Tuesday, July 8, 2008

Question for Terry Corcoran Re: "wireless tax"

In today’s paper Terry Corcoran is equating the wireless spectrum auction proceeds to a “wireless tax”. ...Okay?

Question for Terry Corcoran: If the recent wireless spectrum auction has so far netted proceeds of $4.2 billion, what do you suppose the embedded value of the wireless spectrum is worth that resides within BCE and was “gifted” to BCE as the wireline duopoly player at the very outset, circa 1984? $5 billion $10 billion? $20 billion?

Rather than equating the wireless spectrum auction in the context of a “tax” on consumers, as you have in today’s column, better to equate the transfer of these embedded wireless assets within BCE to the new private buyers as being a complete rip off of all Canadians. BCE is reaping value for something for which it paid nothing. Meanwhile the very LBO that results in this capture of value will result in Ottawa foregoing $800 million a year in tax revenue. That’s a situation of pay me now AND pay me later.

The Telecommunications Act, had it been adhered to, would have addressed this, since its stated policy goals are:

(c) to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications;

(d) to promote the ownership and control of Canadian carriers by Canadians;

Even the BCE shareholders didn’t receive full value for the assets within the company they owned and controlled, since they are being shortchanged some $1 billion in accrued and unpaid dividends.

Sorry Terry, once again you are pursuing the wrong story......the real wireless tax will be the one that results in lessened competition when BCE become the world’s first junk bond legacy phone company and Canadians have the privilege of remitting their monthly cell phone bills to Wall Street to service $34 billion in junk bond debt....sorry make that $44 billion, as the existing debt of BCE has been destroyed as well.

Ottawa's wireless tax

Terence Corcoran,
Financial Post
Tuesday, July 08, 2008

As of 4:04 p. m. yesterday, Industry Canada's wireless spectrum auction had racked up total revenue of $4,196,804,287. That works out to about $210 for each cell phone user in Canada, a tax paid to Ottawa for, essentially, nothing. It also works out to less than the price of one of the eight-gigabite Apple iPhones that Rogers will begin selling across Canada on Friday. At least iPhone buyers will get something for their money......continued.

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