The new rules on the sale or transfer of radiowaves used to operate cellphone networks are unfair to Canadian companies and favour foreign companies like Verizon, Bell Canada says.
Industry Canada announced new guidelines on Friday for companies that want to sell their wireless spectrum licences.
It essentially prevents Bell (TSX:BCE), Rogers and Telus from scooping up unused spectrum or spectrum licences from small wireless companies without a federal review.
"Industry Canada needs to focus on a massive loophole in the spectrum auction framework," BCE spokesman Mark Langton said.
"As it stands, major international wireless companies like Verizon can take advantage of rules intended for small start-ups and unfairly buy twice as much spectrum as Canadian companies at a fraction of the price."
"Bell's always ready to compete, but it's hard to see a big U.S. company getting favours over Canadian operators," Langton said.
The Industry Canada policy further opens the door for big a U.S. carrier like Verizon to participate in the next spectrum auction — if it were to successfully bid for small carrier.
"The Harper government is committed to promoting at least four wireless providers in every region of the country to support greater competition in the market," Industry Minister Christian Paradis said in a statement.
Industry Canada said any wireless company that wants to transfer its spectrum licence will now have to seek a review within 15 days of signing an agreement that could lead to a prospective change. The government will then give the proposed deal a thumbs up or down.
PC Magazine analyst Sascha Segan said if Verizon wants to expand internationally, Canada would be a logical next step and relatively easy for the big carrier to set up operations.
"If Paradis wants four carriers, then bringing in a deep-pocketed U.S. operator would be one way to get there," said Segan, lead mobile analyst.
Bell is "just terrified" that Verizon would be a stronger competitor than Wind Mobile or Mobilicity, he said from New York.
Ottawa has relaxed foreign ownership rules for small wireless companies with a 10 per cent or less market share.
There have been reports that Verizon wants to buy Wind Mobile and is in talks with financially struggling Mobilicity, but the large U.S. carrier has refused to comment.
The new policy framework Friday comes after the Harper government blocked a plan by Telus (TSX:T) to buy struggling wireless upstart Mobilicity in a deal worth $380 million.
Spectrum is airwaves over which cellphone networks operate. The federal government will auction off more of it next year for wireless companies to build out more advanced, faster networks.
Shaw Communications has unused spectrum that it wants to sell to Rogers Communications (TSX:RCI.B).
"Ultimately, the minister will decide on the transfer of the spectrum licence," Shaw said on a conference call to discuss its third quarter results.
Rogers also wants to buy unused spectrum in Toronto from Quebecor Inc. (TSX:QBR.B).
"We'll respect the new regulatory framework and provide the government with any information they require as they review Rogers' proposed spectrum transfer agreements with Shaw and Videotron," Rogers said in a statement.
Wind Mobile chairman and CEO Anthony Lacavera said Wind has emerged as the fourth carrier in British Columbia, Alberta and Ontario. He owns a 35 per cent stake in the company he founded and would like to buy back the rest of it from Russia's VimpelCom.
"I think the policy framework makes it clear that there will be four carriers in every market, and that each carrier in a given market will have access to sufficient spectrum for LTE services," Lacavera said.
Telus said spectrum should be made available equitably.
"Spectrum is the lifeblood of our industry that enables us to provide world-leading services to our clients, and we continue to urge Industry Canada to make it readily available to our industry on a fair and equitable basis," spokesman Shawn Hall said.