Canadian telecom BCE files legal challenge to telecoms rules

TORONTO, Sept 9 Mon Sep 9, 2013 11:46am EDT

TORONTO, Sept 9 (Reuters) - BCE Inc , Canada's largest telecommunications company, has issued a legal challenge to the federal government's indefinite extension of cellular tower-sharing and roaming rules designed to help new entrants to the market.

BCE's Bell Mobility unit argues in the Federal Court application for a judicial review that Ottawa does not have the right to force it to share its cellular network infrastructure.

The petition adds to pressure being exerted on the government by the country's three largest telecoms operators - BCE, Rogers Communications Inc and Telus Corp - ahead of an auction of prized airwaves in which the trio will be restricted to bidding on fewer blocks than new entrants.

The combination of generous auction and network-sharing rules is designed to entice more wireless providers into Canada. The Conservative-led government has said it would like to see four major players in each region, which it hopes will improve pricing for customers.

But this prospect took a hit when U.S. giant Verizon Communications Inc said this month it had decided not to enter the Canada market for now.

Ottawa earlier this year extended and expanded the rules that compel the big wireless operators to open their networks to the customers of smaller rivals.

When introduced as part of a prior airwave auction in 2008, the roaming rules, designed to make upstarts more attractive to customers, applied only to these new entrants and were limited to five years.

In the challenge, Bell says it is seeking a court ruling that the government cannot retroactively impose conditions upon the airwave licenses.

It also said it was seeking to stop Ottawa from imposing similar roaming and tower-sharing conditions in an upcoming auction of 700 megahertz spectrum.

Bell said it had paid more for exclusive deals with property owners to host their cellular towers, and was being forced to waive those commercial rights.

"Companies cannot be expected to bid hundreds of millions of dollars for the right to acquire and use spectrum, and many more hundreds of millions of dollars to develop network infrastructure, if the conditions of its use can be subject to arbitrary, unilateral change during the term of the licence," Bell wrote in the submission.

A spokeswoman for the minister in charge of telecom policy was not immediately available to comment on the legal challenge.

The auction of 700 MHz airwaves, which are highly valued for the ability to penetrate buildings and travel long distances, is due to start in January.

In July, Telus filed its own application for a judicial review over restrictions on the sale of airwave licenses, after the government blocked the company from acquiring spectrum held by struggling startup Mobilicity.

Bell is represented by law firm Blake, Cassels & Graydon LLP. The complaint, filed on Aug. 30, is Bell Mobility Inc vs the Attorney General of Canada, file number T-1474-13.