Upcoming Wireless Spectrum Auction Generates Fierce Competition Among Carriers

by Istvan Fekete on January 10, 2013

CompetitionCanadian mobile bills are expected to look different in the second half of this year, as the wireless carriers battle for the coveted 700 MHz wireless spectrum. We don’t have the exact date, but sometime in the first six months of 2013, Rogers, Bell and Telus — the established power trio — and the up-and-coming Wind, Mobilicity and Public Mobile will meet in a competitive auction.

The rules have changed since the previous auction in 2008. The first noticeable change is the number of participants: Wind, Mobilicity and Public Mobile were not in the market back then. Secondly — and more importantly — foreign investors will be much freer to participate this time.

The federal government finally decided to loosen up foreign ownership restrictions in telecommunications, which has kept Canada a foreigner-free zone as a result of the previous 46.7% limitation on telecom company ownership. This also resulted in much higher mobile bills when compared to European countries such as Germany or the Netherlands.

Helped by the amendment to the Telecommunications Act (allowing foreigners to own a majority in voting shares of an infrastructure-based telecom carrier) foreigners can now be actively involved in the Canadian mobile market. The new rules will allow Wind, Mobilicity and Public to purchase two licenses in each geographic area if they choose to outbid the big incumbents, while the big trio will be capped at buying only one of four licenses.

The 700 MHz spectrum is valuable because of its strong range and ability to penetrate walls, and it is on the wish-list of the up-and-coming companies to run higher-end smartphones that run on LTE (Long Term Evolution) networks such as Apple’s flagship handset.

The auction is expected to bring $3.5 billion, less than the $4.2 billion raised in 2008, due to its rules limiting the big trio and giving some sort of advantage to Wind, Mobilicity and Public, if they are willing to pay the price.

As Wind chairman Anthony Lacavera points out, as cited by Yahoo! Finance, the smaller wireless carriers could compete better against the big trio if they joined forces, but Mobilicity and Public aren’t interested in being acquired. At least not yet.

One thing is certain, though: we mobile users will certainly benefit from this competition.

Written by: Istvan Fekete. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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