Saturday, March 07, 2015

Wireless Spectrum Auction: Industry Canada Says $2.11 Billion Raised

Wireless Spectrum Auction: Industry Canada Says $2.11 Billion Raised

Posted: Updated: 
JAMES MOORE
Industry Minister James Moore
TORONTO - Wind Mobile was one step closer to its goal of becoming a national telecommunications player on Friday, by winning key wireless spectrum licences in southern Ontario, Alberta and British Columbia in the latest federal auction.
The new licences gives Wind Mobile and other regional carriers the capacity of AWS-3 (Advanced Wireless Services) airwaves that will help prepare them for a future in a data-guzzling wireless market.
Industry Minister James Moore said a total of $2.11 billion was raised in the wireless spectrum auction Friday.

But the latest effort by Ottawa to help encourage a fourth national wireless carrier won't have any immediate impact on consumers.
"Overall, it doesn't change the dynamic in the marketplace,'' said Maher Yaghi, a telecom analyst at Desjardins Securities, in an interview.
"We have four players in most markets, but that fourth player is not a national player. That means they don't have the same scale as the other three incumbents to be as competitive.''
Wind Mobile has some 750,000 wireless customers concentrated in populated areas of Ontario, Alberta and British Columbia and has made no secret of its hopes to become the fourth national carrier. But while it hasn't faced the same type of financial problems that pushed its rivals Mobilicity and Public Mobile into court-supervised protection, Wind holds just a small fraction of the market compared with the larger players.
The AWS-3 frequency will boost capacity for Wind Mobile but doesn't expand the carrier's reach into new parts of the country. Eventually, it will allow Wind Mobile to boost its 3G network to the faster LTE network, which is the current standard for major carriers.
Wireless spectrum, which is essentially a radio frequency, is a prized asset for any carrier because it's one of the crucial pieces of the service it provides customers.
Depending on the type of spectrum, the characteristics and value will vary. Lower frequencies generally have a better ability to penetrate walls and travel a further distance, while AWS-3 is more adept at carrying large quantities of data very quickly, which is vital to handle the growing demand of streaming video and other data-heavy features of the latest smartphones.
Governments control who can use what spectrum with licences that allocate certain amounts to individual companies. In this auction, 60 per cent of the available spectrum was reserved for smaller carriers, while the remaining 40 per cent was available to all bidders.
Breaking down the details of the auction, several carriers came out with a significant boost to their overall spectrum allocation.
Wind Mobile boosted its spectrum holdings by 180 per cent with the acquisition of three licences. The carrier paid $56.4 million for spectrum in areas covering 18.1 million people in southern Ontario, Alberta and British Columbia.
Other successful regional carriers included Bragg Communications, which operates EastLink in Atlantic Canada, which increased its spectrum ownership by 77 per cent. It paid nearly $10 million for four licences in Newfoundland and Labrador, Nova Scotia and Prince Edward Island, New Brunswick and northern Ontario.
Videotron (TSX:QBR.B) paid $31.8 million for four licences in Quebec and eastern Ontario, increasing its holdings by 65 per cent.
Larger carriers also participated, including Telus (TSX:T), which was the biggest spender paying over $1.5 billion for 15 licences covering areas serving more than 30 million people. The company boosted its ownership by 16 per cent.
Bell Mobility (TSX:BCE) paid nearly $500 million for 13 licences covering areas serving 13.5 million people, including its holdings by four per cent.
Ottawa has been attempting to boost competition in the wireless market, but Bell, Rogers and Telus continue to represent 90 per cent of the market.
Making a dramatic shift in the composition of the industry won't happen any time soon, said Carmi Levy, an analyst and writer at Voices.com, a London, Ont.-based web technology company.
"We delude ourselves into believing there is going to be revolutionary change, simply because of the outcome of one spectrum auction process,'' he said.
"It took decades for us to get into the position we are now, and as a result, it's going to take additional decades for us to evolve away from the status quo."
Rogers Communications (TSX:RCI.B), the biggest buyer in the 700 megahertz spectrum auction last year, did not win any licences this time. A spokeswoman for the company said Rogers acquired the key spectrum it wanted last year.
A second spectrum auction covering higher-end 2,500 MHz spectrum used in rural communities is scheduled for April 14.
In that auction, Ottawa has placed caps on how much spectrum companies can own, a move that it has said will largely shut out Rogers and Bell because they already own large chunks of it. Wind Mobile and a number of smaller regional companies are also seeking to participate.

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