Wind Mobile Founder Says Rogers Shaw Deal Will Hurt Competition

More and more are coming out to oppose the Rogers Shaw Deal. Anthony Lacavera, founder of Wind Mobile, says the deal hurts competition in Canada.

Last week, we reported on the story that Rogers intends to buy Shaw for for $26 billion. The deal would see the total number of major carriers get reduced. Currently, Canada has 4 main carriers: Telus, Rogers, Bell, and Shaw. The deal would see the elimination of Shaw, reducing competition to a mere three carriers: Telus, Rogers, and Bell. Many are pointing out the obvious: reduced competition will mean lower quality of service as well as higher cell phone and Internet bills.

Canada’s market for mobile and Internet carriers are already notoriously anti-competitive. In fact, they have thwarted efforts to bring in actual competition. First was the wireless spectrum auction. Brought in by the Harper Conservatives, the idea is that startups would flock to the industry because of the auction. Give the market a chance and the problems will magically solve themselves. It was an ideological solution that ended with predictable results. The major carriers gobbled up all the spectrum that went on sale and no new carriers had a shot at entering the market. As a result, the effort proved to be an abysmal failure.

The other kick at the can was to bring in potential rivals. That did, in fact, attract a bite from Wind Mobile in 2009. When the company started opening their stores in Toronto, it felt like, finally, actual competition was finally entering the market. They announced plans that would normalize the sky high cell phone prices. Investors were quite keen on this plan and backed the company in an effort to expand the service. In the years since, heavy lobbying saw the result of a gauntlet of regulatory hoops for the company to jump through. Expanding the business eventually grew so difficult, that investors began backing out of the deal.

Eventually, Wind Mobile sold their network to Shaw, one of the larger players. As a result, it got rebranded to Freedom Mobile and the effort to introduce competition into the sector ended in failure.

After those disappointments, the followup appears to be an effort to push the sector even further into the wrong direction by reducing competition from 4 carriers to 3. That is why Canadians across the country are groaning about the news. If things are bad now, imagine how much worse it will be when competition gets reduced by 25%.

So, there is no surprise that the Competition Bureau of Canada is getting flooded with submissions about the deal. It forced them to leave a note saying that, due to the volume of submissions, they can no longer respond to every one of them. Instead, they say, they will read every submission. Digital rights organizations like Open Media are leading the charge to stop the deal dead in its tracks. In all, a fairly slam dunk effort because Canadians are already more than fed up with the high bills in the first place. So, it would be little surprise that the submissions would be overwhelmingly against the deal.

Now, we are learning that other voices are joining the growing chorus of opposition to the deal. Anthony Lacavera, founder of Wind Mobile, says that the deal will lead to less competition. From Yahoo! News:

Rogers, Bell and Telus will never face real competition unless Canada makes big changes to the telecommunications industry, Wind Mobile founder Anthony Lacavera says.

Lacavera said he believes Wind Mobile could succeed as an independent carrier if regulators force Rogers to divest it — but that would require a number of policies and enforcement actions that limit the power of the Big Three wireless companies.

“I think there needs to be a holistic picture of what the competitive framework will look like,” Lacavera said in an interview.

Much of the money that will be spent by wireless carriers in coming years will be for towers, transmission equipment and wireless spectrum that’s used to beam voice calls and internet data from place to place.

Lacavera said the federal government, which is in charge of selling and managing the spectrum, should make sure the Big Three don’t end up with so many licences that no other company could be an effective rival.

But the solution isn’t as simple as forcing the big players to divest spectrum, he added.

“Spectrum is one element of it. Towers and tower sharing are another element of it. Roaming (fees) and roaming access are another element of it,” Lacavera says.

The article goes on to say that Lacavera believes that regulators need to enforce existing rules to help foster competition in the sector.

At any rate, the obvious lack of competition in the wireless and Internet market has been an incredible sore spot in Canada. So, it’s little surprise that Canadians will rally along with the voices calling for greater competition. The question is less whether Canadians will support the deal and more will regulatory capture efforts overrule the interest of Canadians. That will take much longer to answer.

Drew Wilson on Twitter: @icecube85 and Facebook.



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