Feature Article

July 08, 2013

Canada May Have Much to Offer Verizon

Canada's wireless market is an unusual one. As it stands now, and has stood for years, three major players — Rogers, Bell and Telus, colloquially referred to as "Robellus" — make up the vast majority of the market. Smaller companies have popped up in recent years — most notably Wind Mobile, Mobilicity and Public Mobile — to provide an alternative to the pricey monthly contracts and three-year subsidies offered by the big three, but the going is tough.

Indeed, Mobilicity has been struggling financially for some time and was nearly bought up buy Telus recently; the acquisition was stopped by Industry Canada, however, as the spectrum set aside for these new entrants was "not intended to be transferred to incumbents," as Industry Minister Christian Paradis put it in June.

Image via Shutterstock

Although this decision wasn't favorable to Mobilicity's 250,000 customers, 150 employees and debtholders, it was beneficial to the Canadian wireless market overall. After all, giving the big three more spectrum and more power would likely hurt the Canadian consumer in the long run.

Unfortunately, this situation serves to demonstrate the poor state the market is in, as there are no companies in Canada able to stand up to Robellus — which is why Verizon's apparent interest in Wind Mobile and Mobilicity is so interesting.

Obviously, Verizon has the capital, branding, and operational excellence necessary to bring a real alternative to the Canadian wireless market. If the U.S.-based wireless provider were able to buy the wireless bands given to Wind and Mobilicity, it would be able to change the way the wireless market works in Canada in a way these smaller providers can't.

Many have speculated why Verizon would even want to do this as Canada has about one-tenth the population of the U.S. However, according to Seeking Alpha, there are various factors that make Canada an attractive and valuable market for Verizon, with a lack of partners being the most significant one.

Currently, in the United States, Verizon's wireless division is 45-percent owned by Vodafone and 5.5-percent by US Cellular, which cuts into Verizon's bottom line significantly. In Canada, the operator would be free from these partnerships.

In other words, Verizon coming to Canada would be beneficial to the company and the country. Here's hoping that reports of Verizon's interest in Wind and Mobilicity prove true.

Edited by Alisen Downey

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