Ottawa Kicks Off 2500 MHz Spectrum Auction

by Istvan Fekete on April 15, 2015

Ottawa has kicked off the second wireless spectrum auction of the year. Following the AWS-3 spectrum auction which ended roughly a month ago, it was time for carriers to line up and start bidding on 2500 MHz airwave licences.

The auction aims to serve a major scope of “more choice, lower prices, and better service in the wireless sector”, Industry Minister James Moore emphasized once again as the bidding process kicked off. That’s something the government has been stressing during the past few years, although the results have been questionable. For example, since the introduction of the new Wireless Code, the incumbent carriers have raised the prices of their mid-tiered plans (which include data).

The 2500 MHz spectrum auction cannot replicate the success of the earlier AWS-3 auction, which raised $2.11 billion for the federal government. It won’t create a fourth Canadian wireless player, analysts say. The highest estimate is in the $800 million range, as both Rogers and Bell will be excluded from bidding for spectrum in some of the regions where they already own large chunks.

Telus is expected to come out as the major winner, as it owns almost no spectrum in the 2500 MHz band and is expected to buy big. Given the circumstances, it will be able to access licences at relatively low cost.

It is worth noting that Telus spent big on the AWS-3 spectrum auction as well, paying the majority ($1.51 billion) of the amount raised. Wind Mobile and Videotron are also present at the auction.

“Less than one year ago, nearly 90 percent of spectrum was held by Canada’s largest wireless companies. As a result of this 2500 MHz spectrum auction and last month’s highly successful AWS-3 spectrum auction, new wireless companies are expected to hold approximately 25 percent of the total wireless spectrum available. This spectrum will be made available to providers to offer services to Canadians using the latest technologies.

The expected result is that new wireless companies will hold about a quarter of the total wireless spectrum available. This certainly sounds good, but the reality is that smaller carriers collectively still account for only about 6% of market share, analyst Dvai Ghose, global head of equity research and telecommunications with Canaccord Genuity, highlighted in an interview with the Huffington Post.

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Written by: Istvan Fekete. Follow by: RSS, Twitter, Facebook, or YouTube.

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