Canada's Cogeco eyes wireless service, seeks regulator's help

Thu Sep 25, 2014 2:30pm EDT
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TORONTO, Sept 25 (Reuters) - Canadian regional cable and Internet company Cogeco Cable Inc would consider launching a "virtual" wireless business if the telecom regulator ensures it access to the infrastructure of its much larger rivals, its chief executive said on Thursday.

Louis Audet said that setting strict rules to encourage the emergence of mobile virtual network operators, or MVNOs, would help break the market dominance of the three national operators, BCE Inc, Rogers Communications Inc, and Telus Corp.

The federal government has pushed to have four viable operators in each region of the country, with varying levels of success.

Virtual operators typically rent access to a larger competitor's network to avoid the high cost of building out their own networks, which allows them to sell cheaper mobile plans.

Cogeco made its case ahead of hearings to be held by the regulator, the Canadian Radio-television and Telecommunications Commission (CRTC), next week on the issue of wholesale mobile services.

Cogeco's proposition would only make sense "if there is an order, an enforceable order, to give access, and if the rates at which this access is provided are actually dictated by the regulator," Audet told reporters on a conference call.

Analyst Dvai Ghose at Canaccord Genuity said it was unlikely the CRTC would go along with Cogeco's requests, given its historical preference for encouraging facilities-based competition helped by spectrum set-asides.

Recent wireless entrants Wind Mobile and Quebecor Inc's Videotron, for instance, have spent hundreds of millions of dollars to buy airwaves and build their own networks.

Shares of Cogeco Cable, which operates in parts of Ontario and Quebec as well as in a handful of U.S. states, fell 2.7 percent to C$57.35 on the Toronto Stock Exchange, its lowest level since March.

The three national operators compete with Eastlink in the Maritime provinces, with Quebecor in Quebec, Manitoba Telecom Services in Manitoba, and Sasktel in Saskatchewan. With the failure of several wireless startups, Wind is one of the last challengers standing in three of Canada's most populous provinces: Ontario, British Columbia, and Alberta. (Reporting by Alastair Sharp; Editing by Peter Galloway)