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March 7, 2013

The old adage is that “the life of a monopolist is a quiet life”.  In light of mounting consumer criticism of poor service from a concentrated Canadian wireless market, earlier today the Canadian federal government announced new measures to increase competition in the wireless sector.

In making the announcement, Canada’s Industry Minister said:

“Canadian families work hard for their money.  Our government is ensuring that they have access to the wireless services they need for their BlackBerrys and iPhones at a price they can afford.  Simply put, since coming to office, we have made a stronger, more competitive wireless sector a priority.  And the results speak for themselves.  Consumers have more choice in the wireless market than ever before.  Prices have dropped, and most Canadians now have access to faster mobile speeds and the most sophisticated tablets and smartphones.”

According to the Industry Minister, the new measures, which impose limits (caps) on the acquisition of spectrum by Canada’s large carriers and introduce new measures to facilitate roaming and encourage tower sharing, are meant to provide more choice, better access and more competitive pricing for Canadian wireless consumers.

The measures announced today include: expanding and extending the requirement for wireless companies to provide roaming on their networks to competitors, to ensure that all Canadians, even when traveling, have service regardless of their provider; tightening existing rules to increase cell-phone tower sharing, helping limit the construction of new cell towers (which can operate as a barrier to entry and has been an environmental concern for Canadians); using upcoming spectrum auctions to promote four competitors in each region of the country, from the current “big 3” (the first of which of these new auctions, a 700 MHz auction, will take place in November, 2013); and reviewing the policy on spectrum license transfers in advance of the upcoming auction.

The new measures, meant to promote increased wireless competition, come on the same day that a non-profit study was released arguing that a majority of Canadians are forced to accept poor wireless service (see: Open Media: Time for an Upgrade).  The apparent horror experienced by some Canadian wireless customers was also widely recounted by media today – see e.g., the HuffPost’s note: Canada Cellphone Contracts: Horror Stories Ring Through Consumers Troubles With Serice Providers.

The Government’s announced new wireless measures also come of course in the midst of the ongoing CRTC wireless code consultations and also follow the earlier lifting of investment restrictions on small carriers with less than a 10% market share.

The guiding policy direction for the Government’s new measures to facilitate increased wireless competition includes the: Policy and Technical Framework: Mobile Broadband Services (MBS) — 700 MHz Band, Broadband Radio Service (BRS) — 2500 MHz Band (which includes observations on the wireless industry since 2008) and background to the government’s policy objectives.

What’s Next?: Commercial Mobile Spectrum Outlook

Along with the announcement of caps for the upcoming spectrum auction and other initiatives, the Government also today published a new Commercial Mobile Spectrum Outlook study outlining its plan to meet growing demand for mobile services by Canadians and said: “The rapid growth of commercial mobile services presents significant economic and social benefits for Canada. This growth is also increasing the amount of spectrum required to deliver these services in Canada.”

The federal government seems to be aware that it is treading a very fine balance as it tries to foster a competitive wireless sector – setting forth a clear motive for regulation in a rapidly-evolving industry:

“While the private sector must lead the way in making better, more efficient use of spectrum, Industry Canada recognizes that efficiency improvements alone cannot meet the growing demand for commercial mobile services, and that in order to meet the objective of the SPFC, it has an obligation to manage the supply of spectrum by reallocating limited spectrum resources between radio services.”  Of course, there is too the revenue benefit to the Government in making more spectrum available to incumbents and new entrants.

The government also provided the following backgrounders with its announcement: Reviewing the Policy on Spectrum Licence Transfer Requests; Licensing Framework for Mobile Broadband Services (MBS)—700 MHz Band; Expanded and Extended Frameworks for Mandatory Roaming and Antenna Tower and Site Sharing; and Commercial Mobile Spectrum Outlook.

For more detailed information on the Government’s announcements earlier today, see: here and here.

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