Ottawa is adamant about the need to boost competition in Canada’s wireless market — but how to get there is an open question.

Some industry experts doubt whether Canada can support four national wireless companies. Others say the federal government needs to open up the market to foreign entrants.

The telecommunications market, along with finance and transportation, is one of the pillars of the Canadian economy, said Walid Hejazi, associate professor of international business at the Rotman School of Management at the University of Toronto.

“There needs to be real competition in this sector. That whole industry needs to be fixed,” Hejazi said. “It’s impacting the competitiveness of the Canadian economy.”

On Tuesday, Ottawa rejected a $380-million deal that would have seen industry incumbent Telus Corp. buy Mobilicity, a struggling upstart that is deeply in debt.

The deal would have involved a transfer to Telus of Mobilicity’s wireless spectrum licences, which had been specially set aside for new entrants in a 2008 auction.

Industry Minister Christian Paradis said the Telus-Mobilicity transaction, or any such transfer, is unacceptable.

Paradis said the government “will continually review the regulations and policies that apply to the wireless telecommunications sector to promote at least four wireless providers in every region of the country so that Canadian consumers benefit from competition.”

Meanwhile, Wind Mobile would like to open talks to buy Mobilicity in a bid to create a fourth major Canadian wireless competitor, CEO Anthony Lacavera said Wednesday.

Wind is already the fourth largest wireless carrier in Ontario, British Columbia and Alberta, Lacavera said. “We are certainly interested in reopening the discussion with Mobilicity,” he told The Canadian Press.

While there are successful regional players in Canadian wireless, industry analysts question whether any could successfully become national in scope.

“I do question whether a fourth nation-wide provider would be able to survive in the market, just considering the size of the market,” said David Heger, an analyst with Edward Jones.

There are nearly 26.9 million wireless subscribers in Canada, according to the latest figures from the Canadian Wireless Telecommunications Association. Rogers Communications has about 9.3 million subscribers, BCE Inc.’s Bell has 7.6 million and Telus has 7.7 million.

The next largest players, SaskTel Mobility and Wind Mobile each have about 600,000 subscribers, while MTS Mobility in Manitoba has nearly 500,000. Quebec-based Vidéotron Mobile has about 420,000 subscribers.

The U.S. telecom market, which is almost 10 times larger than Canada’s, has just two dominant players, Verizon Wireless and AT&T, which each have about a third of the market. Sprint has a market share in the U.S. of about 17 per cent “and it goes down from there,” Heger points out.

“If we could get a third strong player, we would be happy from a consumer choice point of view.”

Shaw Communications spent $189 million in a 2008 federal auction to acquire spectrum, but three years later it gave up on its plan to build a national cellular network.

Rogers signed a deal last year to buy that spectrum from Shaw in 2014. The proposal still needs approval by Industry Canada and the Federal Competition Bureau.

“It just makes you question to what degree a fourth player would be successful when you have a large operator like Shaw that considered coming in as a fourth player and said, no, we don’t think we can make a go of it,” Heger said.

Mihkel Tombak, who holds HATCH Chair in technology management and strategy at the University of Toronto, believes that the CRTC’s wireless code of conduct, released Monday, is a good first step.

“I believe that Canada’s telecom market can support a four major wireless carrier,” Tombak said. “The problem is that with consumers locked in with long-term contracts and other billing methods it was very difficult for an entrant to come into the market and build up a subscriber base.

“The new consumer protection rules make it a little easier for consumers to switch, which, in turn, makes the fourth entrant more likely to be viable.”

The government needs to open Canada’s wireless market to foreign competition, Hejazi said.

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It also needs to provide more reasonable terms for cell tower sharing, he said. Expecting a startup to build a new network across the country is unreasonable.

To the argument by incumbents that they built the infrastructure, he said: “It does belong to them and they built it, but they were able to generate money to build it because they are protected from international competition.

“The government has given them this important position in Canada to supply Canadians with an important service. In my opinion, they are letting Canadians down.”

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