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Apr 7, 2021

Shaw opts out of wireless spectrum auction amid Rogers deal

Regulators speak on Rogers-Shaw $26B deal

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TORONTO -- Freedom Mobile and its parent Shaw Communications Inc. will not participate in an upcoming wireless spectrum auction deemed crucial for the development of 5G networks.

The two companies do not appear on a list published by Innovation, Science and Economic Development Canada (ISED) of telcos that have applied to participate in the June 15 spectrum auction.

The 3,500 megahertz auction will provide winning bidders with the capacity to build out and speed up their 5G wireless networks, which are being rolled out around the world.

There had already been doubt about whether Freedom could continue to put competitive pressure on the three biggest wireless companies when the family that controls Shaw struck a deal in March for the company to be bought by Rogers Communications Inc. for $26 billion.

A Freedom spokesman said the company had no comment.

Freedom operates in three provinces -- Ontario, Alberta and British Columbia -- and has Canada's fourth-largest subscriber base but is still small compared with Rogers, BCE Inc. and Telus Corp., which collectively have more than 90 per cent of the market.

The list of 24 applicants posted by the Government of Canada includes the Big Three -- as well as some smaller candidates, including Eastlink parent Bragg Communications and Videotron, which is owned by Quebecor Inc.

Most Liberal and opposition MPs on the committee have expressed concern over the impact on competition and some have questioned how the announcement would affect the auction -- but got no concrete answers from telecom executives who cited strict government confidentiality rules.

The same committee, which isn't a regulator but plays an advisory role, questioned CRTC, Competition Bureau and Department of Industry officials Wednesday as part of their hearings the proposed Rogers purchase of Shaw.

For the most part, officials from the regulators steered away from discussing the Rogers-Shaw deal -- or the spectrum auction -- because the matter is being reviewed.

However, the MPs were free to express their opinions.

"I think with the discussions that we've had here there should (ring) some alarm bells," Earl Dreeshen, a Conservative MP from Alberta, said Wednesday.

"We've heard that the proposed merger agreement will have no benefit to Canadians. It'll reduce competition, raise prices, lessen innovation and lower services to rural communities. We also heard from a rural mayor yesterday that the merger will do nothing to reduce the gap between urban and rural broadband services. That we need more competition not less."

On the first day of hearings, the committee also heard Rogers chief executive Joe Natale and Shaw CEO Brad Shaw say that a combination of their companies would make the combined business more competitive -- particularly against Bell and Telus -- if they can avoid duplicated investments on 5G and use the money to extend and improve their networks into rural and underserved areas.

Quebecor CEO Pierre Karl Peladeau told MPs on March 31 that the Rogers-Shaw deal will result in the elimination of the fourth player essential to maintaining real competition.

One of the major capital expenses for any Canadian wireless carrier is the cost of buying federal spectrum licences either through auctions or from other licence holders.

As a result of Shaw's Freedom opting out of the 3,500 MHz auction, the remaining bidders -- including Rogers, Bell and Telus -- will face less competition.

Other applicants for the auction include Saskatchewan Telecommunications (SaskTel), which is owned by the provincial government, and TechSavvy -- an Ontario-based private company that provides internet and TV services in several provinces.

A final list of bidders will be compiled on April 22.