Feds give nod to smaller players in spectrum auction
The federal government has granted smaller wireless players an advantage in next year’s spectrum auction, a blow to the Big Three carriers as they prepare to bid on the airwaves needed to meet the skyrocketing demand for mobile data and to power nextgeneration mobile networks. After nearly eight months of consultation, Innovation, Science and Economic Development published Wednesday the framework for the March 2019 auction of 600 MHz spectrum licences.
Citing the need to increase competition and affordability, ISED will set aside 43 per cent of the 70 MHz of available spectrum for potential new market entrants and regional competitors, such Shaw Communications Inc.’s Freedom Mobile, Quebecor Inc.’s Videotron and Bragg Communications Inc.’s Eastlink. “Competition is a key driver of innovative and affordable telecommunications services,” ISED Minister Navdeep Bains said in a statement. “This is an important step toward more choices, lower prices and higher quality cellphone services for Canadians.” This decision will give smaller players a leg up in the contest for a particularly valuable block of airwaves — the 600 MHz frequency can carry signals over long distances and penetrate buildings.
It’s a similar framework to the 2008 spectrum auction that resulted in the birth of Videotron, Mobilicity (eventually bought by Rogers), Public Mobile (now owned by Telus) and Wind Mobile (now Shaw’s Freedom). Startups got spectrum for cheaper than they would have in an open auction. ISED first proposed the setasides to “address issues of market power” when it held consultations on the auction last August. It said the incumbents “likely have the means and ability to prevent other service providers from acquiring spectrum licences in an open auction.” It’s moving ahead with the proposal despite pushback from BCE Inc., Rogers Communications Inc. and Telus Corp. The incumbents argued that well-established companies with cable, internet and telephone businesses worth billions of dollars shouldn’t get an advantage that will decrease the overall government revenue earned from the valuable asset.