A missed opportunity

Yesterday’s approvals of Bell’s acquisition of MTS came with a plot twist that few anticipated. As a condition of government approval of the deal, 40 MHz of spectrum (in the AWS-1, 700 MHZ and 2500 MHz bands) is being transfered to Xplornet, Canada’s largest rural internet service provider, giving birth to a new entrant in the Manitoba market. Xplornet is also getting certain other incentives (under the terms of a consent agreement with the Competition Tribunal) to help it launch, including nearly 25,000 customers, retail stores, discounted advertising rates and expedited access to network infrastructure. Additional Bell/MTS customers will be able to switch to Xplornet without any termination fee (including not having to pay off the remaining device subsidy), serving as an incentive for Xplornet to launch quickly in the province.

The structure of the overall deal includes other measures that help ensure Manitoba will continue to have multiple carriers investing in building and upgrading networks and consumers will continue to have access to multiple brands.

The other interesting twist is found by looking at which network network infrastructure will carry each service provider’s traffic. Up until not, Bell and TELUS have shared use of TELUS infrastructure; going forward, Bell’s 90,000 subscribers in Manitoba will migrate to the MTS network which is also being shared with Rogers under the terms of a long term Network Operating Agreement. The TELUS network utilization is being restored through the transfer of 110,000 customers under the terms of the deal.

The deal brings a change in market dynamics as Bell moves from 4th to first place in Manitoba along with a commitment to maintain current pricing offers for at least one year. Perhaps with an eye toward Manitoba’s western neighbour, statements from the Competition Bureau also signal how similar deals might need to be structured to gain regulatory approval.

With all of its focus on wireless, it is disappointing that the government didn’t get a commitment from the companies to launch a broadband service to target low-income households in the province – or even to impose the condition across Bell’s entire service footprint. Low income services have been launched by TELUS and Rogers in their respective wireline serving areas. Unfortunately, neither the CRTC nor Innovation, Science & Economic Development used their approval process to get such an important service to be offered by Bell in Manitoba, Quebec or those parts of Atlantic Canada not already being served by Rogers.

As I said on Monday, “Set clear objectives. Align activities with the achievement of those objectives. Stop doing things that are contrary to the objectives. That takes leadership, not money.”

Unfortunately, this was another missed leadership opportunity for the government to bridge a gap in digital adoption, without spending any additional taxpayer money.

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