Ottawa clamps down on spectrum sales to incumbents

The Harper government will look at the concentration of wireless spectrum in all bands by companies when it considers applications for transferring or selling licences, in what will be a disappointing decision for the country’s biggest carriers hoping to get spectrum from troubled smaller operators.

Industry Minister Christian Paradis said Friday that his department will examine the licence holdings of both the seller and buyer “both within the licenced spectrum band and across (all) commercial mobile spectrum bands.”

That means the government will not only consider whether a carrier wanting to buy spectrum has a small holding in one frequency — such as AWS — in the licence area it will also consider the carrier’s holdings in the PCS, BRS and WCS bands. Incumbents like BCE Inc.’s Bell Mobility, Rogers Communications and Telus Corp. have substantial holdings in all four bands. A carrier hoping to argue, for example, that it owns a small amount of AWS spectrum in a region and therefore should be able to buy more could be crippled because it owns a large amount of other spectrum.
The 2008 spectrum auction largely sold AWS spectrum, plus a small amount of PCS spectrum. PCS, BRS and WCS spectrum was picked up by carriers in previous years.
The department will also consider whether carriers have agreements with other operators to share spectrum. That could hurt Telus Corp. and Bell Mobility from buying spectrum from other operators because they already have an arrangement to share spectrum bought in previous years.
“This isn’t a surprise,” said Iain Grant, managing director of the SeaBoard Group. the minister gave us that heads up in a speech in March in response to the Rogers Shaw proposed spectrum swap. given the government’s focus on creating a more competitive environment the new rules are an obvious next step. Whether or not they will be necessary in a post Verizon-Wind Mobile universe — if that deal goes through — is to be seen.”
On the face of it, he added, it doesn’t help Mobilicity, which hoped to sell itself to Telus Corp. until Paradis killed the deal earlier this month.
The federal government felt it had to clarify the rules on licence transfers after three controversial deals appeared that tread on Industry Canada rules forbidding new entrants who bought AWS spectrum in 2008 — including Wind Mobile, Mobilicity, Shaw Communications, Videotron and Eastlink Cable — from selling or transferring their licences for five years.
The first deal was Rogers Communications Inc. pact with Shaw Communications for a first option to buy Shaw’s Western Canada spectrum when the five year ban expires next year. Shaw decided against building a cellular network largely because of the cost.  The second was Rogers deal to buy Videotron’s unused Toronto spectrum. The third was Telus’s arrangement to buy Mobilicity.
Last month Paradis killed the Telus deal.
Opposition mounts to Rogers-Shaw deal 

The government said companies will have to ask for approval within 15 days. In making a decision it will consider eight factors including the current licence holdings of the carriers applying for a spectrum transfer in the region where the deal would take place, the overall distribution of licence holdings by all carriers in the region, current or prospective services to be provided in the licenced band, the availability of alternative spectrum with similar properties, how much of a wireless network the acquiring carrier has set up in the region, the rural/urban split and “any other factors relevant” to the government’s policy objectives.
 Those objectives include having an efficient and competitive telecom industry and the availability and quality of service to consumers.
In a statement releasing the framework today Paradis said the government is committed to having at least four wireless carriers in every region.

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@]

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