700 MHz Wireless Auction Won’t Increase Competition, Experts Say

by Istvan Fekete on January 13, 2014

The 700 MHz auction will kick off tomorrow, January 14, 2014, with 11 bidders lining up to acquire spectrum. But experts say the lack of new foreign players means less cash then expected for Ottawa. Even more, it could mean less competition in the Canadian wireless market, they claim.

Looking back to the 2008 auction, experts point to the $4.3 billion the federal government raised and the new players that entered the market: Wind Mobile, Public Mobile, Mobilicity, Vidéotron and Eastlink.

Despite spending millions of dollars on acquiring spectrum, the days of some wireless startups are numbered: Mobilicity is currently under protection and wants the court to force the sale of its spectrum license, and Public Mobile has already been acquired by Telus.
Wind Mobile’s fate is questionable as well, although it is the most viable of all the wireless startups.

In other words, the big three continue to dominate the wireless market, with Rogers being the market leader, while the other two, Telus and Bell, control roughly 25% of the Canadian wireless market.

Michael Geist, a law professor at the University of Ottawa, says competition can be reignited only if the government drops all restrictions on foreign investment.
“There’s always the prospect of another entrant,” he said, “but part of that may well require government involvement to create the necessary conditions to make that easier. What they have to think about is, put in enough regulation that people feel that they’re doing something, and don’t put in so much regulation that the companies feel that they’re being overwhelmed or constrained or bottled up,” he said. “It’s kind of a balancing act on everyone’s part.”

Dropping foreign investment restrictions could well serve the purpose of fostering competition in the mobile market, especially now that the government has announced the framework of the 2500 MHz spectrum auction scheduled for April 2015. Interested players are expected to submit their applications by the end of November 2014.

Before then, there are 11 Canadian wireless players interested in acquiring spectrum tomorrow. The 700 MHz waves allow cellphone signals to reach into elevators and deep into underground parking lots, traffic tunnels, and basements where calls are often dropped, and also serve the growing use of smartphones and tablets.

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

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