Reading a court decision on Mobilicity:
(woll try to get the link later)
7. The Plaintiffs submit that when deciding to bid in the first place, they and their investors relied upon the representation that they had the ability to transfer the Mobilicity licences to an incumbent after the five-year moratorium. They argue that the transferability provided an exit strategy to be used in the event Mobilicity was unsuccessful, in the form of a sale to the only likely buyers: the incumbents. However, in 2013, that transferability was removed. As it turned out, Mobilicity struggled financially and ultimately sought protection from its creditors in an insolvency proceeding.
8. The Plaintiffs submit that when Mobilicity sought to transfer its licences after the five- year period, the Government intentionally acted to unlawfully frustrate that sale. The Government unilaterally changed the rules by amending the policy framework to prohibit a transfer of the licences to an incumbent;
#crtc
(Can't find the August 6 decision on Can-LII (they have Ontario Superior Cort decision from later that that.)
" Moreover, the Government submits that it does not follow from the fact that the licences granted to Mobilicity prohibited the transfer to an incumbent within five years, that the licences thereby permitted such a transfer after that five-year period."
This is why one needs to always read contracts with an eye towards wesel words.
Mobilicity:
12. That is really the nub of this complex proceeding: did the Government induce parties to invest hundreds of millions of dollars in the Canadian cellular telephone market based on representations and promises of an available exit strategy, only to “pull the rug out” from underneath those parties when they tried and failed to compete in a market dominated by three well-funded incumbents?
13. For the reasons that follow, the action is allowed.
[note: Mobilicity in separate lawsuit had also shown the government made promises to Mobilicity that all other new entranst would be Canadian, yet, despite the CRTC ruling Wind was foreig owned, the government overruled CRTC decision to declare Wind was Canadian, breakibng its own promise made to Mobi.icity who was stll bound to "must vbe canadian" rules]
On the Mobilicity decision:
Rogers made a deal to purchase Shaw's "new entrant" spectrum ahead of the 5 year moratorium and it was allowed to happen as soon as moratorium lapsed, and before the government then changed the rules to prevent Telus from buying Mobilicity. (Mobilicity went bally up and its ashes went to Rogers).
Industry Ministers ar the time the rules for spectrum were changed to harm Mobilicity: (the court decision shows the minister was in full knowledge this rule change would harm new entrants).
Christian Paradis (CPC) May 2011-July 2013
James Moore (CPC) July 2013-Nov 2015
Good one: minister in 2008 promises Telus it will be able to acquire set-aside spectrum from a new entrant in 5 years, so during the 2007/2008 AWS main auction it was less aggressive in acquiring the more expensive incumbent spectrum. But come 5 years, government reversed its decision to prevent Telus from getting Mobilicity. (after allowing Rogers to buy Shaw's never deployed spectrum). But it shows Telus knew the new entrants would fail and their cheap spectrum become available in 5 years.
@jfmezei@mstdn.ca I think one of the reasons new entrants keep failing is that incumbents are allowed price discrimination by area code.
Result: Wherever a new entrant starts his network, the incumbents will temporarily reduce prices to kill competition, while keeping prices high elsewhere. That way, they can cross subsidize their anti competitive behaviour.
The regulator CRTC doesn't care.
Mobilicity court decision:
• these Plaintiffs (and other licencees and investors therein) of which there are a very limited and discrete number, were specifically courted and encouraged;
• the universe of such individuals was extremely limited. It is a small cohort that was in a position to invest the significant capital necessary to successfully bid for the spectrum licences at auction, and then build out a wireless network;
• the conduct of the Government and its officials in 2013 in introducing and implementing the 2013 Transfer Framework, which had the effect of amending the key attributes of the spectrum licences issued in the 2008 AWS auction was unique and affected this same small cohort of parties;
• the conduct of the Government in 2014 in planting a story in the Globe & Mail was highly irregular and unusual;
• the conduct of the Government in 2014 in directly interfering with the Mobilicity CCAA proceeding, and <...> in 2015 interfering with the action of Mobilicity was also highly irregular.
Context: Govt having blocked Telus-Mobilicity transaction, Mobilicity went CCAA and CCAA judge wanted to force the transfer of spectrum which minister had refused...
343. Ministry employees, together with senior political personnel from the Minister’s Office such as Nicholson and Jessica Fletcher, the Minister’s Director of Communications (“Fletcher”), strategically leaked a story to the Globe & Mail national newspaper. The purpose of the manufactured and planted story, attributed to an anonymous “senior government official”, was to threaten TELUS and any other incumbent bidder for Mobilicity and its spectrum licences.
344. The threat was clear: if TELUS or either of the other two Incumbents continued to pursue the Mobilicity spectrum licences, the Government would exclude them from the then upcoming 2500 MHz spectrum auction, which, to the knowledge of the Government, was critical to TELUS.
Dirty tricks in government are not as rare as we thought.
#CRTC
Context: Govt having blocked Telus-Mobilicity transaction, Mobilicity went CCAA and CCAA judge wanted to force the transfer of spectrum which minister had refused...
343. Ministry employees, together with senior political personnel from the Minister’s Office such as Nicholson and Jessica Fletcher, the Minister’s Director of Communications (“Fletcher”), strategically leaked a story to the Globe & Mail national newspaper. The purpose of the manufactured and planted story, attributed to an anonymous “senior government official”, was to threaten TELUS and any other incumbent bidder for Mobilicity and its spectrum licences.
344. The threat was clear: if TELUS or either of the other two Incumbents continued to pursue the Mobilicity spectrum licences, the Government would exclude them from the then upcoming 2500 MHz spectrum auction, which, to the knowledge of the Government, was critical to TELUS.
Dirty tricks in government are not as rare as we thought.
#CRTC
Correction on previous posts:
Rogers offered to buy Shaw's original AWS spectrum in 2013, pending expiration of 5 year moratorium .
Government immediatly changed policy to ignore the 5 year sunset on prohibituion of such transactions. (impacting Telus buying Mobilicity and sending later into CCAA).
Early 2015: Spectrum auction for 700MHz, AWS-3 and 2500 MHz resulted in remaining new entrants having 25% of spectrum in Canada, and the minister then declared mission accomplished and removed the band that had been indefinitely extended beyond contracted 5 years.
Mobilicity entertained bids with Rogers-Telus bidding against each other. Rogers won with $465m. (blocked Telus-Mobilicity in 2013 was $380m).
Rogers puchased Mobilicity and Shaw's AWS spectrum but with convoluted spectrum exchanges with Wind.
(Shaw would eventually buy Wind to save it from bankruptcy).
So the Rogers-Shaw was NOT approved prior to minister changing rules to ban Telus-Mobilicity,
Correction on previous posts:
Rogers offered to buy Shaw's original AWS spectrum in 2013, pending expiration of 5 year moratorium .
Government immediatly changed policy to ignore the 5 year sunset on prohibituion of such transactions. (impacting Telus buying Mobilicity and sending later into CCAA).
Early 2015: Spectrum auction for 700MHz, AWS-3 and 2500 MHz resulted in remaining new entrants having 25% of spectrum in Canada, and the minister then declared mission accomplished and removed the band that had been indefinitely extended beyond contracted 5 years.
Mobilicity entertained bids with Rogers-Telus bidding against each other. Rogers won with $465m. (blocked Telus-Mobilicity in 2013 was $380m).
Rogers puchased Mobilicity and Shaw's AWS spectrum but with convoluted spectrum exchanges with Wind.
(Shaw would eventually buy Wind to save it from bankruptcy).
So the Rogers-Shaw was NOT approved prior to minister changing rules to ban Telus-Mobilicity,
Mobilicity saga:
Minister tells Telus and Rogers that the buyer of Mobilicity must give some spectrum to Wind as requirememt for approval.
Wind tells Telus that a contract with Rogers prevents it from accepting spectrum from Telus.
Telus goes to government and offer to return spectrum to IC and IC could then distribute to whomever it wants (aka Wind).
Industry Canada issues letter to Telus saying it might take 12 weeks to approve such a scheme.
Telus drops out of bidding, Rogers wins,
Industry Canada approves Rogers-Shaw-Mobilicity-Wind four-some same day.
Amazing the soap opera material one learns in court decisions 🙂
Mobilicity saga:
Minister tells Telus and Rogers that the buyer of Mobilicity must give some spectrum to Wind as requirememt for approval.
Wind tells Telus that a contract with Rogers prevents it from accepting spectrum from Telus.
Telus goes to government and offer to return spectrum to IC and IC could then distribute to whomever it wants (aka Wind).
Industry Canada issues letter to Telus saying it might take 12 weeks to approve such a scheme.
Telus drops out of bidding, Rogers wins,
Industry Canada approves Rogers-Shaw-Mobilicity-Wind four-some same day.
Amazing the soap opera material one learns in court decisions 🙂
Jean-Francois Mezei