Telus Loses Legal Challenge Over Spectrum Licenses

Canadian mobile operator Telus has lost a court battle in which it challenged the Canadian federal government’s policy on spectrum that was designated for the country’s smaller mobile operators. The Federal Court of Canada dismissed Telus’ complaint that the government changed its policy on the transfer of spectrum from new Canadian players to the country’s dominant mobile operators. The license terms for new entrants precluded the transfer or sale of the license to incumbents for a five-year period. However, as Telus is charging, a change in government policy now requires transfer of spectrum to have ministerial approval. The court deemed that the government’s original rules did not state or imply that after the five-year period expired, any operator could freely acquire the set-aside spectrum. Telus, which argued that it had based its bidding strategy in the 2008 auction on being able to purchase the set-aside airwaves, began legal proceedings in July 2013 after the government rejected its offer to acquire Mobilicity, one of Canada’s smaller operators.

As Canadian Federal Court Justice Roger Hughes handed down his ruling this week—and ordered Telus to pay the government’s court fees, as well—Canada’s industry minister, James Moore, said the following about the outcome: “Our policy has always been clear—we will not approve spectrum transfer requests that decrease competition in the wireless sector.” Despite the pro-competition stance that the industry minister, Canadian Competition Bureau and CRTC say they are taking, unless these ruling bodies make some audacious moves, Canada’s big three operators—Rogers Wireless, Bell Mobility and Telus—will continue to dominate the market and smaller players such as Mobilicity or Wind will not be able to gain any headway.

As we have written, the CRTC’s ban on exclusivity clauses, which it enacted several months ago, and its June specification that operators need to create roaming deals based on a formula that calculates caps for wholesale roaming rates, are attempts to rectify the market conditions for new entrants. However, the CRTC and the federal industry ministry need to do more to enforce lower-cost roaming access to established operators’ networks. Simply blocking a large operator from purchasing a small operator is, in our opinion, not enough. The present regulatory environment, lacking as it is in strong measures that will enable competition, is a stagnant one that will not help Mobilicity or any other secondary operator move forward.

The above item appeared in a recent issue of The Tarifica Alert, a weekly resource that analyzes noteworthy developments in the telecoms industry from around the world. To access all of the latest articles and issues or to speak with the research team: http://www.tarifica.com/contactus.aspx