Advanced Wireless Spectrum Auction - Comment to Industry Canada

[telegopoly]

I would like to introduce you to a new grass-roots Canadian Telecoms Oligopoly information and protest site at TeleGopoly.com.

What is TeleGopoly?

Telegopoly = Telecom + Oligopoly

A market scenario where there are minimal, dominant, major telecoms companies serving the wireless (cellphone) market. Due to their oligopolistic nature and 'coopetition', the wireless telcos act like monopolies in a ‘competitive’ market. Side effects are minimal innovation and high service fees.

An example of this market situation is Canada where there are only three network based wireless carriers (which created tightly controlled MVNOs to create illusion of competition) serving the wireless market.

The Telegopoly.com objective is to educate Canadians about the Advanced Wireless Spectrum (AWS) Auction.

Next year, Industry Canada will hold the AWS Auction. Industry Canada set up a call for comments which ran from mid-February to May 25, 2007. Unfortunately the Call for Comments was not well advertised and the only time the press spoke about the process in any really visible manner was near the end of the process. It is now too late to make commments.

The Department will also provide interested parties with the opportunity to reply to comments from other parties. Reply comments will be accepted until June 27, 2007. We as consumers must be heard! It is important to rebutt comments made by business organizations which are acting as defacto lobby groups for the incumbent carriers.

The carriers want "free market" open auctions via which the incumbent carriers will be able to outspend potential market entrants which could bring innovation and competition to the Canadian market.

Visit the site and let us know what you think.

Ensure that you send your comments to Industry Canada by June 27!

Sincerely,

Jake and the Telegopoly.com team

[kimmy]

Our airwaves should be rented or leased, not auctioned or sold.

And there should be (and I believe there are) frequency bands set aside for public use, such as HAM radio, unlicensed spread spectrum, and citizens' band radio.

-k

[jbg]

The carriers want "free market" open auctions via which the incumbent carriers will be able to outspend potential market entrants which could bring innovation and competition to the Canadian market.

Wouldn't industry incumbents, who by definition are well funded and lawyered-up, always have an advantage over a thinly funded upstart?

[August1991]

Our airwaves should be rented or leased, not auctioned or sold.

It's not clear to me what difference there is in leasing or selling the use of certain radio frequencies. (And in either case, a sale or lease would be accomplished through an auction or bidding process.)

We buy land and if the government wants the land "back", it can always buy it or even expropriate it. If we were to lease radio frequencies, this would just add extra, uneccessary uncertainty into the industry.

And there should be (and I believe there are) frequency bands set aside for public use, such as HAM radio, unlicensed spread spectrum, and citizens' band radio.

The government reserves certain wavelengths for its own use.

Due to their oligopolistic nature and 'coopetition', the wireless telcos act like monopolies in a ‘competitive’ market. Side effects are minimal innovation and high service fees.

There is every reason to believe that, as opposed to monopoly or competition, oligiopoly is innovative. Firms are large enough to have the resources to innovate and they have the incentive to seek an edge on their competitors.

The carriers want "free market" open auctions via which the incumbent carriers will be able to outspend potential market entrants which could bring innovation and competition to the Canadian market.

This strikes me as a separate problem.

First of all, if we opened the bidding process to foriegn service providers, then it would be hard to argue that incumbent carriers will have an advantage.

Second, the incumbents (Telus, Rogers, Bell) are hardly the only people with deep pockets in Canada.

Third, the evidence is that anything the government would do would just make matters worse. The term "coopetition" is meaningless but the idea of "co-option" or regulatory capture is not. The Big Three have strong tentacles all through government.

----

I frankly think the government has far more pressing and important matters to deal with than telecommunications. This is a rapidly changing industry and the government should get as far away from it as possible. Instead, the government should think about income redistribution and the environment since markets can not deal with these issues adequately.

[telegopoly]

I believe that innovation and competition is not moving fast enough in the Canadian marketplace. The big three know that if they play a "rational game" in the growing market - that is not to compete strongly then all boats rise as the tide rises.

The big three and investors are making a lot of money. The wireless services are the crown jewels in the telco corporations. Who suffers? The customers.

Think about this - Rogers Operating profit margin is 49%. Telus is at about 43 or 44% and even the totally screwed up Bell is in the mid 30s. This are mind blowing numbers.

How do they get these numbers? Through high prices and lack of service improvements.

The big three want an open auction. They are also asking the government to take away the development requirements. That is they do not want to be held to timelines by which they have to do something with the spectrum. In effect they could buy it and then do very little with it and milk the old network. This keeps out competition.

Think of the 2500MHz spectrum auction held in 2004/2005. This was for a service called Nomadic Wireless Broadband. Rogers and Bell bought up the most valuable spectrum and today are doing virtually nothing with it.

Think of this - when Rogers, Bell and Telus started wireless operations - they were given their initial large whack of spectrum for FREE. The government subsidized the business!

What I would like to see is at least one new entrant into the wireless market.

The government must help improve competition.

[August1991]

Think about this - Rogers Operating profit margin is 49%. Telus is at about 43 or 44% and even the totally screwed up Bell is in the mid 30s. This are mind blowing numbers.

Sounds to me that Bell is ripe for a shareholder takeover and mass firing of its managers.

Whaddya think?

Think of the 2500MHz spectrum auction held in 2004/2005. This was for a service called Nomadic Wireless Broadband. Rogers and Bell bought up the most valuable spectrum and today are doing virtually nothing with it.

The new Bell management might want to look at this.

Think of this - when Rogers, Bell and Telus started wireless operations - they were given their initial large whack of spectrum for FREE. The government subsidized the business!

Whenever the MSM presents Ted Rogers as a great Canadian entrepreneur, I always think of things like this. In Canada, too many of our supposed entrepreneurs are actually good at schmoozing government people.

What I would like to see is at least one new entrant into the wireless market.

The government must help improve competition.

Uh, you want the Canadian federal government to create an entrepreneur to oppose the Big Three telecoms.

That's like creating another Frankenstein in response to the havoc caused by the first.

You really think that'll work?

[telegopoly]

I would like to see a new Frankenstein in the market. Who would be on my wishlist?

MTS + Shaw + Qubecor + RIM + some US money

Why RIM? They are a great Canadian company with tons of money. Think back to the day when Nextel and Clearnet started up. Motorola owned 30% of Nextel. They got Push To Talk (Mike Network) off the ground and to this day it is one of Telus' biggest money earners. RIM could do the same thing - develop new devices for the Advanced Wireless Spectrum (the new network would be a pure data network and voice would just be an app on it)

This "Frankenstein Company" could do to the wireless carriers what VoIP has done to landline Long Distance.

I know people in Bell in middle management. They are not a very motivated group. The corporate culture is very "jaundiced". I actually feel sorry for them. For the last few years the philosophy has been that Bell does not need to be a leader but a great follower in the market. They seem to think they can win by being second but best to market. Well they are second to market but far from being best.

The sad thing though is when you look back in history - when Microcell and Clearnet started up they were given 30MHz of spectrum NATIONWIDE. This is more than any other carrier got. Even with this competitive advantage the incumbent carriers were still able to swallow them up.

We need to at least try. If someone wants to invest a few big $$$ then let them. It will be good for us consumers and that is the most important thing.

Sadly - while we do vote politicians into office we can't do anything about the bureaucrats that actually make the decisions.