Canada Competition Bureau

OpenMedia Claims Mobilicity Deal will Raise Prices

June 24, 2015 - Written By Cory McNutt

OpenMedia, the outspoken and self-proclaimed Canadian protector of “our online rights,” has come out against the merger of Mobilicity and Rogers Communications saying, “Canadian cell phone users will pay the price for government’s broken promises on the Rogers/Mobilicity deal.”  They believe this sale will mean fewer choices and higher prices – that are already “increasing 3 times the rate of inflation” – for all Canadian cell phone subscribers.

Earlier today, we reported that Mobilicity accepted a $465 million offer from Rogers based on documents filed with the Ontario Superior Court.  This deal was far from done, and still is, but one of the biggest hurdles was having Industry Canada approve the deal – which they were adamant about not approving a deal in that one of the Big Three was trying to purchase an smaller, entrant wireless company.  This deal flies in the face of what they have been preaching for years that more competition was needed and that Canada needed a viable fourth large carrier to further the competition in an effort to lower prices.  In their big kick-off for 2015, Industry Minister James Moore claimed that there would be more spectrum available to help ensure that Canada’s wireless network would be first class and they promised to bring more competition to Canadians.

OpenMedia Campaigns Manager Josh Tabish had this to say, “Canadians may be scratching their heads over why the government just approved a deal that will ultimately mean less choice and higher prices for Canadian cell phone subscribers, despite promises to the contrary.  What’s worse, this comes after the government’s own report officially confirmed Canadian wireless prices are rising at three times the rate of inflation and that we are paying some of highest prices in the industrialized world for terrible service.  Tens of thousands of Canadians specifically asked Industry Minister James Moore not to allow the Big Three to acquire valuable spectrum previously set aside for new providers.  He promised he wouldn’t, but today he broke that promise.  Instead, he chose to approve a deal that gives Rogers and the Big Three, who currently control over 90% of the market, even more control.”

It was noted that the government may have given somewhat so that a deal for the sale of Mobilicity could be finalized rather than going into bankruptcy and defaulting on their creditors.  It may also have something to do with the $1.2 billion lawsuit that Mobilicity’s investors had filed against Industry Canada back in September 2014.  Industry Canada did make a stipulation that whomever purchased Mobilicity would have to give a portion of the valuable AWS spectrum in the Ontario region to entrant WIND Mobile to help them build out their LTE network and thus add some competition in certain areas in Canada, but OpenMedia is not buying it saying that, “The government owes Canadians an explanation for their broken promises.”