Federal government favours small players over Big Three in wireless spectrum auction

Large telecom carriers in Canada are barred from bidding on more than 40 per cent of the airwaves used to carry cellular signals in an upcoming auction, the federal government announced yesterday.

The department of Innovation, Science and Economic Development (ISED) released the final rules for a public auction of 600-MHz spectrum that will be held March 2019. The valuable airwaves in the 600-MHz frequency offer good penetration into buildings and can travel long distances without interruptions. Federal Innovation Minister Navdeep Bains said the rules will spur competition in the marketplace and lead to better service in both urban and rural regions across Canada.

“Competition is a key driver of innovative and affordable telecommunications services,” he said in a statement, adding the auction will also support emerging technologies.

The new rules follow the government’s proposed framework released last summer, which aimed at correcting the imbalance in lower frequency spectrum holdings between the Big Three: Bell, Rogers and Telus. According to the Canadian Radio-television and Telecommunications Commission’s (CRTC) latest policy monitoring report, the Big Three account for more nearly 90 per cent of the total market share. The government is hoping the auction will benefit new market entrants and regional competitors, such as Shaw Communications Inc.’s Freedom Mobile, Bragg Communications Inc.’s Eastlink and Quebecor Inc.’s Videotron. License winners will be subject to minimum five and 10-year deployment targets.

Shortly after the announcement, Shaw Communications released a statement applauding the government’s decision.

“Supporting strong, sustainable wireless competition will become even more important as our wireless environment evolves into 5G and becomes more focused on the Internet of Things,” said Brad Shaw, CEO of Shaw Communications. “Canadians deserve better in wireless. Today’s announcement has set us on the right path forward for the future.”

The ISED says national incumbent service providers be defined as companies with 10 per cent or more of national wireless subscriber market share. Some of the larger telecoms aren’t happy about. Shortly after the policy framework was released last summer, The Financial Post reported that, George Cope, CEO of Bell parent company BCE, told investors at a BMO Capital Markets telecom conference in Toronto that large cable companies in Canada “shouldn’t be subsidized by taxpayers.”

Rogers CEO Joe Natale agreed.

“I do take issue with the fact that we’ve got vibrant capable regional players that are being classified as new entrants,” he told the Post.

Financial services firm Canaccord Genuity released a report about the government’s decision, noting the positives clearly favour Shaw and Quebecor, not the incumbents. But that shouldn’t be a surprise, the company noted.

“While the 43 per cent spectrum set-aside can be deemed negative for the incumbent stocks, this was generally in line with street expectations,” according to the report.

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Alex Coop
Alex Coophttp://www.itwc.ca
Former Editorial Director for IT World Canada and its sister publications.

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