Winners of new wireless spectrum in this month’s auction could have a coast-to-coast network up faster and for a lot cheaper than some financial analysts are estimating, says a telecommunications consultancy.
In a report released Thursday, the Montreal-based SeaBoard Group estimates a service in 15 major Canadian cities covering 60 per cent of the population could be up and running for $500 million by next summer.
Iain Grant, the company’s managing director, says that’s better than the minimum $630 million some financial analysts believe a national network will cost. Others estimate it could cost as much as $1.2 billion.
But he adds, if several regional entrants share infrastructure costs a national cellular service could start as early as January and for much less that $500 million.
One reason SeaBoard is optimistic is that backbone technology has advanced in the past decade to the point that “signaling and radio gear that once filled a room and needed a crane to install now is the size of a compact washing machine,” the report says.
Also, Industry Canada has ruled that incumbent carriers such as Bell Mobility, Telus and Rogers Wireless have to let new spectrum winners share their towers and roam on their cellular networks, which will mean significant cost savings. But SeaBoard also believes that several entrants will share infrastructure costs, which will also lower their overall expenditures.
In fact, Grant said, it will be in the interest of new carriers to do so.
“The expenditure of capex [capital expenditures] on network infrastructure is not necessarily something you can differentiate yourself with. You can probably differentiate yourself on brand.”
In India and Scandinavia, ostensible enemies have been successfully co-operating on wireless infrastructure, he pointed out. To make its calculation, SeaBoard assumed a spectrum winner aiming for a national network would first want to establish itself in 15 cities covering 60 per cent of the population and along key highways connecting those areas, leaving smaller centres for later.
It believes 2,223 nodes with transmission gear such as controllers and gateways would have to be built in such a network. Assuming 55 per cent of them would be sited on rooftops and another 25 per cent co-located on other provider’s antennas, the new network wouldn’t have to erect many expensive towers for the rest of the equipment.
Roughly, then, SeaBoard estimates it could cost $286 million to put up the transmission system in the cities, plus $17 million for towers along major highways and $170 million for backbone to connect it all together.
That’s just under $500 million, but it doesn’t include the cost of buying spectrum (likely to be in the tens of millions of dollars), marketing and Branding, distribution and back-office costs.
The auction starts May 27. Industry Canada estimates it could last from three to five weeks.
