July 30, 2013 / 9:06 PM / 4 years ago

Telus challenges Ottawa's wireless policy in court

4 Min Read

TORONTO (Reuters) - Telus Corp (T.TO), one of Canada's big three wireless companies, has taken the government to court to challenge policies aimed at encouraging more competition.

Telus, second-largest provider of wireless service in Canada, late on Monday sought a judicial review in federal court in Ottawa over government restrictions on the sale of licenses to use airwaves.

Legal experts were skeptical that a review would succeed or deter the Conservative Party government from trying to limit the market dominance of the three largest companies, Telus, Rogers Communications Inc (RCIb.TO) and BCE Inc (BCE.TO).

"I assume Telus thinks they can win this case, but I think this is going to be a very tough case for them to win," said a lawyer specializing in the telecom policy, who asked not to be identified to protect business dealings. "I don't see this case as being much of a game changer."

A spokesman for Industry Minister James Moore on Tuesday said the government was aware of Telus's challenge, but he declined to comment because the matter was before the courts.

Battle Over Wireless Spectrum

Telus's move is the latest salvo fired by the big wireless players against the government, whose efforts to encourage competition have piqued the interest of U.S. telecom giant Verizon Communications (VZ.N).

In June, the government effectively foiled a C$380 million ($370 million) bid from Telus for struggling Canadian wireless provider Mobilicity by blocking the transfer of the start-up's spectrum licenses to Telus.

The Conservative government also said it would not approve other deals if they result in undue spectrum concentration in the hands of a few.

Mobilicity acquired its airwaves in a 2008 auction in which Telus, Rogers and BCE were barred from bidding on some spectrum so it would be free for newer players.

Telus argues that when Mobilicity bought the spectrum, it did so under the understanding it could sell those licenses to the established operators after five years.

"The minister did not have the statutory power to interfere with those vested rights," Telus said in its court filing.

Telus said in the filings with the Federal Court in Ottawa that it is seeking clarity on the legality of the government's decision last month, which potentially changes the rules around transferring bandwidth rights between carriers.

Telus' interpretation of the telecom policy differs from the view of others who competed in that auction, however.

"The government never in any way assured anyone that after five years transfers would be permitted," said Anthony Lacavera, who as chief executive of Globalive bought airwaves in the 2008 auction for his Wind Mobile operation.

Eye on Verizon

Rogers has also reached deals giving it the option to acquire airwaves from two regional operators once the five-year moratorium ends next year.

Telus, Rogers and BCE say the government is giving an edge to foreign wireless majors like Verizon, which sources familiar with the deals say is in talks to buy both Wind Mobile and Mobilicity.

The three companies, which between them own a huge stable of media assets across Canada, have launched a wide-ranging lobbying and public relations campaign to argue their case that Verizon should not get undue preference if it seeks to enter the Canadian market.

Telus says this could put billions of dollars of investment at risk, cost Canadian jobs and result in foreign companies being given advantages over local companies.

($1 = $1.0261 Canadian)

Editing by Jeffrey Hodgson and Grant McCool

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