Industry Minister James Moore released a statement in response to the publication of the list of applicants for the upcoming 700 MHz spectrum auction:

Today, Industry Canada published the list of applicants for the 700 MHz spectrum auction scheduled for January 14, 2014. This high-quality spectrum will soon be deployed across Canada, providing Canadians with dependable, high-speed wireless services on the latest technologies.

Well before this summer’s public debate on wireless policy, our Government introduced a number of measures to create more choice in Canada’s wireless market and to defend consumers. As a result, prices have come down, the number of jobs in the wireless sector has increased and consumers have more choices. This trend will continue as a result of January’s auction.

In addition to this auction, our Government will continue to aggressively pursue policies that ensure consumer interests are at the core of all Government decisions.

Some have read the last sentence as a threat for the government to introduce strong regulatory measures. As I told the Globe and Mail earlier this month, the government has already made a number of changes to the regulatory landscape – most of which have not yet been in place sufficiently long for the impact to be measured:

Over the past year and a half, it has liberalized foreign ownership regulations, implemented a stringent code of conduct for wireless providers, added new mandatory roaming and tower sharing rules and changed the conditions for transfer of spectrum licenses. The government needs to take stock of the impact of all of these changes and reflect on whether these are the most appropriate measures to encourage investment and provide consumers with a vigorous competitive marketplace.

In an interview on BNN, I suggested that perhaps it is time to ask the Competition Bureau to conduct an independent review of the state of wireless competition.

Industry Canada published the list of applicants for those companies that would like to bid in the upcoming 700 MHz auction.

The biggest surprise appears to be that there are no surprises. Despite its best efforts, no new foreign companies have been attracted to Canada’s mobile market.

Industry Canada will need to examine relationships between the bidders (and the companies behind the bidders) in order to ensure that there is no potential for bidding collusion or circumvention of the rules, but there are no new deep pockets threatening to disrupt the Canadian wireless marketplace.

As I described last week, we do not know anything about where these companies plan to bid, or which companies plan to bid for more than one block.

There are 14 different geographic areas that cover the whole of Canada; initial bid prices depend on the population and the amount of spectrum being acquired. Each bid point requires a deposit of $130,000 and covers about 100,000 people per block of 5 or 6 MHz. The paired blocks of spectrum have increased bid points required in the more populous geographies so 1,221 bid points are required for a national paired block license, versus 334 bid points for an unpaired block. A 5% down payment had to be submitted with the application last Tuesday; the remainder is due on October 29. Links to the relevant sections of the Industry Canada rules can be found in last week’s blog post.

It was widely reported last week that none of the major US carriers (AT&T, Verizon, T-Mobile, Sprint) were planning to participate in the Canadian auction. Perhaps some of them were unwilling to face the regulatory risk of being unable to sell at some point in the future. When the federal government denied the TELUS request to acquire Mobilicity, it changed the rules set out in the original AWS auction. As I wrote in late July, “Had the government simply said that the original AWS rules called for a 5 year hold and the acquisition was premature, that would be one understandable, and consistent message.”

Instead, the government continued its game of Calvinball, keeping us all guessing on what the rules will govern multi-billion dollar investments. 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.

In its zeal to prevent “undue spectrum concentration—and therefore diminish competition”, did the government’s June 4 announcement diminish the attractiveness of investment in Canadian wireless?

Industry Minister James Moore told Reuters that the government’s wireless policy was focused on the upcoming 700 MHz spectrum auction.

Moore said 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,” he responded.

The Minister declined to provide any information about whether any new foreign companies had submitted bidding papers and preliminary deposits yesterday, saying that the list will be released next Monday.

According to the current auction list of key dates, Monday September 23 is when Industry Canada will publish a list of applicants, their “beneficial ownership and associated entities information”.

We will not get any information about the number of bidding points being sought by each company. That information would provide some insight into the company’s bidding strategy. Pre-auction bid points require $130,000 each; 1221 bid points ($158,730,000) are needed to bid on one paired block across the country. A minimum of 2 bid points are needed to participate in the auction for a prime paired block, or just one point for bidding on an unpaired block – that would let you play in the game for the three territories.

The applications needed to be accompanied by a down payment of only 5% of the bid deposit.

Keep this in mind when the list gets published next week. To appear on the list, companies may have only submitted a check for about $7000.

The balance is due October 29, a week after Industry Canada publishes the list of provisionally qualified bidders. To move from “provisionally qualified” to fully qualified simply requires physically delivering the 95% outstanding balance owed on the bid point deposit. The qualified bidders list will be released November 8, indicating only who has a seat at the table, with no disclosure of the size of their stack of chips.

Applicants can decrease the number of bid points between now and October 29, but they may not increase them.

Not a lot of money was needed to make the preliminary list that will be published next Monday, the provisional list on October 22 and the final list on November 8. Because Industry Canada elected to use anonymous bidding, there will be no information released about activity by each company during the auction.

Once the auction has concluded we will hear who the winners are and how much money was spent. We may not know much about what is happening for the next 6 months.

When the CRTC expanded the scope of services covered by the office of the Commissioner of Complaints for Telecommunications Services (CCTS) in December 2010, we knew it would be a challenge to ensure that all service providers would register.

The major telecom service providers are front of mind, but there are hundreds of smaller players providing voice and internet services to the public. Although all service providers were supposed to have registered, compliance was to be ensured by checking the list when a customer complaint arrived at the CCTS.

A year later, in December 2011, Brama Telecom was the first service provider to face the CRTC over a continued failure to comply with the requirement to register with the CCTS following a complaint. Following an official CRTC inquiry being launched, Brama joined the CCTS and the CRTC proceeding was discontinued.

Today, 3 service providers became the first to continue past that gate and have moved to the “name and shame” stage. The CRTC has modified its webpage describing the CCTS in order to list the continued non-compliance of the companies.

You should also be aware that the CRTC has required the following companies to participate in the CCTS, but that they have not yet complied with this requirement:

• Adeste Global Managed Networks Inc.
• Lions Gate Internet, doing business as Imagen Communications Inc.
• Tollfreeforwarding.com

Further, the CRTC has issued mandatory orders to the companies seeking information about the nature of the services being offered and how those services are being provided, such as over the company’s own facilities or by resale of another telecommunications service provider’s services). The CRTC says that it “intends to register these orders with the Federal Court and pursue their enforcement as orders of that court.”

Ignoring such an order could lead to contempt charges.

Today’s decision was triggered by a “show-cause” proceeding launched 6 months ago, that threatened service disconnection:

The Commission notes that where a TSP is found to be in non-compliance with the CCTS participation requirement and does not own or operate a transmission facility, disconnection would be effected through an order directed at the Canadian carrier that provides that particular TSP with telecommunications services, whether directly or indirectly, to cease providing the TSP with the services.

Will these companies comply with the information request now that there is the threat of contempt proceedings being launched?

Will services being provided by these companies in Canada be disconnected? The CRTC could issue a disconnection order to all Canadian service providers who could be underlying these 3 non-compliant companies: Adeste Global Managed Networks Inc., Lions Gate Internet (doing business as Imagen Communications Inc.), and Tollfreeforwarding.com.

On July 15, James Moore was named Industry Minister, charged with fostering “a growing, competitive and knowledge-based Canadian economy.”

He is 65 days into the new job, two-thirds of the way into his first 100 days. How is it working out so far?

Three and a half years ago, Minister Moore’s predecessor’s predecessor launched a consultation to develop a strategy to guide the development of a digital economy strategy. Together with then Industry Minister Tony Clement, and Minister of Human Resources and Skills Development Diane Finley, the current Industry Minister was part of the original announcement in his role as Minister of Canadian Heritage and Official Languages. He said at that time:

Our government is committed to ensuring that creators, inventors and entrepreneurs have the incentives to innovate, the confidence to take risks and the tools to succeed. We recognize the important role the digital media and content sector plays in the digital economy, and we intend to develop a long-term plan that will stand the test of time.

Three departments launched the digital economy consultation; with our third Industry Minister, we are still waiting for the outcome of that consultation. The consultation was to explore 5 themes:

• Capacity to Innovate Using Digital Technologies;
• Building a World-Class Digital Infrastructure;
• Growing the Information and Communications Technology Industry;
• Digital Media: Creating Canada’s Digital Content Advantage; and
• Building Digital Skills for Tomorrow.

Where is the “long term plan that will stand the test of time”?

In his first two months, it is evident to all that there is a new leadership in place. How will this translate into advancing the department’s mission, “to foster a growing, competitive and knowledge-based Canadian economy”?

There was an interesting address earlier today by Jason Furman, Chair of the White House Council of Economic Advisors [pdf]. His observations on the telecommunications sector were informed by a depth of economic analysis that looked beyond international consumer price comparisons and recognized the flow of capital investment by the US industry. I commend reading the speech in its entirety.

Among the highlights was reading about concerns first documented in a White House report released in June, “Four Years of Broadband Growth” [pdf]: uneven adoption of broadband by education and income; uneven adoption in rural areas; and, affordability challenges.

Reading the depth of research that clearly informed Furman’s speech, reviewing the White House report with its analysis, it became clear that there is a policy gap in Canada caused by our missing digital economy strategy.

In the next 5 weeks, by October 23 – the 100 day milestone in office – will Canada finally see a comprehensive national digital strategy?