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Home Tech News Rogers will not get Shaw’s wireless licenses, says Innovation Minister

Rogers will not get Shaw’s wireless licenses, says Innovation Minister

In a statement on Thursday, Minister of Innovation, Science and Industry François-Philippe Champagne said he will “simply not permit” the currently proposed Rogers-Shaw merger, pointing specifically to the transfer of wireless licenses.

“The wholesale transfer of Shaw’s wireless licenses to Rogers is fundamentally incompatible with our government’s policies for spectrum and mobile service competition,” the Minister said in the release.

Although this does not mean that the C$26 billion deal is off the table, it does mean that Rogers will have to meet more stringent criteria to be compliant with regulations. Currently, the proposal is under review by three separate regulatory bodies: Canada’s Competition Bureau, the Canadian Radio-Telecommunications Commission (CRTC), and Innovation, Science and Economic Development Canada (ISED).

Craving for licenses

Rights to wireless spectrum are highly sought after by telcos. In the mid-band 3,500 MHz 5G spectrum auction held last year, Canadian operators collectively paid nearly $9 billion for 1,495 licenses. The next auction, scheduled for the 3,800MHz band in 2023, is expected to be just as heated.

“In addition to total bandwidth and operating frequency, another dimension to spectrum cost is in which area you can access or own that amount of spectrum,” said Xianbin Wang, Canada research chair in 5G and Wireless IoT Communications at Western University. “It’s very important because that basically defines the overall telco’s business opportunities associated with that spectrum.”

Amid the ongoing merger process, Shaw and Freedom Mobile abstained from the 3,500 MHz spectrum auction. In an email seen by iPhone in Canada in April 2021, Freedom Mobile told employees that its 5G network has been put on hold indefinitely.

Nevertheless, Freedom Mobile still purchased 11 licenses in the 600 MHz 5G spectrum for C$492 million. Rogers also owns a large swath of 600MHz spectrum, having paid C$1.7 billion for 52 licenses.

Universally disapproved

In the merger announcement, Rogers said that acquiring Shaw would help bridge the digital divide in urban Canada and benefit consumers. The company promised to create a new $1 billion Rogers Rural and Indigenous Connectivity Fund to bring high-speed internet to underserved communities and extend the Connected for Success program across Western Canada.

The proposed merger faced immediate backlash from the entire telecom market. In a rare moment of unity, Rogers’ key competitors Bell and Telus, along with a cohort of independent service providers, protested that allowing the deal would grant Rogers presiding power over Canada’s telecommunications market and erode competition.

Although Rogers, Bell and Telus are Canada’s ubiquitous carrier service providers with signal coverage spanning across the country, Shaw is the dominant broadband internet service provider on the west coast. It owns an extensive fibre optic internet network in key cities like Vancouver.

As a part of the deal, Rogers was to also acquire Shaw’s subsidiary Freedom Mobile, which chiefly provides mobile services in Ontario. Rogers said that by absorbing Freedom Mobile, it would be in a better position to compete against Bell and Telus. This component of the deal is under heavy scrutiny by regulators and appears unlikely to be approved.

As well as its effect on wireless and broadband competition, the merger would also see the consolidation of Shaw’s media brands under Rogers’ name.

In a September 2021 filing to the Canadian Radio-Telecommunications Commission (CRTC), Bell alleged that “Rogers will be able to control the availability of programming services in every English-language market on all available platforms as even the most popular channels will need carriage on Rogers to survive,” reported the Globe and Mail.

According to the CBC, Bell had made a bid to purchase Shaw but gave up due to potential regulatory issues.

“As it stands, the proposed Rogers-Shaw transaction is contrary to the public interest,” said Pierre Karl Péladeau, chief executive officer of Quebecor, parent company of telecom service provider Videotron, in a public statement. “As Bell, Rogers and Telus already control 90 per cent of Canada’s wireless market, it is imperative that we create the necessary conditions for real competition in order to give consumers more choice, better prices, better services and more innovation.”

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