How screwed is the federal government’s quest to improve the wireless market in Canada? You could say we’re at the cigarette-smoking stage, as in that’s what the country’s cellphone incumbents are figuratively doing right about now.
Act One saw the tease by Verizon, which thought about coming into Canada via a purchase of Wind and/or Mobilicity but ultimately decided against it. Perhaps the U.S. giant was too distracted by its mega-deal with Britain’s Vodafone, maybe it figured that Canada wasn’t a worthwhile enough market, or more likely it saw that it would still have huge disadvantages in facing off against Bell, Rogers and Telus. Either way, that hope sputtered.
Act Two focused on the alternative to Verizon, which would have seen a stronger and revitalized Wind purchased and run by its original backer, Egyptian billionaire Naguib Sawiris. But then the government went and vetoed his deal to buy business services provider Allstream from Manitoba Telecom, which would have done much to overcome some of those disadvantages facing Verizon or any other challenger, on unexplained national security grounds. And boy did that make Sawiris hopping mad. As he told an Egyptian news organization last week, he is “finished with Canada” and won’t spend another penny here. As if to add an exclamation mark to the whole thing, private equity firm Birch Hill – which was also a possible buyer for Wind and/or Mobilicity – also last week withdrew its intention to participate in the upcoming wireless spectrum auction.
Which brings us to Act Three, where the stage setting is grim indeed. The two small wireless providers, which the government has credited with lowering prices by almost 20 per cent since their inception a few years ago, have no obvious buyers – or at least those who have the money needed to compete with the incumbents – and the government has made it clear that they can’t sell out to the self-same Big Three. Moreover, with the Allstream rejection, the Conservatives have likely scared away any other potential buyers. After all, who would enter a market where the rules are clearly being made up on the fly?
Wind and Mobilicity are about as far up the creek as could be imagined, and where these already financially strapped companies are going to get the big money needed to acquire spectrum in January is anyone’s guess at this point. No one in their right mind is going to buy them.
Of course, someone who isn’t in their right mind might, and that sure sounds like the sort of people who are running this show (into the ground). Indeed, the only remaining realistic buyer for these two companies looks to be the government of Canada. I’d mentioned the possibility of a Crown wireless corporation before, an idea that was seconded by the Communications, Energy and Paperworkers Union, but the idea was laughed off by Industry Minister James Moore.
But given that the alternative is the likely death of Wind and/or Mobilicity, is there really any choice left?
Come on, think about it – it wouldn’t be so bad. Wind could even be rebranded to be more Canadian-sounding. Chinook Mobile, anyone?