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Canada blocks Rogers/Bell JV from grabbing more airwaves

Canada's Industry Minister James Moore speaks during a news conference in Ottawa February 19, 2014. REUTERS/Chris Wattie
Canada's Industry Minister James Moore speaks during a news conference in Ottawa February 19, 2014. REUTERS/Chris Wattie

By Euan Rocha and Alastair Sharp

TORONTO (Reuters) - Canada blocked a joint venture of two of the country's biggest wireless telephone carriers from acquiring more airwaves on Thursday, sending the latest pointed message that their dominant positions would be challenged in the fight to win over consumers.

The government said it had declined a request to transfer 83 wireless spectrum licenses from NextWave to Inukshuk, which is owned by Rogers Communications and BCE Inc's Bell Canada unit.

The decision may set an important precedent for a string of other spectrum deals being plotted as telecom companies rush to buy up as many prized airwaves as possible.

Canada's Industry Minister James Moore said in a brief statement the sale of the 2.3 GHz airwave licenses would have created unacceptable levels of concentration of spectrum in the hands of incumbent carriers, hurting competition in regions including Montreal, Ottawa, Edmonton and many mid-sized cities.

The government said Bell and Rogers would have grown their combined claims on available 2.3 GHz spectrum to 77 percent from 29 percent, if the deal had been allowed to proceed.

Bell said it had planned to use the spectrum in an expansion of its latest network to rural and remote areas, while Rogers said it wanted it to help handle heavy data use.

Both companies, however, said the rejection would not affect their respective coverage plans.

HISTORY OF REJECTION

The government has twice blocked Telus Corp, the third of Canada's main wireless providers, from acquiring struggling recent entrant Mobilicity, while Rogers has struck deals giving it the option to buy airwaves from Shaw Communications and Quebecor.

The latest rejection shows the Conservatives are holding firm to a plan to boost telecom competition across Canada, including the thinly populated northern and eastern reaches where Inukshuk largely operates, via control of the trade in spectrum.

Spectrum refers to the leased airwaves wireless carriers use to carry their customers' voice calls, text messages and increasingly heavy mobile video streaming and other data use.

Both Shaw and Quebecor bought airwaves in a 2008 auction in which Ottawa encouraged new entrants, but Shaw later aborted its wireless plan. Quebecor meanwhile expanded its ambitions last week with the purchase of 700 MHz licenses in Ontario, Alberta and British Columbia plus its home market of Quebec.

The government raised C$5.27 billion in last week's auction, much more than initially expected.

It applauded Quebecor's national emergence, which helps burnish the government's policy of supporting four wireless providers in every region, after the late withdrawal of Wind Mobile, another new entrant, and Verizon Communications Inc's decision not to expand northward.

"We will not approve any spectrum transfer request that results in excessive spectrum concentration for Canada's largest wireless companies, which negatively affects competition in the telecommunications sector," Moore said in the statement.

Moore has previously gone head-to-head with the big domestic operators in a public spat over whether Ottawa's policies discriminate against locals in favor of large foreign operators.

(Editing by Stephen Powell, G Crosse)

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