Law Times

PAGE 12 FOCUS Minister Christian Paradis about a new spectrum auction in 2013 to release more broadband into the market. Increasing competition and at- Government changes rules to attract new entrants T Wireless auction BY JUDY VAN RHIJN For Law Times he wireless telecommu- nications sector is abuzz following the March an- nouncement by Industry tracting new market entrants re- main a preoccupation for Industry Canada, but it has altered its ap- proach from the 2008 auction with some startling announcements. Th is time around, the government will impose caps on the amount of broadband each entity can own, namely a two-band restriction in any tier for all players and a one- band restriction for large provid- ers with more than 10 per cent of the market nationally or more than 20 per cent of the market in their tier. Th e idea is to guarantee that new wireless competitors as well Cassels & Graydon LLP, sees this as a win for the incumbents in the sense that they're able to bid on all of the spectrum, not just a part of it like last time. "It makes it likely that Rogers, Telus, and Bell will be able to get three out of the four prime bands and one will be available for a new entrant. Th at achieves what the government is looking for: new entrants and the ability to grow the market." Another change causing a lot of The relaxation of the foreign ownership rules will give new entrants better access to capital, says Gary Jessop. as the incumbents have access to the spectrum up for auction. In the 2008 auction, the government set aside 45 per cent of the defi ned spectrum for new entrants only. Gary Jessop, a partner at Blake talk is the removal of foreign own- ership restrictions with respect to wireless fi rms that have a national market share of 10 per cent or less. Since the market totals about $40 billion now, this will aff ect fi rms with less than $4 billion in revenue. David Elder of Stikeman Elliott LLP says the ownership rules go hand in hand with the spectrum auction. "Th e government is hop- ing that a combination of a cap with improved ability to raise capi- tal from foreign markets will allow new entrants to get the capital they need and buy at market rates. It will bring in a lot of foreign capital not just for bids on the auction but for infrastructure, investment, and rolling out the service. of the ownership rules will give better access to capital. "One thing' for sure: it will raise a lot of money for the government and that means it will be expensive for bidders and a prime source of capital is south of the border or overseas." Jessop was in New York when Jessop agrees that the relaxation s " interviewed and talking to po- tential clients and other law fi rms about the proposed changes to the foreign ownership rules. While he thinks there are many foreign fi rms interested in the Canadian market, he warns that these are early stages. "Th ey want to see the details to see if there are any wrinkles in the rules before they get too ex- cited. It goes without saying that they are always looking for op- portunities and Canada is a nice, easy market. We have 35 million Reach one of the largest Canada! legal and business markets in people with a stable economy and stable infrastructure. ticipants will benefi t most, at least in the short term, as it becomes more diffi cult to obtain a share of the market. Elder, however, some of the 2008 entrants have been disappointed at the amount of market share they've been able to attain, some foreign investors might not be so eager to jump in. "Others may see the new rules as making the climate for invest- ment better, says that as smaller entrants obtain more than 10 per cent of the market because of natural growth rather than by acquisition, they keep their foreign ownership exemption. "Th is might appeal to com- " he says, noting that if panies like Horizon and AT&T enough to entice them to spread north," he says. Other measures announced Jessop believes that early par- " April 23, 2012 • lAw Times relate to the requirement to ensure that rural Canadians have equal access to telecommunications ser- vices. Bidders for spectrum will have to put their service out to 90 per cent of their footprint within fi ve years and 97 per cent in seven years. "Radio spectrum does not fol- low the contours of population," says Elder. "If they focus their in- frastructure and investment where they have the most customers, this leaves rural dwellers without all the advantages. It is provided for now as a condition of the licence but it does still give carriers the ability to pinpoint where they will extend services and they'll do that where they get the most revenue. rules aimed at supporting competi- tion and limiting the proliferation of new cellphone towers have been a thorny issue since the last auction. Th e government has responded by tweaking some of the rules that re- quire carriers to share services. "New entrants have long com- Roaming and tower-sharing " plained that even though the rules provide that incumbents must share, the reality is that the agree- ments, particularly with respect to tower sharing, have been very diffi - cult to negotiate, are oſt en strongly opposing views to the point that new entrants are put- ting up their own towers. Th ey've got to get into the market and they can't wait. Th is means it' With more than 250,000 page views a month, canadianlawlist.com captures your market The all-new canadianlawlist.com features: — A fresh new look, designed for improved user experience — Effective new ways to reach the legal market — Gold and silver advertising packages For more information contact: Colleen Austin at 416-649-9327 or toll free at 1-800-387-5351 colleen.austin@thomsonreuters.com www.lawtimesnews.com CLL Web promo - CLL Dir..indd 1 12/8/11 10:58 AM cant reduction in the time frame for moving on to arbitration when the parties can't agree. "No other jurisdiction requires mandatory roaming, One new measure is a signifi - " ment has chosen not to step in and regulate it. Th ey have indicated the potential issues but are leaving them up to the participants to resolve. Th e fi nal highlight is the res- " says Jessop. "Th e govern- " ervation of 10 megahertz for the exclusive use of the public safety community. Lobbyists are hoping to increase that to 20 megahertz, the amount received by the American public safety sector, before the auc- tion takes place. " says Elder. "Th ere pensive and there are more towers, which was what the requirement was designed to stop. s more ex- LT Online Print and in

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