Ottawa Citizen

Smaller players call spectrum auction rules a win for competitio­n

- EMILY JACKSON

Smaller wireless players including Shaw Communicat­ions Inc.’s Freedom Mobile are celebratin­g the federal government’s decision to give them an advantage in the upcoming auction for spectrum, the airwaves that power mobile communicat­ions, as a win for competitio­n.

Incumbents, however, are less impressed by the rules released Wednesday by Innovation, Science and Economic Developmen­t for the March 2019 auction for 600 MHz spectrum — a desirable low band frequency for next-generation 5G networks given its ability to penetrate buildings in dense urban areas and travel long distances in rural communitie­s.

It’s the latest chapter in the debate over whether Canada’s wireless market is competitiv­e enough and how much action the government should take to address the issue.

The framework sets aside 43 per cent of spectrum for regional operators and potential new entrants, which will result in lower prices than if they had to compete in an open auction against the Big Three of BCE Inc., Rogers Communicat­ions Inc. and Telus Corp. ISED cited the need for more competitio­n, which it in turn expects will boost affordabil­ity, when it announced the framework.

The decision “affirms the government’s commitment to true competitio­n and the long-term benefits it will bring to all Canadians,” Shaw CEO Brad Shaw said in a statement, adding it “will drive a more dynamic, competitiv­e wireless market in Canada.”

Shaw argues the move will correct a “significan­t imbalance” in low-band spectrum holdings between the Big Three and smaller players whose networks are decidedly not as fast or reliable. The incumbents currently hold over 90 per cent of low-band spectrum, which Shaw said reflects a “concentrat­ion of market power” including about 90 per cent of Canadian wireless subscriber­s.

Incumbents, on the other hand, argue the market is already competitiv­e.

“The wireless market is fiercely competitiv­e with four facilities based service providers with multiple brands in virtually every market competing to win the hearts and minds of Canadians,” David Watt, Rogers senior vicepresid­ent of regulatory, said in a statement.

Fourth players include Shaw’s Freedom Mobile, Quebecor Inc.’s Videotron and Bragg Communicat­ions Inc.’s Eastlink, all of which got their start thanks to government advantages in the last major spectrum auction in 2008.

“The startups of a decade ago are now well-capitalize­d regional players who do not require government assistance,” Watt said. “Going forward, we hope the government recognizes this and adopts more balanced auction rules as the country gets ready for 5G.”

Eros Spadotto, executive vicepresid­ent of technology for Telus, said the decision “compromise­s the potential for Canadians living in rural or remote communitie­s to have access to future 5G technology.”

“The carriers who will be granted spectrum under extremely favourable conditions in this decision are very regional and are highly focused on urban markets, in contrast to carriers such as Telus who have a proven track record of providing extensive coverage over vast geographie­s.”

Bell called the set asides “far too generous” considerin­g the “slow pace of service rollouts” from the cable companies that first acquired spectrum in 2008.

“The government calls them regional players but these are billion-dollar corporatio­ns already well establishe­d in wireless, and they don’t need ongoing taxpayer subsidies to be able to bid for spectrum,” said Bell spokesman Marc Choma.

The government plans to earn at least $1.5 billion from the auction based on the opening bids for spectrum, which will be licensed for 20 years. Smaller players will not be allowed to sell spectrum to national incumbents for five years. Rules around when the spectrum must be deployed vary between five years to 20 years after it’s issued.

These rules intend to stop spectrum flipping. Both Shaw and Quebecor Inc., which owns regional competitor Videotron, have made hundreds of millions of dollars selling unused spectrum in the past.

 ?? PETER J. THOMPSON/FILES ?? Shaw, which owns startup wireless provider Freedom Mobile, says the new rules for the March 2019 auction “will drive a more dynamic, competitiv­e wireless market in Canada.”
PETER J. THOMPSON/FILES Shaw, which owns startup wireless provider Freedom Mobile, says the new rules for the March 2019 auction “will drive a more dynamic, competitiv­e wireless market in Canada.”

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