When BCE Inc. is unhappy about a regulatory policy, you’ll know. Here’s today’s release about the 700 MHz spectrum auction rules, and below that, last year’s release about the CRTC decision that denied BCE’s acquisition of Astral (which the regulator approved this year in a follow-up decision).
Transmitted by CNW Group on : July 25, 2013 07:00
Bell Canada urges Ottawa to close loopholes that favour big US wireless carriers
Bell is ready to compete with any wireless carrier on a level playing field
But 3 loopholes in federal regulations give special benefits designed for wireless startups to major US wireless players like Verizon
Advantages include special access to Canadian infrastructure and our national airwaves
All Canadians will be paying to help a giant American carrier – 4x bigger than Canada’s wireless sector combined – get benefits denied to Canadian companies
Ottawa gets nothing in return – Canadian companies can’t get the same subsidized access in the US or any other country
MONTREAL, July 25, 2013 /CNW Telbec/ – Bell Canada today called on the federal government to immediately close loopholes in its wireless policy framework that favour major US wireless carriers at the expense of Canadians and our country’s world-class wireless industry and network infrastructure.
“Federal wireless policies intended to help small startup competitors unintentionally give the same advantages to major US wireless companies that want to enter Canada – advantages paid for by Canadians and denied to the country’s major wireless carriers. With the potential impact on the country’s airwaves and infrastructure, it’s an unprecedented situation that affects all Canadians,” said George Cope, President and CEO of Bell Canada and BCE.
“Bell is ready to compete with any wireless company. Our national team takes pride in delivering world-leading networks, the best mobile devices and competitive pricing to customers in cities, small towns and rural locations throughout Canada. We can succeed against US giants in a fair marketplace, because we’ll invest more in Canada. But our federal government is unintentionally underwriting the success of US companies in Canada. We ask that Ottawa allow Canadian wireless companies a fair chance to compete by closing these loopholes.”
3 loopholes in the rules
US giant Verizon Communications has already indicated it is poised to exploit the federal regulations originally designed to assist competitive startups. These 3 loopholes in the rules would allow Verizon to:
Buy twice as much new wireless spectrum in the upcoming auction of Canada’s 700 MHz airwaves as Canadian carriers at a lower overall price.
Canada is getting ready to auction 700 MHz spectrum – the best airwaves for carrying your future mobile calls and data. Able to operate equally well in both rural and urban areas, 700 MHz is the most technologically advanced spectrum ever auctioned by the Canadian government. There are 4 prime blocks of this spectrum available. Canadian carriers like Bell can only buy 1 each – but big US carriers like Verizon can actually buy 2. The way the auction is structured, American companies would pay less and get more spectrum, reducing the government’s auction revenues at the expense of Canadians. As well, one of Canada’s own major wireless carriers could be shut out of the auction for our country’s airwaves entirely.
Get a free ride on the world-leading networks funded and built by Canadians.
Government rules give a company like Verizon the option to offer wireless service simply by riding on the networks of Canadian carriers, world-class wireless infrastructure funded by Canadian investors and built by Canadian workers over the last 30 years. Verizon would not need to build its own network throughout Canada, invest in rural communities or support job growth as Canadian companies do. Verizon can easily afford to build its own networks and should do so if it wants access to Canada’s airwaves.
Acquire smaller Canadian wireless companies at fire-sale prices.
If wireless start-ups are financially distressed and looking for buyers, government rules prohibit them from being sold to Canadian carriers large enough to buy them like Bell, Rogers or TELUS. That depresses the value of the startups – and lets a US company like Verizon acquire them at cut-rate prices and gain all their assets, including their existing wireless spectrum already subsidized by Canadians.
Verizon Wireless is part of the $120-billion Verizon Communications conglomerate – in comparison, Bell Canada, the country’s largest communications company, has annual revenue of approximately $18 billion. Verizon is not a company that needs special advantages or subsidies to compete.
Even Verizon doesn’t agree with these kinds of handouts – at least in its home country of the United States. Last March, Verizon told the US Federal Communications Commission “there is no basis for the Commission to give certain large companies a regulatory hand-out so they can acquire spectrum… at a substantial discount over the price that would otherwise be received.”
In May, Verizon also said “The industry should be concerned about kind of picking winners and losers in something like that [US spectrum auction]. We have been very vocal in a responsible way with everyone in Washington about the importance of a level playing field.”
No reciprocity: Canadians denied similar access in the US
It’s important to note that Canadian carriers are not being given any kind of similar special access to the US wireless market – which means Ottawa would be giving US companies these advantages and getting nothing for Canada in return.
“With the loopholes in the rules, Canadian companies cannot even try to acquire startup wireless companies at any price, but American companies can. And they can bid for more of our country’s airwaves and at a lower price. Favouring US companies over Canadians threatens our national communications industry and its place in Canada’s future growth, productivity and prosperity,” said Mirko Bibic, Bell’s Chief Legal and Regulatory Officer. “These special rules were intended to help new competitive start-ups. We ask how the federal government could now hand over Canadian spectrum, infrastructure and capital to US corporations – especially when Canadians do not have similar rights south of the border.”
Impact on Canadians
Industry experts predict that US operators like Verizon would use the lower capital and operational costs enabled by the loopholes to target Canada’s largest and most profitable urban markets. Not only would they be free to ignore small town, rural and remote Canada, the network access loophole discourages them from investing in infrastructure by guaranteeing them the right to use the networks of Canadian companies.
Analysts further predict that Canadian carriers would be required to concentrate their own efforts in the very largest cities, while cutting costs and investment in order to compete. Canadian telecom industry employment would be adversely affected, and entire regions of the country would be left out of new waves of wireless innovation and access to the digital economy.
Canada’s wireless industry is now one of the most vibrant in the world. Our world-leading networks serve 99% of the population, thanks to annual investments of almost $3 billion by the Canadian carriers (Canadian companies invest more per capita in telecommunications than any other country in the G8). Pricing is competitive with developed countries, and according to an independent report prepared for the CRTC, up to 40% lower than in the much larger US market. Smartphone penetration is also higher in Canada than the US.
A fair and straightforward solution
To ensure all Canadians can continue to benefit from a world-class wireless industry, Bell is urging the government to support a fair and open marketplace by closing the loopholes:
If Ottawa is allowing US carriers access to Canadian airwaves, promote head-to-head competition by permitting any carrier to bid on two blocks of prime spectrum in the upcoming 700 MHz auction – not just US carriers.
Require US carriers that enter Canada to build out to the entire country, as Canadian companies have done, rather than allowing them to simply enjoy access to the world-leading networks built by Canadians.
Allow major Canadian carriers the opportunity to bid against the big US companies to acquire wireless start-ups seeking buyers, with full review by the Competition Bureau.
To learn more about this situation, please visit Bell.ca/PlayFair.
Headquartered in Montréal since its founding in 1880, BCE (TSX, NYSE: BCE) is Canada’s largest communications company, providing leading wireless, TV, Internet, home phone, and business communications services from Bell Canada and Bell Aliant. Bell Media is Canada’s premier multimedia company with leading assets in television, radio and digital media. For more information, please visit Bell.ca.
The Bell Let’s Talk mental health initiative is a national charitable program that promotes Canadian mental health across Canada with the Bell Let’s Talk Day anti-stigma campaign and significant funding for community care, research and workplace best practices. To learn more, please visit Bell.ca/LetsTalk.
SOURCE Bell Canada
Bell shocked by CRTC rejection of Astral transaction, requests Cabinet intervention
- Bell will ask federal Cabinet to issue direction to CRTC to follow its own regulatory policy
- Decision a breach of the CRTC’s Diversity of Voices policy, and protects cable conglomerates and rewards their extraordinary and obstructive lobbying efforts
- CRTC decision denies Canadians hundreds of millions in new content funding, innovative new broadcast services, enhanced programming choice and competition
MONTREAL, Oct. 18, 2012 /CNW Telbec/ – BCE Inc. (Bell) today announced it will request that the federal Cabinet intervene in the CRTC’s decision to reject Bell’s acquisition of Astral Media. Bell is appalled that the CRTC would come to a decision that so negatively impacts Canadian consumers and the national broadcast industry, contravenes its own policy and is tainted by behind-the-scenes lobbying by Bell’s cable rivals.
“This is a decision that should not stand. Canadian consumers were told today by the CRTC that they don’t deserve more – more choice, more competition, more Canadian content funding – all of which Bell and Astral committed to with this transaction,” said George Cope, President and CEO of Bell Canada and BCE Inc. “We met all the CRTC’s rules, indeed our acquisition of Astral was based directly on the CRTC’s currently in-place Diversity of Voices policy. The wide-ranging benefits to Canadians of the transaction are clear, but the CRTC has told consumers that they and the rules in place just don’t matter.”
In its 2008 Diversity of Voices regulatory policy, the CRTC confirmed that it would approve broadcasting transactions resulting in a company controlling less than 35% of total TV audience share. Bell and Astral combined would have an English-language TV market share of 33.5% and just 24.4% of the French-language TV market, both well within the rules (it is worth noting that this would put Bell-Astral on par with cable company Shaw/Corus, which has a 30.2% share of English-language TV, and well behind cable company Quebecor’s existing 30% share of French-language TV).
With this CRTC policy in place, and which Bell logically used as its guide in acquiring Astral, the CRTC instead quotes a working paper from 1978, a single application from 1986 and a 1989 public notice to justify its rejection of the Bell-Astral transaction in 2012.
“The CRTC’s decision reflects a bygone era, based on antiquated working papers from the 1970s and 1980s that have little bearing on modern Canadian broadcasting, and completely ignores its own most recent policy. Canadian broadcasting needs significant new investment, fresh ideas and increased choice in a time of cable company dominance in media and accelerating competition from foreign giants who invest little to nothing in the Canadian broadcasting system,” said Mirko Bibic, Bell’s Chief Legal and Regulatory Officer. “Considering the dire impact the CRTC’s decision will have on consumers in communities small and large, the blow it delivers to confidence in Canada’s regulatory system, and the fact that the CRTC worked so closely with cable companies to arrive at its conclusions, Bell is compelled to launch its request to the federal Cabinet to direct the CRTC to actually follow its own in-place policy.”
Bell has confirmed that senior CRTC officials met privately with Bell’s cable competitors multiple times in the days and weeks before the commission began its public hearings into the Bell-Astral transaction, while denying Bell the opportunity for any such consultations – calling into question the impartiality of the entire process.
“That the CRTC was not guided by its own rules is a grave concern. In fact, this is just the latest in a series of decisions where the commission held hearings, established rules… and then inexplicably ignored them when Bell moved forward with a strategic investment. This sends a strong message that Canadian broadcasting regulation is impetuous and unreliable, ” said Kevin Crull, President of Bell Media.
Bell’s acquisition of Astral was supported by independent producers, advertisers, media companies, community and arts groups – and by 99.84% of Astral shareholders. In rejecting the transaction, the CRTC sent a clear message to the broadcasting industry, investors and the corporate sector that its own rules don’t matter – to the detriment of consumers across Canada.
“A combined Bell-Astral would grow the entire Canadian broadcasting industry to the benefit of consumers and content creators. Instead, the CRTC has decided to favour the interests of unregulated U.S. broadcast channels and Internet television providers, while blatantly protecting the interests of cable companies, such as Québecor, which continues to dominate the French-language media market” said Mr. Crull.
If the CRTC’s decision is allowed to stand, the Astral-Bell transaction will not be allowed to close and the negative outcomes are clear:
- It cuts off more than $240 million in new funding for Canadian content, including greatly expanded Canadian news and entertainment programming in both official languages.
- French-language consumers have been robbed of a planned national French-language news service based in Québec; Québec consumers, content creators and its broadcasting industry remain at the mercy of Québecor, the integrated cable-broadcaster that has long dominated Québec media with a French-language TV market share of 30%, far higher than the combined Bell-Astral share of 24.4%.
- Consumers across the country are denied a stronger homegrown voice able to compete with unregulated U.S. TV channels and Internet OTT broadcasters – including with Bell’s planned all-Canadian service featuring Astral’s Canadian and international movies and Bell Media news, sports and entertainment programming to compete with cross-border services like Netflix and Apple TV.
- It forces a review of Bell’s commitment to continue to operate money-losing TV stations in small communities across Canada as part of the Bell-Astral investment plan.
- Canadians in the North are denied significant new broadband communications infrastructure planned as part of the Bell-Astral benefits package.
Rather than welcome these clear benefits to consumers of the Bell-Astral plan to invest heavily in Canadian programming and broadcasting services, the CRTC chose instead to serve cable companies focused on protecting their profit margins, already the highest in North America. These same corporations dedicated their vast TV, print and other media holdings to an aggressive and blatantly misleading campaign aimed at subverting due process and quashing enhanced competition. In combination with private meetings with the cablecos, the CRTC fell head over heels for their carefully orchestrated and well-funded propaganda effort that made a mockery of the entire process.
If the CRTC’s decision stands, one of the closing conditions for Bell’s $3.38 billion acquisition of Astral Media will not be met and the transaction will not proceed. The transaction also remains subject to approval by the federal Competition Bureau.
Headquartered in Montréal since its founding in 1880, Bell is Canada’s largest communications company, providing consumers and business with solutions to all their communications needs. Bell Media is Canada’s premier multimedia company with leading assets in television, radio and digital media. Bell is wholly owned by Montréal’s BCE Inc. (TSX, NYSE: BCE). For Bell product and service information, please visit Bell.ca. For Bell Media, please visit BellMedia.ca. For BCE corporate information, please visit BCE.ca.
The Bell Mental Health Initiative is a multi-year charitable program that promotes mental health across Canada via the Bell Let’s Talk anti-stigma campaign and support for community care, research and workplace best practices. To learn more, please visit Bell.ca/LetsTalk.
Caution Concerning Forward-Looking Statements
Certain statements made in this news release, including, but not limited to, statements relating to the proposed acquisition by BCE Inc. of Astral Media Inc. and other statements that are not historical facts, are forward-looking. Forward-looking statements, by their very nature, are subject to inherent risks, uncertainties and assumptions which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements. As a result, we cannot guarantee that any forward-looking statement will materialize and you are cautioned not to place undue reliance on these forward-looking statements.
The forward-looking statements contained in this news release describe our expectations at the date of this news release and, accordingly, are subject to change after such date. Except as may be required by Canadian securities laws, we do not undertake any obligation to update or revise any forward-looking statements contained in this news release, whether as a result of new information, future events or otherwise. Forward-looking statements are provided herein for the purpose of giving information about the proposed transaction referred to above. Readers are cautioned that such information may not be appropriate for other purposes. For additional information with respect to certain of these and other assumptions and risks, please refer to BCE Inc.’s 2012 First Quarter MD&A dated May 2, 2012, filed by BCE Inc. with the Canadian securities commissions (available at www.sedar.com) and with the U.S. Securities and Exchange Commission (available at www.sec.gov). This document is also available on BCE Inc.’s website at www.bce.ca.
SOURCE: BELL CANADA