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Meena Alnajar is an IPilogue Writer, IP Innovation Clinic Fellow, and a 2L JD Candidate at Osgoode Hall Law School.

In March 2021, Rogers Communication Inc. announced an upcoming to buy Shaw Communications Inc for a US$26 billion takeover. If successful, Rogers will become Canada’s -largest cellular and cable company operator. Canada would resultingly have wireless providers to choose from instead of four. This deal is now facing opposition from some of Canada’s key regulatory powers. On March 3 2022, Canada’s of Innovation, Science and Economic Development Francois-Phillippe Champagne stated that “The wholesale transfer of Shaw’s wireless licenses to Rogers is fundamentally incompatible with our government’s policies for spectrum and mobile service competition, and I will simply not permit it.” But why should Canada prevent industries from extremely profitable mergers and acquisitions?

Ottawa’s main concern with this deal is the monopolization of essential services like cell phones and Internet. With a monopoly, Rogers is free to raise prices because no other competitor could offer a better price matching Rogers’ breadth of services. Many are concerned that they will not be able to compete with Rogers, and consumers worry they will suffer higher cell phone prices without other options. Rogers gave an assurance that it would not raise prices until at least years after the deal’s closing. But that assurance may not be enough to stop Rogers from continuing to competitors in the future, leaving fewer choices for Canadian consumers. Financial analysts acknowledge that while the government may try to reject the deal, the government’s statements are not necessarily fatal. predict that the deal will close, but, to maintain competition in the industry, Rogers will not be able to buy all of Shaw’s wireless business.

The Rogers-Shaw deal is likely moving ahead. On March 24, the Canadian Radio-television and Telecommunications Commission (“CRTC”) Rogers’ acquisition. The CRTC stated that, subject to modifications, Rogers’ proposal would not unduly affect Canada’s competitive landscape. The CRTC made stipulations to its approval that could once again balance Rogers’ acquisition and fair competition in the wireless service marketplace. Rogers will contribute towards various initiatives promoting local news and independent projects. Rogers must also create an news team with journalists in all provinces to provide news content to First Nations, Métis, and Inuit communities. These stipulations could help stimulate local journalism and production companies, addressing concerns regarding the survival of local wireless services after this big merger.

While Canadian government officials seek to discourage anti-competitive behaviours, Canada’s Competition Act was last reviewed in . Since then, Internet giants like Google, Facebook, and Amazon have often participated in anti-competitive practices online to dominate the marketplace. In Canada, Google and Facebook pocket of online advertising revenues, yet no laws have come in to stop them. Minister Francois-Phillippe Champagne announced on , to modernize competition law through legislative reform of the Competition Act. Through a broad review, the Competition Bureau has suggested changing the in the current competition law. This defence saves mergers that harm competition so long as the deal creates cost savings or other efficiency gains. Rogers may rely on this defence to keep the deal moving forward. Though not yet rejected, the Rogers-Shaw deal may be a catalyst for Minister Francois-Phillippe Champagne to implement changes to competitive practices.

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In response to this statement BCE, Rogers, and Telus (the "Big Three" Canadian telecommunication companies) launched a . They argued that the rules intended to support new entrants into the Canadian wireless market would actually allow large foreign corporations like Verizon to squeeze out Canadian companies and jobs.

Verizon CEO, Lowel McAdam, now says that Verizon the Canadian market. In an interview with Bloomberg news service, he said that the speculation of a Verizon entry into the Canadian market was “way overblown." Nevertheless, Verizon managed to spark a polemic discussion about the new spectrum auction and rules introduced by the government to encourage the introduction of a fourth major telecom competitor into Canada.

In 2012, the government to allow foreign companies to enter the market with some limitations. Companies with are now open to foreign investment, while large carriers are still restricted to one-third foreign ownership. In 2014, the Government plans to  four blocks of the 700-megahertz wireless spectrum to carry voice and data services. As a part of the government’s ongoing attempts to develop competition in the wireless market, the "Big Three" carriers will be restricted to bidding on only one block. The Government further " from purchasing either Wind or Mobilicity - the current small providers in Canada.

The "Big Three" argue that the rules will favour foreign carriers who enter the market because they would be able to bid on more than one block since they are not incumbents. Two of the four blocks are for new entrants and current speculation is that these blocks will therefore sell for a lower price since the big three cannot bid, making them attractive to a foreign competitor. Verizon is currently four times larger than the "Big Three" combined, which does not seem to be the underdog the government had in mind when it implemented the policy to encourage competition.

The withdrawal of Verizon has not put an end to the protest from the "Big Three". Rogers CEO, Roger Nadir, claims that while welcomes competition, the current policy in place do not provide a level playing field. laid out three loopholes in the rules that still need to be closed. A spokesman for said, “It’s never been about Verizon coming to Canada. It has been and continues to be about fair access to the spectrum.” The "Big Three" maintain that the rules provide an unfair bidding advantage to new entrants at their expense.

In late August, members of the country’s largest private sector union outside of Industry Canada offices, citing their disapproval of the new rules that will open telecom to foreign investment. They fear that the introduction of another provider will result in Canadian job losses as a result of corporate streamlining to remain competitive. The union is also concerned with privacy and security if an American corporation enters the market, especially in light of Verizon’s involvement in recent .

In my opinion, the concern from the "Big Three" may be unwarranted at this point. After all, despite government attempts to diversify the market over the last few years, remain with the "Big Three". The introduction of Wind and Mobilicity has already resulted in an nearly in the last few years; however, Canadian carriers still have per user. Moreover, Canada has among the most expensive wireless plans according to the and the . Canada is a relatively small and rural market, which presents a huge undertaking of development of infrastructure to enter competitively in all areas. Thus, even under the new relaxed rules, one does not simply walk into the Canadian market.

According to digital public affairs analyst Mark Belvis, one poll indicates that would support entry of Verizon into Canada as they believe it would lead to better service and lower rates. Consumers already feel they have little choice and the attempt by the "Big Three" to gain sympathy did not gain much traction with frustrated consumers who used this campaign to air their grievances against their providers. Continued opposition from the "Big Three" to changes in the Canadian wireless market may prove to be a consumer-alienating strategy in the long run.

Even without the entry of Verizon, feels that “the way we’ve designed our policies, we are going to have more competition in the marketplace from other players.”  The government does not seem to have changed its position and still wants a fourth major competitor despite the media frenzy caused by the Verizon inquiry.  The auction remains for January and companies wishing to bid still must submit their applications by September 17^th.

Allison McLean is an IPilogue Editor and a JD candidate at Osgoode Hall Law School. 

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Originally "Dave Wireless", Mobilicity  to take part in the 2008 Advanced Wireless Spectrum (AWS) auction that reserved portions of the spectrum for bidding to new entrants into the market. As a condition of the reserved auction, these new entrants were restricted from transferring the spectrum to incumbents (groups which previously held rights to portions of the wireless spectrum) for five years. A hallmark of the Federal government's  to increase competition in the wireless industry, the reserved auction was hailed at the time as a  step for consumers. �����Ի��� were two other new entrants as a result of the 2008 AWS reserved auction. The launch of these three companies was seen as a  for consumers by increasing  and ultimately decreasing prices, while improving service.

The reserved auction was only one facet to a Federal Government  which also included regulating access to incumbent assets, and debate over foreign ownership of telecommunication firms. The initiative was in response to earlier  by consumer advocates that Canadians suffered high costs and low service, allegedly stemming from a lack of competition between the three incumbent firms.

Good Move?

Consumer advocates  the recent decision as reinforcing the purpose of the reserved auction - that incumbents should not be allowed to acquire parts of the spectrum specifically set aside to spur competition. They also argue that a 4th alternative provider is needed to increase  and bring down prices, and by effectively blocking the deal, the Federal Government is ensuring an additional competitor continues operation. These advocates also believe that new entrants like Mobilicity have fulfilled their purpose, and consequently consumer prices for wireless communications have come .

Bad Move?

Going forward, we must ask whether blocking the acquisition of Mobilicity by Telus could be detrimental to Mobilicity consumers, if it could deter future investors, and whether it might have an overall negative impact on the industry. Without outside investment, Mobilicity appears to be heading for , meaning an uncertain future for its 250,000 customers. In the long-term, there is a fear that blocking the sale to Telus will signal to potential investors that a divestment strategy involving incumbents will not be allowed, thereby restricting their ability to get returns on those investments. Without the ability to sell their ventures to the biggest potential customers (the incumbent wireless firms), new potential investors will anticipate lower returns, likely resulting in decreased investments in Canada's wireless industry. Less investment would lower competition, leading to precisely the opposite outcome intended by the Federal Government. If this comes to fruition, it is difficult to see how Mobilicity going bankrupt will benefit consumers either in the near- or long-term.

4th Player Needed?

Given all three new entrants who launched under favorable circumstances are now facing financial troubles and uncertain futures, it raises the question - what is required for a new firm to be competitive? As part of the Government's 2007 strategy, wireless spectrum was  for only new entrants, foreign ownership rules were , and access to incumbent assets was forced by . Even with all these favorable concessions, Mobilicity cannot turn a profit and both other new entrants Wind Mobile and Public Mobile are up for . The failure of all three of these raises the issue that perhaps the wireless market was not as uncompetitive as Canadians were led to believe. If the market was so uncompetitive and consumer prices so high, how could not one of these three become profitable after four years of operating under favorable conditions and with the ability to "cherry-pick" customers in the most concentrated urban markets? Could this be a sign that perhaps the current market is competitive, and prices are not unduly inflated?

Canada currently has three national wireless providers. Much commentary has been written discussing  in Canada, and concerning  in the telecommunications market. Nobody, however, has been able to explain why having a fourth alternative provider would dramatically lower prices, and improve service. Some have  with the perceived failure of the Federal Government program to spur competition, they should instead focus on regulating the incumbents or utilizing other methods to enforce competition. Either way, the Federal Government will soon be forced to acknowledge that its efforts so far have been insufficient to create a viable fourth competitor in the wireless market.

Alex Buonassisi is an IPilogue Editor and a JD Candidate at Thompson Rivers University.

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