Verizon Says It's Not Interested In Canada, Price Creep Coming?

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Shares in Canada's big three telecom companies are surging on news that U.S. giant Verizon said it's no longer interested in entering Canada's wireless market. (Composite image: Canadian Press) | CP

A decision by U.S. giant Verizon to no longer try to enter Canada's wireless market may mean Canadians could soon end up paying more on their cellphone bills, say several analysts.

The prospect of Verizon's entry had produced more options for consumers as the country's big three wireless carriers offered new data sharing plans, previously unavailable for smartphones and tablets, telecom analyst Iain Grant said Tuesday.

"If nothing else, even the spectre of Verizon coming here was enough to change pricing in the Canadian market," Grant said.

"Without Verizon, will prices creep up? I think, sadly, the answer is probably yes."

Shares in Rogers, Bell and Telus surged on news that Verizon confirmed that a Canadian entry was "off the table at this point."

Verizon Communications Inc. said Monday it was no longer interested in competing in the Canadian wireless market after announcing it would pay US$130 billion for a 45 per cent stake in Verizon Wireless owned by British cellphone carrier Vodafone.

Grant noted that the three Canadian carriers now allow households to choose the amount of data they want to use and share one monthly data plan, an option Verizon, AT&T and Sprint have been offering for more than year.

"Thanks Verizon. Even just clearing your throat got us better prices for data sharing," said Grant, managing director at the SeaBoard Group.

But analyst Troy Crandall said he doesn't expect Canada's big carriers to bring in price hikes soon. He said the three are competitive and recognize consumers have limits to their monthly telecom budgets.

Crandall said consumers were largely forgotten in the huge publicity campaign against Verizon by Bell, Telus and Rogers.

The telecoms argued that the upcoming auction of wireless spectrum — radio waves needed to operate cellphone networks — favoured foreign competitors and put Canadian incumbents at a disadvantage. The government wanted to increase competition for consumers by having four wireless carriers in each of the country's regions.

"It just seemed like the consumer was an afterthought in the whole fracas," said Crandall, of investment firm MacDougall, MacDougall and MacTier.

"There was never any indication of how blocking Verizon coming into Canada was going to help the consumer."

The deadline for companies to sign up for the wireless spectrum auction in January is Sept. 17 and, with Verizon out of the running, there are no obvious foreign carriers to compete with Rogers (TSX:RCI.B), Telus (TSX:T) and Bell (TSX:BCE).

Industry Minister James Moore's office said there were no plans to delay the auction or change the rules that give foreign bidders access to bid on two blocks of prime 700 megahertz spectrum while the three domestic carriers are held to bidding on one block apiece.

Telus executive Josh Blair said the Vancouver company will continue to push for fair access to spectrum.

"We are still very concerned about the upcoming auction because any international giant could come in, even though Verizon has confirmed they will not," said Blair, Telus' chief corporate officer.

Both analysts said the three large telecom companies have cornered most of the wireless market in Canada, making it more challenging to attract new foreign telecom players.

Crandall said Quebecor could come out a winner in the auction because it won't have to bid against Verizon, potentially lowering its costs. Grant said he isn't convinced that Quebecor's Videotron will want to increase its wireless footprint across the country.

Wind Mobile chairman and CEO Anthony Lacavera said he still wants Wind to become Canada's fourth national carrier, saying the markets where the company operates have brought down prices by 18 per cent.

"Verizon is not and never was needed to build a competitive telecommunications market in Canada," Lacavera said.

Lacavera still owns a 35 per cent take in Wind Mobile and would like to buy back the 65 per cent stake that Dutch-headquartered VimpelCom owns.

The Public Interest Advocacy Centre said it doesn't expect prices to go down.

"I don't see any credible fourth player at the national level and as far as we're concerned, that's where pricing discipline comes from and it's from national competitors," said John Lawford, executive director of the Ottawa-based group.

Lawford said he's not sure other foreign telecom companies will participate in the auction now.

"It really just sends a signal out there to the rest of the world: Please don't come here," he said. "But to(The Canadian Press)."

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