We've been hearing a lot lately, that Verizon is looking to enter the Canadian Wireless market. Big Red themselves have confirmed that they have been in talks with Canadian carriers with a possible route to a purchase but, things have been quiet on that front recently. Understandably, the Canadian stalwarts aren't overly happy with the idea of the US' largest carrier waltzing in on their turf. Bell are in fact so distressed that they've decided to appeal to the Canadian government in an open Press Release recently.
With an intro like this, it's clear that Bell is unhappy, indeed.
- Bell is ready to compete with any wireless carrier on a level playing field
- 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 national airwaves
- All Canadians will be paying to help a giant American carrier - 4x bigger than Canada's wireless sector combined - get benefits denied to Canadian companies
- Ottawa gets nothing in return - Canadian companies can't get the same subsidized access in the US or any other country
The main reason Bell is unhappy is that they feel regulation would allow Verizon to gain an unfair advantage in Canada, and to compete with them in a quicker time frame than they'd like. There are three main issues that Bell feel would give Verizon an unfair advantage.
Buy twice as much new wireless spectrum in the upcoming auction of Canada's 700 MHz airwaves as Canadian carriers at a lower overall price.
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 entirely.
Get a free ride on the world-leading networks funded and built by Canadians.
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.
Bell have a point with their first complaint, the auction rules allow any new entrant in the country to buy two blocks, while keeping folks like Bell, Rogers and TELUS back to buying just one. While we all know that spectrum is power in the wireless market, we're not so sure that Verizon would have it as easy as Bell are trying to make out. As for being able to swallow up the new entrants well, this is something that verizon could easily do - they make enough money to be able to throw around some cash and it could be a quick way for them to gain some spectrum.
The real issue here is that the Canadian wireless market has stayed stagnant for many years now, and with 3-year contracts and high-pricing the norm in the Great White North, surely something needs to give? It'd be strange to think of big, bad Verizon being the face of change but, it's beginning to look like as much. Let us know how you feel in the comments below - if you're in Canada would you like Verizon to set up shop there?