Mobilicity Publicly Asks For the Government’s Help to Raise Capital

by Istvan Fekete on May 6, 2013

Just a month before carriers need to secure their bidding spot for the upcoming wireless spectrum auction with initial deposits, Mobilicity — Data & Audio Visual Enterprise Wireless Inc. — asks the government to provide financial help.

The wireless startup’s future is uncertain, as it is going through a restructuring process that which could even result in the sale of the company or recapitalization. In it’s desperate search for capital, Mobilicity has decided to take the ultimate step and ask for help right from the government, citing various reasons why Ottawa should help the struggling startup.

The stakes are high: the November auction of wireless licences could make or break sustainable competition in the wireless sector.

Mobilicity provides two scenarios for how the government could help the struggling company: first, it wants Ottawa to allow new entrants to pay for new spectrum licences in instalments stretching over the entire license term – which, in the case of the 700 MHz spectrum, is 20 years. Secondly, DAVE Wireless is asking the government to return “the entire auction proceeds to new entrants” for the AWS spectrum they acquired five years ago.

To back this request, Mobilicity has pointed to Ottawa’s earlier moves to assist incumbents during “the industry’s early days by assigning spectrum in less transparent processes including comparative reviews, which are otherwise known as ‘beauty contents’ or on a first-come, first served basis.” What’s interesting is that the incumbents’ received their licenses for free to boost a strong start, yet they are now paying license fees.

In contrast, Mobilicity had to spend more than $243 million to get its AWS licenses; Wind Mobile spent $442 million; while Public Mobile paid $52.38 million.

In the light of the aforementioned practices, Mobilicity is requesting the government’s help and, if approved, it would welcome the helping hand, as it would immediately ease the current pressure the new entrants are under. The company’s request was submitted as part of Industry Canada’s review of the spectrum license transfers.

The deadline for the first cash deposit is June 11. The incumbent’s presence is obvious, but Wind Mobile, for example, has not yet confirmed its participation for the November auction, while Public Mobile has asked for a later deadline to put down money.

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

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May 10, 2013 at 5:28 am
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