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Ottawa will let market decide how many wireless players will be in each region

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MONTREAL - Ottawa appears to backing away from its pledge to increase the number of wireless competitors to four in every region of the country.

Industry Minister James Moore said Wednesday that the market will determine if there's a fourth competitor, downplaying the federal government's efforts to expand the market beyond the country's three major carriers to foster competition and bring prices down.

"It would be irresponsible for us to have a public policy that wasn't setting in place the parameters where more competition could emerge, if the market can support it," Moore said in an interview with The Canadian Press.

"Whatever dynamic emerges that the marketplace can support, the marketplace will decide that," Moore said from Ottawa.

The Conservative government eased the rules on foreign investment for wireless companies with less than 10 per cent of the marketplace, paving the way for foreign companies to enter the Canadian market and also buy small Canadian wireless organizations.

The move sparked a campaign last summer by Canada's big wireless providers _ BCE, Telus (TSX:T) and Rogers (TSX:RCI.B) _ arguing that foreign players, such as Verizon in the U.S., would be given an unfair advantage under the current wireless rules. Verizon ultimately decided against entering Canada.

Moore said he would like the norm to reflect the situation in Atlantic Canada, Quebec and Saskatchewan. All have four rivals _ usually Rogers, Bell and Telus plus a regional player such as Eastlink, Videotron or SaskTel.

It's unclear whether Ontario, Alberta and British Columbia will have more competitors once the Jan. 14 federal auction of wireless spectrum wraps up.

While new players Mobilicity, now under creditor protection, and Wind Mobile compete in those markets, they are not participating in the auction due to the high cost of the coveted 700 megahertz spectrum up for grabs.

Experts say the 700 megahertz radiowaves are particularly valuable because they allow cellphone signals to travel longer distances and penetrate buildings and tunnels where calls are often dropped.

The lack of new foreign players in the auction likely means it won't bring in as much revenue as expected to federal coffers, or the increased competition that Canadian consumers hoped would drive down prices.

The previous auction in 2008 raised $4.3 billion and ushered in new players: Wind Mobile, Mobilicity, Public Mobile, Videotron and Eastlink.

Mobilicity and Wind Mobile have since gone up for sale and Public Mobile has been sold to Telus.

The Canadian wireless market continues to be dominated by Bell (TSX:BCE), Rogers (TSX:RCI.B) and Telus (TSX:T), with a total of more than 25 million subscribers.

A new auction of radiowaves has beeen set for April 2015 by the Conservative government to allow Canada's smaller telecoms and Internet companies to increase their wireless spectrum. The government has put caps on how much 2500 megahertz spectrum companies can own, a move Ottawa says will largely shut out Rogers and Bell because they already own large chunks of it.

Moore also said legislation is coming on roaming rates that big telecom companies charge their small rivals for using their cellphone networks. Roaming fees are charged when customers use their cellphones outside their own network provider's coverage area. Rogers, for example, has a national network, but smaller providers such as Wind Mobile and Quebec's Videotron have to negotiate agreements to give their customers service across the country when they travel.

An announcement is also in the works on forcing telecom companies to use the spectrum they haven't deployed, or face losing it, Moore said.

Moore said Tuesday's budget announcement to bring high-speed Internet to rural and northern Canada will involve co-operation between wireless carriers, provincial governments and the federal government. The budget earmarks more than $300 million over five years to expand broadband high-speed Internet access.

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