Less Wireless Competition in Canada?

Now that a federal court has ruled that Wind Mobile’s ownership structure doesn’t comply with Canada’s foreign ownership rules, one of the options being openly discussed by analysts and Wind is the possible consolidation of the wireless market. This could see Wind acquire one of the new players – Mobilicity and Public Mobile – so Wind can get back onside.

How ironic given the effort made to introduce more wireless competition. If consolidation became a reality, the wireless market could quickly revert to its former self with maybe, at best, a few new players.

It raises the question about how long any kind of competition – wireless or broadband – can really exist in Canada without foreign ownership rules being relaxed. Right now, the biggest problem facing competitors is there are few buyers for their companies and, as important, a limited number of investors. With few financing options, selling out to one of the incumbents is a strong possibility, which means less competition.

Amid the speculation about Wind’s future, it is important to remember that consolidation is nothing new to the Canadian market. Microcell, for example, was the new kid on the block that shook up the landscape with lower prices. Then, it ran into financial problems and filed for bankruptcy protection before it was acquired by Rogers.

The federal government allowed the transaction to go through even though it meant a major competitor was going to be swallowed up by an existing competitor. A couple years later, the government then decided Canada needed more competition.

If you’re at all confused about what’s the horizon, you are probably not alone. The biggest question is whether consolidation is inevitable or a healthy scenario. Is this what the government envisioned when it decided there had to be more wireless competition?

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