or the customers.