Bidding in Canada’s 700 MHz spectrum auction has started

Canada’s 700 MHz spectrum is officially on the block today. Originally slated for the first half of 2013, then rescheduled for November 2013, the qualified bidders can finally participate today.

The government wants to bring “greater wireless coverage at lower rates for consumers,” but the ongoing controversy‎ surrounding the bidders for this “beachfront” spectrum is overshadowing its real attempt to offer Canadians the wireless competition they want.

The government will auction off four prime blocks of 700 MHz spectrum. The frequency can easily reach remote areas with fewer cell sites, is cheaper for carriers to deploy, and has stronger cellular signals to penetrate through thick walls in buildings, thus reducing dead spots. In addition, the 700 band is the same that both AT&T and Verizon use in the United States and will be compatible out of the box with most existing North American smartphones.

The government had intentions to woo foreign investors to the table, but failed to do so. Originally 15 organizations submitted deposits to bid in the auction, but over the course of two months five dropped out, most notably WIND Mobile, just hours before the bidding was set to begin. Here’s the list of ten bidders participating for the valuable spectrum:

• Bell Mobility Inc.
• Bragg Communications Incorporated (Eastlink Wireless)
• Feenix Wireless Inc. (Group led by John Bitove)
• MTS Inc.
• Novus Wireless Inc. (Novus)
• Rogers Communications Partnership
• Saskatchewan Telecommunications (SaskTel)
• TBayTel
• TELUS Communications Company
• Vidéotron

This auction has a different setup than the way AWS was done in 2008 (which raised over $4.3 billion): this time, the government is using the “combinatorial clock” format, where participants bid on a “package” of spectrum, rather than bidding item-by-item. In addition, the federal government will not communicate who the winning bidders are for each block until 5 days after the auction concludes, which could take up to seven weeks.

The total amount of the proposed opening bids for all spectrum blocks is $897,324,000, with the lowest opening bid starting at $142,000 in Yukon, NWT and Nunavut. Estimation are that this auction will raise between $3 and $4 billion for the government.

Back in September, Industry Minister James Moore stated “our Government introduced a number of measures to create more choice in Canada’s wireless market and to defend consumers. As a result, prices have come down, the number of jobs in the wireless sector has increased and consumers have more choices. This trend will continue as a result of January’s auction. In addition to this auction, our Government will continue to aggressively pursue policies that ensure consumer interests are at the core of all Government decisions.”

Source: Industry Canada (2)