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Cogeco Could Test Canadian Wireless Waters

As the Canadian government readies hearings next week that could substantially reduce roaming rates for cellular telephone service, Montreal-based cable operator Cogeco Cable – which also has interests in the U.S. cable market – is contemplating creating its own wireless service for its customers.

Cogeco Cable already offers TV, Internet and landline phone service in Quebec and Ontario. In 2012, Cogeco purchased U.S. cable operator Atlantic Broadband in a deal worth about $1.36 billion.

In a statement, Cogeco said it would consider offering its own wireless service if the Canadian government manages to cut prices wireless networks charge to lease their lines. CEO Louis Audet has proposed creating a mobile virtual network operator (MVNO) which would buy network airtime from carriers and resell it to customers.

“Given the high concentration in the Canadian mobile wireless market, Cogeco strongly believes that regulatory measures fostering the entry of MVNOs in addition to other measures will increase competition in the market and enhance consumer choice,”Audet said in a statement. “A regulated MVNO option would definitely be in the best interest of Canadian customers and businesses.”

The Canadian Radio-television and Telecommunications Commission (the chief communications regulator in Canada, similar to the Federal Communications Commission in the U.S.) is scheduled to begin hearings on possibly regulating wholesale roaming rates next week. Cogeco is slated to testify before the CRTC on Sept. 29.

The regulatory agency has pushed for a fourth wireless competitor in the market to compete with Telus Corp., BCE Inc., and Rogers Communications, but hasn’t had much success. The three carriers currently control more than 90% of the wireless market in Canada, and Cogeco believes an MVNO, which would not have to spend the billions of dollars to build its own network, has a better chance of success.

In the U.S., the wireless business has been an elusive one for cable, dating back to the industry’s original partnership with Sprint PCS. Sprint, Comcast, Cox, Time Warner Cable and Bright House Network tried to partner again on a wireless service, called Pivot, which was abandoned in 2008.  In 2011, as part of its agreements to sell its wireless spectrum to Verizon Communications, Comcast, TWC and Bright House negotiated the right to co-market Verizon Wireless service with their cable packages. Cox, which didn’t sell its wireless spectrum in that deal, sold some of its licenses to Verizon later that same year, about a month after abandoning plans to build its own wireless network.