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.