February 20, 2014
Ten telecoms participated, 97 of 98 licences were awarded, and some $5.27 billion has been raised, but not all that much changed as a result of yesterday’s 700 MHz wireless spectrum auction.
While the country’s major wireless companies led the action and obtained most of the available spectrum from Industry Canada’s auction process, one player however has extended its reach outside its home province.
Industry minister James Moore noted that the results mean more choice for Canadians by enabling a fourth wireless player in every region of the country, with the incumbent wireless companies securing spectrum that will enable them to deliver the next generation of wireless devices.
Companies that obtained spectrum will be able to start using these high-quality airwaves to serve their customers by mid-April, he added.
The fourth player to which Minister Moore referred is Quebecor, now poised to offer wireless services in Southern Ontario, Alberta, and British Columbia, as well as its home base in Quebec.
Quebecor Media’s Videotron subsidiary acquired seven operating licences in those provinces.
“The wireless network Videotron launched in the fall of 2010 already has more than 500,000 customers,” stated Robert Depatie, president and CEO of Quebecor Media and CEO of Videotron. “With the high-quality frequencies acquired in this auction, Videotron is now well-equipped to develop its network in the years to come and to continue offering its customers the best in wireless technology.”
The largest telecoms, Rogers, Bell and Telus, acquired the vast majority (89%) of the valuable spectrum, with Rogers leading the way (see table below), and noting it had secured the valuable spectrum it most desired.
“We went into this auction with our customers’ needs front and centre. We believe they want the ultimate video experience and this spectrum will allow us to deliver just that. Not all 700 MHz spectrum in the auction was the same; we secured the beachfront property we wanted. You either want your customers to have the best for the next 20 years or you don’t. As Minister Moore said today, the 700 MHz spectrum is the highest-quality wireless frequency ever auctioned in Canada. This was a clear strategy for the long-term and our customers won,” said Guy Laurence, president and chief executive officer of Rogers Communications.
Many observers and citizen’s lobby groups were less than thrilled with the role “the Big Three” played in the auction.
The Public Interest Advocacy Centre (PIAC) had called upon the government to “set-aside” valuable 700 MHz spectrum in the auction for “new entrants” who would challenge the incumbent wireless providers Bell, Telus and Rogers.
The low frequency 700 MHz licences were highly valued by bidders as this spectrum is well-suited to delivering signals well over long distances meaning it requires less infrastructure to deploy and penetrates structures better than higher frequency bands.
“Despite efforts by the federal government to promote competition, and previous efforts to improve access by competitors to towers and roaming requirements, little has changed with today’s results”, said John Lawford, PIAC’s executive director and general counsel. “We urge the government to use other methods to attempt to address the lack of competition in the Canadian wireless market as consumers in Canada will continue to pay more for wireless than in other countries, at least in the short to medium term.”
Those methods include enforcing the new competition-focused policy on spectrum transfers; strengthening the roaming and tower-sharing framework; following through on the government’s promise to cap domestic roaming rates; releasing more licensed and unlicensed spectrum; and creating a more open and predictable environment for foreign investment. PIAC also encourages the Government to ensure that spectrum licence holders use their spectrum throughout their licenced territories, instead of using the licence as an investment to sell to a higher bidder.
“Quebecor’s potential entry into markets outside Quebec looks like it could provide welcome additional cell phone choice for many Canadians,” noted citizen’s lobby group OpenMedia.ca executive director Steve Anderson. “It’s important that Minister Moore make sure Quebecor use their valuable new spectrum to serve Canadians. More choice could be in the cards but the reality is that this auction will not fully address the high wireless prices that are holding our economy and country back. We need rules to ensure all Canadians have a range of affordable, independent options – but right now those independent providers are on life support.”
OpenMedia.ca says this revenue should be reinvested into the country’s digital networks so Canada can catch up to its global counterparts, and tackle what it sees as a growing digital divide and national digital deficit.
Winning bidders have until March 5 to submit 20% of their total final payment.
The remaining 80% of their total final payment is due April 2. The revenue from this auction will be deposited in the Consolidated Revenue Fund.
Another major wireless spectrum auction, for the 2500 MHz band, is scheduled to begin in April 2015. This spectrum is well-suited for addressing demand in more densely populated areas driven by increased smart phone and tablet use and for delivering broadband services to rural Canadians.
Bidder Number of Licences Won Final Price
Rogers 22 $3,291,738,000
Bell 31 $565,705,517
TELUS 30 $1,142,953,484
MTS 1 $8,772,072
SaskTel 1 $7,556,929
Vidéotron 7 $233,328,000
Bragg 4 $20,298,000
Feenix 1 $284,000
Totals 97 $5,270,636,002