OTTAWA (Reuters) - Canada is focused on boosting competition in the telecom sector and will examine any move by industry leader Rogers Communications Inc (RCIb.TO) to back a private equity bid for two small wireless carriers, Industry Minister James Moore said on Wednesday.
The deal would be a way to thwart the possible entry of U.S. giant Verizon Communications Inc (VZ.N) into a Canadian market where Rogers and two other players, BCE Inc (BCE.TO) and Telus Corp (T.TO), hold some 90 percent.
Reuters and other media reported on August 2 that Rogers, Canada’s largest wireless carrier, wants to help Toronto’s Birch Hill Equity Partners fund a purchase of controlling stakes in two small players who entered the Canadian market less than five years ago.
Neither Rogers nor Birch Hill have publicly acknowledged the plan.
Speaking in an interview with Reuters, Moore said he could not comment on the plan, but his focus was on competition.
“The large three already have 90 percent of the footprint, and we didn’t develop our telecom policy...to have a larger and larger footprint of Canada’s largest firms and thereby limiting the degree of competition in the Canadian marketplace. I don’t think that serves consumers,” he said.
“I’m not going to pre-judge a proposal. If a formal proposal is put to me, put to my department, we will examine it in good faith, objectively, about what it is they have in mind. But our goal is more competition.”
Moore, who took up his portfolio last month, said the issue is not black and white. He pointed to an agreement between Telus and BCE’s Bell to share infrastructure, and said the government would not stand in the way of that.
The next chance to open up Canada’s telecoms market comes with a 2014 auction of valuable wireless spectrum where the rules are skewed in favor of new entrants. Verizon has not confirmed that it will bid in the auction, saying only that it is exploring the possibility of entering the Canadian market.
The three main Canadian players say the rules are unfair and have launched a high profile campaign of advertising and media events to swap public opinion and persuade the government to change its mind.
Moore is not budging.
“The government’s policy on the auction is not changing. We’ve already delayed the auction twice. We arrived at the policy after a great deal of consultation...and we’ve arrived at a policy we think works,” he said.
He said Canadian officials had provided information on the wireless market to Verizon in a meeting in New York at Verizon’s request. He noted the importance that Canada placed on rural markets and on the overall marketplace.
“It’ll be not a cakewalk for anybody,” he said.
The established carriers say the government is not providing a level playing field. Operators which do not have at least 10 percent of the market can bid for more prime blocks than the existing players, they say. As a result, Verizon can swallow up the small players, which the Big Three are not allowed to do, they argue.
Moore noted that the existing players have the advantage of being able to bundle their cell contracts with other products including cable service.
He left the door open to further liberalization of both broadcasting and telecommunications in line with recommendations from a government-appointed panel in 2008.
Editing by Janet Guttsman and Andrew Hay