Canada’s wireless industry boasts world-calibre innovation and service, yet continues to be hamstrung by regulatory requirements that threaten its global competitiveness, says the head of a national wireless industry advocacy group.

Wireless networks and service providers are playing a critical role in building Canada’s national broadband structure and topnotch research facilities, but proposed federal amendments to the country’s spectrum policy – essentially a new fee and licensing regime – are threatening the industry’s viability, said Peter Barnes.

“Frankly, we’re disappointed that the government has, again, overestimated the value of the spectrum and proposed excessive fees,” said Barnes, CEO of the Canadian Wireless Telecommunications Association (CWTA), which represents cellular, PCS (personal communication services) , messaging, mobile radio, fixed wireless and mobile satellite carriers.

Barnes, one of several keynote speakers at the two-day Wireless Connections 2003 conference held in Calgary last week, noted Canada’s cell and PCS providers are already paying more than $137 million a year – the equivalent of $12 per subscriber compared to 24 cents per subscriber in the U.S. – in spectrum licence fees.

The federal government is proposing a fee increase that would amount to a 34-per-cent hike and an additional $50 million in extra costs borne by providers by 2011, he said.

“Under current licensing requirements, Canada’s wireless industry has yet to become profitable,” Barnes said. Yet the industry continues to invest in first-class education and research facilities – including the Nortel Wireless Centre of Excellence in Calgary and the Sun Centre of Excellence in E-Learning at the University of Alberta – and those efforts are paying more dividends toward Canada’s competitiveness and economy than any additional spectrum fees could provide, he said.

Higher fees, Barnes added, will damage the federal government’s vision of accessibility and affordability, because the increase will spell more expensive wireless services.

Canada’s wireless landscape continues to evolve dramatically. Only about 10 per cent of Canadians used wireless devices in the mid 1990s. Today, that number is more than 37 per cent, or 12 million – still small in comparison to wireless-friendly Europe where more than 80 per cent of the population relies on mobile phones – but indicative of the opportunity for huge growth, Barnes said.

According to market research firm Yankee Group, text messaging is a $12-billion US market, while the Canadian market could grow to about $400 million by 2007 from less than $100 million today.

A survey released last month by telecom giant Ericsson Canada Inc. showed Canadian wireless phone subscribers reported using their handsets more than those in 10 other countries surveyed, with the exception of the United States. Despite lower overall wireless penetration in this country, Canadian wireless subscribers said they talked an average of 19 minutes per day and paid an average of $41 per month for their wireless service – about two-thirds the global average.

The conference heard how the use of mobility devices is exploding, with evolving applications including text messaging, imaging and gaming, but so-called 3G or third-generation networks and services haven’t rolled out as fast as planned due to economic pressures in the telecommunications sector, said Kari-Pekka Wilska, president of Nokia Americas.

Wilska added that it may take several years for consumers to fully adopt new mobility products into their everyday routines. “Thirty years ago, people said they would never carry a phone in their pockets,” he noted, “and some people today say they will never browse the Internet with these devices, because they are just not convenient. It’s going to take time for people to change their behaviour.”

But, Wilska predicted: “The wireless industry has never been as exciting as it will be in the next five years.”

While there’s been an economic lull in Canadian wireless development over the past couple of years, there is a light at the end of the tunnel, according to Barb Richardson, a principal and director of Alberta-based venture capital firm SpringBank TechVentures, who chaired the Wireless Connections conference.

“Three years ago, we had all the hype and then the markets crashed – the carriers weren’t building up the network and companies weren’t coming out fast enough with new devices. But that’s started to change,” Richardson told Business Edge.

“We’ve got the high-speed networks and all the new devices where you can do gaming, business and consumer applications. People are starting to re-invest in the industry again, and get re-energized. Companies are starting to invest dollars and turn over their mobility equipment.”

And the new killer app? “The ones that are winning out are the gaming and cool applications – the teen segment, largely,” said Richardson. “That’s a big growth area. It’s the consumers who are picking the services they want . . . as soon as companies try to decide what they think are going to be the winning applications, they fail.”

The wireless conference has become such a success since the first Alberta-Finland Wireless Symposium was held in 2001 that organizers say it will become an annual event. “We’ve picked up enough momentum, and it gives us the opportunity to showcase what’s happening in Calgary, where we have a lot of wireless activity,” said Richardson.

Alberta continues to be a leader in wireless and wired-based technology. The province has the highest penetration rate for wireless in the country, at 41 per cent, while Calgary has more kilometres of optical fibre than any other city in Canada and broadband Internet is accessible to 99 per cent of its residences. The city’s wireless sector exports an estimated $3 billion of goods and services each year.

This year’s sold-out conference, which focused on developments driving the global wireless marketplace, attracted more than 300 attendees and featured high-profile speakers from Europe, Japan, the U.S. and Canada. Home-grown companies including Wi-LAN, Guest-Tek and Quick Link Communications rubbed shoulders with representatives of international firms including Nokia, Nortel Networks, Intel and Microsoft.

Web watch: www.cwta.ca