An access to information response revealed that the government has spent $9M on its ad campaign attacking Canada’s wireless industry.
The Globe and Mail and National Post have both published opinion pieces on the appropriateness of taxpayers paying for such partisan messages. I’m not even going to get into the content of the ads or try to understand how the government reconciles the contradiction between the messaging and the department’s own pricing study.
The $9M is a small fraction of more than half a billion dollars in such ads over the past 6 years.
Indeed, the $9M is reflective of policy that may be costing taxpayers much, much more.
Last night, we learned that yet another group has dropped out of the bidding for 700MHz spectrum, leaving us with just 11 remaining. Catalyst Capital, one of the main bond holders for “struggling startup carrier Mobilicity,” has withdrawn.
We could have a situation where there is un-sold spectrum when the bidding stops. Fewer bidders participating coupled with spectrum caps means the auction will generate less money for the treasury. The AWS auction generated $4.25B to pay down the national debt. Thanks to that auction, the savings on interest alone have more than covered the government’s partisan advertising bill.
Back in September, the Financial Post reported Industry Minister Moore said to Reuters:
the government was concentrating on an intensely watched auction of wireless spectrum, where it is encouraging new entrants to challenge the Big Three.
“Our policy is the auction and we’ll see what happens through the auction”
When the initial list of bidders for the auction was release in September, I wrote that inconsistency in the application of spectrum transfer and foreign investment rules have added regulatory risk that diminishes the attractiveness for investment in Canadian wireless.
A favourable investment climate doesn’t just mean that foreign money is welcome. Investors need to be confident about the rules are for taking their money out again.
Failure to approve the VimpelCom-Wind Mobile and Accelero-Allstream transactions have raised questions about how open our markets are to foreign investors. If our policy is the auction, one might have thought that government actions are consistent with optimizing the outcome of that auction.
Little kids often play chess without looking ahead, considering the secondary and tertiary implications of each move. In the spring, I wrote “Thinking 3 moves ahead“:
How will investors respond to being told that they cannot get the best deal for their money, that the company may have to be sold in a fire sale. With its accumulated tax losses, the best offer for Mobilicity will come from companies that can make use of those losses – that road leads to the doorsteps of the big three carriers. A rejection of the deal will impact more than just Mobilicity’s backers; Canada’s Industry Minister has been trying to drum up interest in market entry from investors around the world, in hopes of securing more bidders for the upcoming auction of the 700 MHz band. All of these potential global players will be watching to see whether they will face a friendly investment climate before they risk billions of dollars.
Our policy is apparently relying on the 700 MHz auction and “we’ll see what happens through the auction”. Is it time to start considering the next move?
The next move should be to end all this silliness and put spectrum management into the hands of an independent arm’s length regulator as was recommended by the Telecommunications Policy Review Panel in 2006. This is far too important a segment of our economy to turn into a political football. Transparency, fairness and reason are all suffering under the current system. Regardless of where one stands on the issues we should be embarrassed as Canadians that we are so far out of step with accepted regulatory best practice worldwide.
hear! hear!
just so long as it’s not the CRTC….can we outsource to Ofcom?
When the UK first placed spectrum management in an arm’s length regulator it was the spectrum-specific Radiocommunications Agency (RA). In my own view the RA was the most effective and progressive spectrum regulator the world has seen. I would favour a spectrum-specific regulator for Canada over the CRTC.