UPDATE 1-BCE goes to court to fight Canada's wireless rules

Mon Sep 9, 2013 1:56pm EDT

By Alastair Sharp

TORONTO, Sept 9 (Reuters) - BCE Inc , Canada's largest telecoms company, is taking Ottawa to court to fight government moves to assist new entrants in the wireless market as part of its policy push to increase wireless competition.

Ottawa earlier this year extended and expanded rules that compel Canada's three dominant wireless operators - BCE, Rogers Communications Inc and Telus Corp - to open their networks to the customers of smaller rivals.

The Conservative government extended indefinitely a requirement that the big three share their cellular towers with smaller competitors and provide them with roaming services on their networks. When introduced in 2008, the roaming requirement, designed to make upstarts more attractive to customers, was limited to five years.

BCE's Bell Mobility unit says that the government cannot change its rules in midstream, and has gone to Federal Court to argue that Ottawa does not have the right to force it to share its cellular network infrastructure. It is seeking a judicial review of the changes the government has made.

It is also seeking to stop Ottawa from imposing similar roaming and tower-sharing conditions in an auction of 700 megahertz spectrum in January.

The petition adds to pressure being exerted on the government by the country's big three telecoms ahead of the January 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 government has said it would like to see four major players in each region of the country, with the aim of lowering prices 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.

BCE said it had paid for exclusive deals with property owners to host its 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 said Canadian consumers are the government's main concern.

"We will continue to strongly defend Canadian consumers and the rules for the upcoming spectrum auction, which were designed after consultations with the wireless industry, including Bell Canada Enterprises," Industry Minister James Moore's director of communications, Jessica Fletcher, said.

The 700 MHz airwaves that will be auctioned in January are highly valued for their ability to penetrate buildings and travel long distances.

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

Bell Mobility 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.