UPDATE 1-Canada's Harper says wireless rules do not favor foreign players
* Rogers, BCE, Telus say auction rules favor a Verizon
* Auction of wireless spectrum set for January
* Verizon's interest in Canada may be cooling
OTTAWA, Aug 29 (Reuters) - Canadian Prime Minister Stephen Harper on Thursday disputed claims by his country's leading wireless companies that his government's telecommunications rules give unfair advantages to foreign players like Verizon Communications Inc.
Canada's three biggest wireless companies - Rogers Communications, BCE Inc and Telus Corp - are asking the Conservative government to rethink its rules for next January's auction of wireless spectrum, saying the playing field is slanted in favor of a Verizon.
Verizon had signaled a tentative interest in entering the Canadian market, but there is speculation more recently that its interest is waning, reinforced on Thursday when Vodafone Group Plc said it was in talks with Verizon to sell its stake in Verizon Wireless, the No. 1 U.S. mobile carrier. .
"The reality of the situation here is there is no special rule or special loopholes for foreign companies," Harper told reporters in Toronto.
"There are rules that assist all new entrants, whether they be Canadian or foreign, to enter the marketplace and provide competition that will be in the interest of Canadian consumers," he said.
Under rules the government says are designed to increase competition and drive down prices for consumers, new entrants can bid in the auction for two of four prime blocks of the spectrum that wireless companies need to operate mobile services, while the existing big players can bid for only one block apiece.
The three incumbents, which cater to 90 percent of the market, have launched an advertising blitz to sway public opinion. While they favor competition, they say, the new rules were drafted with smaller firms in mind, and Verizon is bigger than the three of them combined.
If Ottawa lends a hand to Verizon to enter Canada, they say, the Canadian players could be forced to cut jobs and trim mobile phone coverage in rural areas.
One full-page newspaper ad this week compared the country's airwaves to precious natural resources: "If the government let a giant foreign corporation buy up half of Canada's water, you would be outraged," it said, with a photograph of a lake and mountains. It went on to say foreign corporations were getting "special treatment."
Harper and the minister overseeing telecoms policy, Industry Minister James Moore, have made it clear they won't budge as a Sept. 17 deadline looms for companies to register for the auction.
"As I've said before, I understand full well the desire of the major incumbent telecommunication companies to protect their bottom line. They have every right to do that," Harper said.
"But the responsibility of the government is to act in the broader public interest."
Verizon had approached two small Canadian wireless companies earlier this year, but it has now decided to delay any such move, raising doubts about whether Verizon still had plans to expand into Canada, the Globe and Mail newspaper reported this month.
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