Ottawa: 700MHz auction will start first half 2013, plus we’re loosening foreign ownership rules (Video)

Ian Hardy

March 14, 2012 4:37 pm


Our Canadian wireless carriers have been patiently waiting for Ottawa, specifically Christian Paradis, Canada’s Industry Minister, to make a decision on how the upcoming 700Mhz spectrum auction will be structured. All interested players have had their say over the past few months – many have been vocal with cartoons and online petitions with the interest in encouraging the government to make the auction “fair and open”, or at least have at set-aside or cap in place that would keep wireless competition alive.

In our recent poll we asked “How should the upcoming 700MHz spectrum auction be structured?”. Out of 4,087 voters 78% (3,182 Votes) stated that they want to “Have a set-aside for new entrants”. 20% (828 Votes) said that the auction should be “fair and open” for all carriers. 2% (77 Votes) were “Undecided”.

The 700MHz band, also known as the “beachfront property” or “Cadillac” of spectrum, is important to the future of Canadian wireless because it’ll efficiently help roll out Long Term Evolution (LTE). The 700MHz is cheaper for carriers to launch, easier for them to expand into remote areas, and has the ability to penetrate through thick walls in buildings (reducing dead spots).

Paradis once stated that the spectrum rules “is not a decision that I nor this government will be taking lightly”. Today, he unveiled the plans.

Paradis noted that “The measures I am outlining today will ensure the timely availability of world-class wireless services at low prices for Canadian families, including those in rural areas”. The 700MHz spectrum auction will be taking place during the first half of 2013, foreign ownership has been lifted for small telecom players such as the newer players like WIND Mobile, Mobilicity, Videotron and Public Mobile. The government went the route of having no set-aside, but did decide to put a cap on the bigger wireless carriers like Rogers, Bell and TELUS. In addition, Paradis also stated that they will open up to allow more foreign ownership, wich will allow non-Canadian companies to own up to 100% of carreirs with a market share of 10% or less.

Here’s the official notes from the Industry Canada press release. Paradis stated that “This spectrum will allow telecom companies to bring the latest 4G LTE mobile networks to Canadian consumers and businesses, including those in rural areas. This means Canadians will have access to the fastest mobile speeds and latest devices, such as the newest iPad, PlayBook and smartphones. They will have access to high-definition video and video conferencing over mobile networks. Canadians will benefit from greater access to e-health, intelligent transport and other advanced applications. This will result in improved connectivity for consumers, increased business productivity and enhanced safety for Canadians.”

-The Telecommunications Act will be amended to lift foreign investment restrictions for telecom companies that hold less than a 10-percent share of the total Canadian telecommunications market. This will help telecom companies with a small market share access the capital they need to grow and compete.

-The government will be applying caps in the upcoming spectrum auctions to guarantee that both new wireless competitors and incumbent carriers have access to the spectrum up for auction.

-The government will apply specific measures in the 700 MHz auction to see that rural Canadians will have access to the same advanced services as everyone else in a timely manner.

-The government will improve and extend the existing policy on roaming and tower sharing to further support competition and will improve transparency and information sharing to facilitate agreements between companies to slow the proliferation of new cellphone towers.

-A portion of the 700 MHz spectrum will be reserved for public safety users such as police and firefighters across Canada.

The 2008 wireless spectrum auction raised a total of $4,254,710,327. A recent report from Scotiabank suggests that the upcoming 700Mhz auction could top $3.5 billion for the government.

Update: The carriers have sent us various statements on how the structure of the 700MHz auction

Rogers: “We’ve always said a fair and open auction is the best way to ensure Canadians have access to the best and latest technology. This is an important announcement and we’re taking the time to review the decision and what it will mean for Canadians.”

WIND Mobile: “We want to be the 4th national carrier and we cannot get enough spectrum to do it. This is a catalyst for new entrant consolidation. I believe that WIND is positioned to lead that consolidation, but we will be at a structural disadvantage with respect to our LTE offering, there is not enough spectrums set aside for new entrants to roll out LTE.” – Anthony Lacavera, CEO of WIND

Mobilicity: “It’s a victory for all Canadians. This ensures that wireless competition will stay alive and stay healthy and that means consumers will get lower wireless prices, better services, and more technology faster. We will be in the auction 100% and we will bid aggressively.” – Stewart Lyons, CEO of Mobilicity

TELUS: Have not received an official statement back

Bell: “We’re still studying the decision and don’t have comment for now.

Source: Industry Canada
Via: CBC

  • Mark

    So a cap rather than a set-aside, which effectively makes it a set-aside. All about the optics… Gotta love politicians. I read on the Globe that essentially 25% of the spectrum will be unavailable to the big carriers. I can live with that.

    • SoftwareComingSoon@gmail.com

      How about eliminating 3 yr contracts first?

      Then the CRTC can talk about auctions

  • JB

    Seems like the worst possible outcome.

    Only the Big 3 will be able to compete for the 700mhz spectrum due to price, while the smaller carriers will have to “grow organically” with old technology and lousy spectrum w/ no option of merger/aquisition.

    I want to make some kind of cutting political remark, but this is just another sad failure of government to understand any element of the tech industry beyond what lobbyists tell them.

    • JB

      Ok, I read a bit more. It’s not actually that bad.

      Learned a lesson today, RTFA, then comment.

  • jonny

    What is the cap? Is the leftover amount enough for everyone else who will be bidding? The new companies need it a hell of a lot more than ROBELLUS does.

    ROBELLUS has launced their LTE networks already, so they say, so they obviously can do it without 700.

  • SAM

    THIS IS GREAT NEWS FOR SAMMIE!!!
    NOW THE APPLE GARBAGE CAN GO TO THE IDUMP!!!
    GET THE NOTE!! FROM SAMMIE!!
    GO SAMMIE!!!

  • bob

    Why 2013? It should have been yesterday!

    • Geoff

      While I kinda agree with you, having the auction in 2013 gives the small companies a chance to find the money to actually participate in the auction. This is especially true when you consider that they just opened it up to 100% out-of-country investment. Finding millions of dollars in investment money just simply isn’t something most people can do in a matter of days.

  • Blair

    @JB, how do you contend that only the Big 3 will compete for the 700MHz spectrum? Who says Verizon or TMo can’t come in, buy Mobi/Wind/Public and bid on uncontested spectrum?

    • Adam

      What would the point of that be? They expand to Canada? Possible but unlikely. They can’t buy spectrum here and use it in the US, licenses are location based.

      Would be interesting if someone like AT&T bought out Mobi and started offering full North American Coverage.

    • Curtis

      I would not expect any of the major US Carriers to look north at the new entrants. 400K subs and $26 ARPU is not worth anything to Verizon or AT&T. They would get a lot more return on their investment from by putting up LTE towers in tier 2 Markets across the USA. If the US companies do come to Canada it will be to make +$50 ARPU with Millions of clients, not to scrap the bottom of the barrel.

      Who will be interested will likely be investment groups such as Orascom who are used to operating in countries that provide $3-$9 ARPU. To them the possibility of $26 ARPU now with the possibility of more later is nothing sort of astonishing. So if we see any new money, my bets are on the Middle East operators looking for stability, and maybe the Asian groups.

    • Crue

      And the US carriers are better than the CDN ones? You must be f’ing kidding me. I’ll take three-year contracts over a dumpy network ANY TIME. I have the choice to take three-year contract, which people forget, I don’t have such a choice when it comes to network.

      Now if a European carrier came in, I’m game.

    • FadedSpark

      If verizon bought PMo and made them not suck, i would probably jump ship.

      Doubtful ;)

  • Tom

    Sounds pretty good to me (though I’ll wait for further analysis).

    In the past few years I’ve been very disappointed at how the Tories have kowtowed to the incumbents and backed away from their original plans for reform.

    But today’s announcement seems like a move in the right direction.

    Maybe having a majority (and tons of money in the bank) has given them the backbone to move things in the right direction?

  • zzZZzz

    duck face?

  • t-shirt

    I’ve seen that shirt in the background before. It’s a Dr. Pepper shirt that says “Trust me, I’m a Dr.” Perfect for a government press conference.

  • beuh_dave

    “This, it said, would effectively reserve one block of prime spectrum in each of 14 license areas of Canada for firms and for regional companies that aren’t national heavyweights.

    Incumbents in each of the 14 license areas would be limited to buying what amounts to 5 MHz of prime spectrum for uploads to cell towers and 5 MHz for downloads.

    This effectively reserves 25 per cent of prime spectrum for new entrants or regional providers.

    For the 2,500 MHz spectrum, there will be a cap on purchases that will effectively allow new entrants and regional providers to gain access to one block of frequencies in each license area.

    The government is also imposing new obligations on some of those companies that end up buying 700 MHz spectrum that should force them to offer high-speed service to more rural customers.”

  • Adam

    On another note. I wonder if the set-aside applies to regional companies like MTS, Sasktel, tbaytel, DMTS, etc. They’re not new entrants, but they’re not the giants like big-3/subsidiaries are.

  • Randy – 1

    So what happens, theoretically, if a foreign Telecom opens up shop here (or buys up 100% in one of the new carriers) because they have less than 10% market share starting out. But then over time grows to over 10%? Would they be forced to sell a stake of their holdings? Hopefully not. I’d like to think this is a first step in finally, and truly, opening up wireless competition.

    • JadonFresh

      not if they grow organically past 10%. however if they merge/acquire another company then I think there would be issues.

  • shoo

    So wind will use 700mhz for LTE, and 1700 for UMTS?

    So wind’s umts network will likely never get the building penetration benefits of 700mhz spectrum

  • JustAnotherDan

    Best case scenario: Rogers/Bell/Telus split the 75% as best as they can. Foreign investment helps the new entrants and regional carriers all fight over 25%. Maybe one of them gets enough across Canada to actually build their 700MHz network. Maybe not.

    Worst case scenario: Foreign companies (T-Mobile, Verizon, AT&T, Vodafone, 3, whoever) come in and bid against everyone, effectively splitting 100% of the spectrum between the big 3 and the foreign guys, leaving the EXISTING new entrants in the sidelines entirely.

    Conclusion: New entrants are all screwed unless they can get the big telecoms overseas to invest in them… but why would they bother when they can just bid on the spectrum themselves?

  • Ron Mexico

    The big 3 own more spectrum than any carrier in the world, give them access to 75% more, makes sense.

    How much did Paradis get paid? 75% of a s**t load?

  • delumen

    If I was the new entrants, I would spend as much as possible (even take out huge loans) to push the Big3 out of what they think they will get of the spectrum. Its perfect timing to get rid of them with the momentum of the people’s anger against old establishments of Canada that have prospered enough from our subsidies for being “Canadian”.

    Although I know Robelus will get all the money they have to buy all the spectrum out to keep us from having the best/affordable prices. I’m excited to see how this turns out, and it will raise lots of money for the government which means they should be scrutinized to make sure they invest it back to Canadians (example: transit, infrastructure).

    Here’s to 2013…

  • JC

    Iain Marlow just tweeted this:

    Globalive CEO Tony Lacavera is not happy. “It’s a total disaster,” he says. “There’s not enough set aside for us to roll out LTE.”

  • G203

    This decision is actually somewhere in between of the incumbents and newbies. The thing is the government should slightly favor the new entrants because they are the ones that really need to build a robust network.

    That said, if you add all the new players together, their total subscriber together is just about 1.1 million! Given the population is 32 million here in Canada, they are far from the 10% market share. I would like to see some European or Asian telecom firms such as Vodafone, Orange, NTT, 3 and MAXIS coming to Canada. Look at the big three APRU, $almost $55 APRU is a lot of money to gain from because Asian and European provider are providing more services for at least 40% discount of the big three.

  • Yash

    does this mean that outside companies like ATandT etc can come to canada and compete with rogers and bell???

  • David

    The incumbents are in for a real challenge. Let’s face it. The Big 3 didn’t become big because they’re good at what they do, but because they were nurtured like animals in zoos. You throw them out into the real world of competition they’re just going to get eaten.

    • JustAnotherDan

      Just like RIM!

    • Ron Mexico

      Who’s going to come in to beat them? Even if AT&T or Verizon came here their prices would be higher than the Big 3. The Big 3 are safe our government will ALWAYS ensure that.

    • grekoff

      The sooner this happens, the sooner a real network provider like T-Mobile or Vodaphone can buy Wind & Mobilicity and build out a Robellus grade network priced at American rates.

      The coat-hanger antenna and tin-can telephone networks that Public, Mobilicity, and Wind have built out thus far are laughable competition to the Big 3. We need to bring a caged tiger into the room and shake things up.

  • narci

    How about having the big 3 release spectrum they are hoarding before they can bid on new spectrum?

  • narci

    Also…if they allow 100% foreign ownership for encumabts with less then 10% market share, what happens if they grow bigger then 10%?

  • Jeff

    Does this accelerate the merger to create BELUS?

  • Phyxius

    just join the big 3. it is inevitable. join the dark side. we will own the galaxy… i mean.. we will own the spectrum.

    i agree prices should be cheaper, but you don’t get coverage quality like you do with the big 3… i rather pay a higher price to have coverage in my area then drop every 2 minutes. small price to pay to have quality. you won’t get a bose for the price of an RCA pos.

  • Crue

    This is important: Companies that hold more than one block of spectrum will have to provide wireless services to 90 per cent of their coverage areas within five years, and to 97 per cent of their coverage areas within seven years.

    This hopefully limits spectrum hoarding.

    I wonder if Wind or Mobilicity will actually buy blocks outside of the profitable urban areas this time around?

  • jess

    wind and mobilicity should merge and become t-mobile canada

  • uranus

    Now the 700mhz spectrum is going to get so fragmented that no single carrier will be able to create a world leading nationwide network, and we will see 4 towers on every corner. There should be a rule that 700 mhz carriers must carry the calls or data requests of their competitors customers, no roaming fees or hard handoffs. We will then have a nation wide network made up of different providers.

  • uranus

    Also 2013 is too late. Failure to allocate the 700mhz spectrum is the reason Canada doesn’t have the razr maxx, which is 700mhz lte.

  • Douglas

    It’s bad for new entrants to roll out LTE services with the 700 megahertz. You need 10 MHz to do it properly (up and down). The Gov only gave them half. It’s useless for LTE.

  • geezzz

    So Now WIND is Legal, when will we see PublicSprint and T-Mobilicity

  • Will C

    I would not be surprised if China Mobile (whom is currently going after Public Mobile), come in next year, and buy up most of the 25% of spectrum available to regional carriers, and might possibly even compete against the Big 3 for some of the other 75% of spectrum too.

    China Mobile is a state-owned corporation owned by the Chinese government. Their capital is practically endless, and has been actively buying up resources globally for expansion.

  • uranus

    Remember before cell phones Canada had ONE telephone company, Bell. Monthly fees were regulated by the CRTC to prevent predatory pricing by the monopoly. No competition, yet Canada was a world leader in telecommunication. It worked then, perhaps we should look at that model now. I don’t trust the Chinese or any other foreign power owning an essential service like phones. Also I’m tired of towers on every corner, duplication, and not having service while I’m right beside another carrier’s tower. Competition is not necessarily good in the phone industry, because it is an essential service.

  • jason4

    SKREW ROBBERS, HELL AND HELLUS. WHINY BABIES.

    ABOUT TIME FOREIGN OWNERSHIP GET HERE.

  • Will C

    Uranus, your argument is so flawed that I am not even going to bother.

  • anonymous

    The only reason people don’t want it set aside is because smaller companies don’t operate in their areas, or they fear they won’t for too long.

    • AWSguy

      Polls on every damn web site showed that people wanted set asides.

  • WarrenB1T

    So tony is crying already. Like he was going to do anything with the spectrum! The winds OWNER already said if there was not deal they would not bid. Good news is Vodafone could walk in and partner with rogers and make big red.. really BIG!! Mobli will bid, so they will get some of the pie. IF the big 3 have LTE now why does wind not have it? they have the 1700 band just like the big 3.. hmm Oh yeah tony said LTE was not in the cards last year… suckas!

    • Accophox

      You’re an i***t. Wind has deployed HSPA services on its AWS frequencies. It can’t deploy LTE and HSPA at the same time using the same frequency blocks.

    • chall2k5

      wind only has 10 MHz of AWS, not enough for LTE

  • Accophox

    Anyway… I read through the document about the 700MHz auction. I think you guys should too.

    But, from what I gather… the important as all heck spectrum are blocks B/C/C1/C2. Incumbents are limited to holding 1 of the 4 per region. This leaves 1 prime block for any newcomer in any of the regions. So, essentially, I’m guessing that Wind will outbid Mobi on LTE in any of the provinces, aside from QB, MB, and SK, where Videotron, MTS, and SaskTel operate services. But who knows. It might not play out that way.

    A is unwanted due to interference from adjacent frequencies. Same for D and E blocks.

  • stylinred

    can someone tell me why telecoms cant just all use the same frequencies/etc why is there a limit or bid on who can use what? isnt it unlimited?

  • Rich

    screw the set aside, its only beneficial if you live in the major cities. The new entrants will only overlap their current networks and by the time it reaches where I am, it will have been years later. At the speed in which they develop their AWS frequency zones, I might aswell throw my lot in with the big 3 and get better phone selection. Shit, even yellowknife can get LTE so I might aswell just bite the bullet. Unless they can portion out LTE over an agreement stating they have to reach X amount of the population in Y years or have it revoked, there’s no weight to anybody saying ‘yeah take our side cause we can guarantee you service when we get it’.

  • Eddy

    I think the biggest part to this announcement is the removal of foreign investment rules for newcomers.

    Even though I think an auction with no spectrum set aside and with foreign investment rules totally eliminated for all would be the ideal target, this is a huge step forward.

    ONce again, to the protectionist thugs out there, why don’t you pay for all our phone bills since you love paying more for stuff?

    • WarrenB1T

      Eddy wind is 100% foreign owned so what difference does the announcement make now? Wind wanted a set aside they got it and now they are stomping their feet and saying they will not bid. I am sure mobli will bid and get some. How much more debt can wind take on anyway?

  • jon_d0e

    opening up canada to foreign ownership is very un-canadian. Don’t call yourself a canadian if you don’t support BELL, TELUS and ROGERS

    • stylinred

      if bell telus rogers supported Canadians, instead of robbed us, we’d support them too

  • mike

    Great! god bless the conservative gov’t!  Go harper go!