By Ben Dummett And Rita Trichur
TORONTO--A Canadian court has dismissed Telus Corp.'s
high-profile legal challenge against the Canadian government's
wireless policies, delivering a final blow to the phone company's
struggle to acquire Mobilicity, a wireless start-up.
Telus has tried to buy Mobilicity a number of times since 2013
to gain access to the smaller carrier's wireless spectrum to meet
growing demand on its mobile network. But the Canadian government
has blocked the Telus takeover attempts, concerned the deal would
diminish competition by driving up consumers' wireless bills.
In July 2013, Telus asked Canada's Federal Court for a judicial
review challenging new government rules that indefinitely prevent
incumbent carriers, like itself, from purchasing start-ups.
Originally, the government had indicated wireless spectrum
acquired by small carriers in a 2008 auction could be acquired by
incumbent phones companies after five years.
But in 2013, the government introduced new rules that
effectively prevented these types of transactions on an indefinite
basis. Telus argued this about-face by Canada's Industry minister
unfairly disrupted the country's wireless sector and Telus' plan to
acquire new spectrum.
"The most that can be said is that Telus made a business gamble
and lost, " according to the court decision. "It is not the
minister's fault."
A Telus spokesman had no immediate comment.
The government welcomed the decision. "We have always been clear
in our policies that we would not approve spectrum transfer
requests that decrease competition in the wireless sector," a
government spokesman said. He added the government doesn't publicly
comment on private business transactions but said "the court ruling
speaks for itself."
Telus earlier this year has lost a high-profile legal challenge
against the Canadian government over wireless policies.
In January, the Federal Court dismissed a separate request by
Telus to conduct a judicial review of Ottawa's decision to limit
the amount of so-called prime spectrum that major carriers were
allowed to buy in a landmark spectrum auction that took place
earlier this year. Canada's so-called Big Three carriers include
Telus, Rogers Communications Inc. and BCE Inc.
The industry has been at loggerheads with the Conservative
government over competition policies for the wireless sector ever
since Verizon Communications Inc. explored the potential to enter
the Canadian market in 2013.
Industry observers have said the government was keen for Verizon
to buy a Canadian start-up so that the market would have a fourth
strong competitor.
Although Verizon ultimately decided against Canadian expansion,
the overhang of the Canadian industry's very public spat with the
government continues unabated and risks becoming an issue in the
run up to next year's federal election.
Ottawa has said it is committed to ensuring that there are at
least four carriers in every regional market of Canada so that
competition will result in lower prices for consumers.
Incumbent carriers such as Telus, however, have alleged that
Ottawa misled the sector by indefinitely extending what was
originally supposed to be a five-year ban on major carriers buying
spectrum owned by struggling start-ups like Mobilicity.
Write to Ben Dummett at ben.dummett@wsj.com and Rita Trichur at
rita.trichur@wsj.com
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