POLITICS

Union, CEO group line up to oppose special treatment of big carrier Verizon

07/29/2013 03:21 EDT | Updated 09/28/2013 05:12 EDT
TORONTO - A group of CEOs and a major union are the latest to oppose any special treatment for U.S. company Verizon when it comes to buying small Canadian wireless companies and radiowaves used to operate the cellphone networks.

The Canadian Council of Chief Executives and the Communications, Energy and Paperworkers Union of Canada say domestic and foreign companies should operate under the same level playing field as Canadian companies.

Council president John Manley, whose group represents 150 chief executive officers from various industries, says favouring a foreign competitor over Canadian companies sets a bad precedent.

Verizon, which has more than 100 million wireless customers, has said it's eyeing the possibility of entering Canada.

There have been reports that Verizon is planning to buy new carrier Wind Mobile while also is in talks with financially struggling Mobilicity — two of the new generation of wireless carriers competing with Rogers, Telus and Bell (TSX:BCE).

In June, Ottawa blocked major carrier Telus (TSX:T) from buying Mobilicity and made it clear it wants four wireless competitors in every region.

"One of the directors put it this way: We encourage Target to come into Canada, but we don't tell Canadian Tire they have to give up 30 per cent of their shelf space to Target to help them get established," Manley said Monday.

"Because of the depth of Verizon's pockets, they can easily buy up two of the four blocks. That leaves a Canadian player out of that spectrum... and spectrum is the oxygen for wireless communications."

The Communications, Energy and Paperworkers Union is also opposed to any advantages the Harper government is offering New York-based Verizon Communications.

"Granting one of the biggest companies in the world special rights to public airwaves (spectrum), to buy small players and to existing companies' networks may be the most ill-conceived policy the Harper government has come up with," CEP President Dave Coles said in a statement.

"In its ideological crusade to open the telecommunications sector up to foreign ownership, the Conservatives are 'gaming the rules' in favour of a major US-based multinational."

Early next year, the federal government will hold an auction for 700 megahertz spectrum, a sought-after bandwidth frequency which allow telecommunications companies to rapidly transmit large amounts of data. The service will improve cellphone connections in rural areas as well as elevators, tunnels and other places where service is often spotty.

Canada's wireless carriers want to be able to bid for the same amount of wireless spectrum that Verizon will be able to bid on as a new player in Canada.

Analysts have noted that current rules on the sale or transfer of radio waves don't allow Bell, Rogers or Telus to bid on and win more than one block of spectrum, but this wouldn't apply to new entrants such as Verizon.

Foreign ownership restrictions have been removed for small wireless companies with less than a 10 per cent of the market, which opens the door for Verizon and other foreign companies to enter Canada. However, big carriers still can't be more than one-third foreign owned.

Manley noted there are three and four cellphone competitors already in many of Canada's markets.

"It's hard to understand what the objective (of the government policy is). You've got pretty good pricing in Canada, certainly good compared to the U.S," he said. "You've got high quality of product. You have competing infrastructures, you have an obligation to supply rural and remote communities, which is high cost. What exactly is the problem you are trying to solve?"

The Globe and Mail reported that senior executives for Bell, Telus and Rogers (TSX:RCI.B) were in Ottawa Monday to meet with Industry Minister James Moore.

A spokeswoman for Moore would not confirm who the meeting was with, only saying that the minister was privately "meeting with representatives from various sectors in the coming days and weeks."

Last week, the three telecom companies joined together in calling for Ottawa to change its policy on foreign ownership of small Canadian wireless companies. Together, they have about 25 million wireless customers.

The three Canadian rivals say they have been put at an unfair disadvantage that allows foreign carriers like Verizon to buy small Canadian wireless carriers while denying them the same opportunity.