BUSINESS

James Moore: We Want Competition In The Wireless Market, But Only To A Degree

08/20/2013 09:32 EDT | Updated 11/13/2013 08:20 EST

OTTAWA — Industry Minister James Moore may be offering a conciliatory gesture to Canada’s big cellphone providers after a nasty fight by promising the federal government will not loosen foreign ownership rules any further.

Speaking to The Huffington Post Canada on Monday, Moore said the Conservative government is focused on fostering competition in the wireless market, but only to a certain degree.

An "absolutely free market" will not get Canadian cellphone customers what they want, and neither will imposed price controls, he said.

“I just don’t think it would serve the Canadian industry,” Moore said. “I think it would upset a balance that I think we have achieved.”

Moore has been locked in a war of words with Canada’s large industry players – Bell, Telus and Rogers – over its decision to allow only small players and new wireless entrants, including potentially Verizon, to bid on an additional block of spectrum in the 700 MHz range, a highly valued signal wavelength that allows for faster and better coverage.

The three incumbents are worried that U.S. wireless giant Verizon may potentially outbid one of them on one of the blocks of spectrum both can bid on. Rogers CEO Nadir Mohamed warned Monday that millions of Canadians could face slower traffic speeds if one of the big three is left without a block of spectrum because of the government’s decision.

Moore told HuffPost it was a “falsehood” that the government had courted Verizon, as some news reports implied. Bureaucrats at Industry Canada had met with the company after it requested basic information about the upcoming auction, he said.

In order to foster competition, however, the Tories have allowed foreign-owned companies to enter Canada’s mobile market but only if they hold less than 10 per cent of the market. Moore told HuffPost that he has no plans to further relax those rules, saying it would be bad for Canadian business.

“We don’t want to, obviously, damage and hurt Canadian companies, we just want there to be effective competition,” Moore said.

If it were an absolutely full free market, he said, the different regions of the country would not have comparable service.

“I don’t think that can be achieved in an absolute free market."

“You would be well served in a large city centre … but I don’t think all Canadians would necessarily be well served.”

But speaking about Verizon’s potential entry into the marketplace, Moore suggested there are ways of regulating the industry to ensure that rural and underserved areas are connected by newcomers. He said it would be difficult, however, because it would take time for new players to expand their networks.

Moore said the government’s goal is to lower Canadians’ cellphone bills, but he acknowledged there is no way the federal government can guarantee that an entry by Verizon would mean lower prices.

He insisted competition is healthy and pointed to the entrance of smaller players in the market, such as Wind and Mobilicity in 2008, as key drivers in lowering mobile bills by 20 per cent.

Moore also nixed any idea of imposing price controls, telling HuffPost: “I don’t foresee that being an option. No.”

He said he had no intention of mandating consumer-friendly policies, such as country-wide local calling or capping roaming rates.

“These aren’t Crown corporations; these are businesses, and they’ll engage the marketplace as they choose,” he said. “We’ll observe and we’ll see what happens.”

Liberal deputy leader Ralph Goodale suggested Moore might be trying to placate the big three after their big public dispute.

“He’s probably trying to offer an olive branch to people he has otherwise disturbed in the course of the discussion,” Goodale said.

Moore told HuffPost the big three have brought their problems on themselves.

If the broadcasters hadn’t used their wireless divisions to compensate for lesser performing parts of their businesses, and if they had been more sensitive to customer complaints, he said, they would not be as vilified by the public.

“You know, had the money that they clearly have at their disposal to invest in this campaign (against Verizon), if that money had been used to engage consumers in service standards, people might feel differently,” Moore said. “All of these Canadian companies are doing extraordinarily well. The analysis that I saw, that was done by my department, shows that Canadian telecommunications profits are incredibly healthy and they are doing very well and they are not under threat from a lack of prosperity in the status quo.”

Moore has been engaged in a heated public relations battle after Anthony Fell, Bell Canada’s BCE director, shared a letter in the Financial Post last week that he had written to Prime Minister Stephen Harper. In it, he called Moore “disrespectful” towards the CEOs of Bell, Telus and Rogers Telecommunications for granting them only 30-minute meetings to make their case about the upcoming spectrum auction.

For Minister Moore, after less than a month in office, to suddenly become an expert on major telecom policy and make grand pronouncements on this decision without far more detailed analysis, discussion and understanding is quite unseemly,” Fell wrote in the letter published on Aug. 13.

BCE’s attempt to bring the public onside in the battle against Verizon backfired, McGill University political scientist Richard Schultz, a telecom specialist who has consulted for Bell, Telus and the CRTC, told HuffPost.

“It was foolish, stupid, arrogant,” Schultz said of Fell’s letter.

Not one to back down from a fight, Moore shot back at Fell in a letter published on his website saying, the big three telcos were being “dishonest” and “misleading” in their media campaigns.

He also took Fell to task for suggesting that the Tories’ policy was merely “‘a political populist initiative to capitalize on a misinformed public view” of Canada's telecommunications industry. He then embarked on a cross-country tour to sell the public on the government’s plan to increase competition in an effort to lower prices.

“The big three’s interest, that’s not our interest,” Moore told HuffPost. “Our interest is consumers and just defending the policy over overheated energy that is being put out there against [it by] … those who are criticizing it because of the threat to them,” he said.

“Nobody believes that the incumbents want robust aggressive competition,” Moore added.