Ottawa turns down sale of spectrum to Bell-Rogers’ Inukshuk

The telecommunications industry has been wondering how hard the Harper government will hit the country’s three biggest wireless carriers after stating last year that it will carefully look over every proposed transfer of spectrum to incumbent operators.

This morning it got an answer: Industry Minister James Moore turned down the sale of 83 licences in the 2300 Mhz WCS band owned by NextWave Wireless Inc. to the Inukshuk consortium owned by Rogers Communications and Bell Canada.

“After considering this request under our spectrum licence transfer framework, Industry Canada has determined that this licence transfer would lead to unacceptable levels of concentration of spectrum in the hands of incumbent carriers that negatively affects competition in our wireless sector,” Moore said in a statement. “Industry Canada will therefore not approve the proposed NextWave to Inukshuk spectrum transfer request.”

If allowed Inukshuk’s national share of WCS spectrum would leap to 77 per cent from 29 per cent of spectrum in that band, the government said.

Additionally, it explained because there is only one paired block of WCS spectrum, only one licensee can hold a licence in a given geographic tier. So if the sale is approved, 95 per cent of the WCS spectrum would effectively be held by Bell, Rogers and Telus.

“We will not approve any spectrum transfer request that results in excessive spectrum concentration for Canada’s largest wireless companies, which negatively affects competition in the telecommunications sector. As we set out in the Speech from the Throne and Economic Action Plan 2014, our government is committed to improving high-speed Internet access for Canadians in rural and northern communities, and we will continue to stand up for consumers first in our wireless sector.”

NextWave, which owns Canadian and American spectrum, was bought by AT&T Inc. in January, 2013 for US$650 million. AT&T wanted its WCS spectrum for added capacity on its LTE network.

In a research note telecom analysts Lemay-Yates Associates of Montreal pointed out that the 10-year obligation on WCS licences for deployment expires next month. That means NextWave will either have to move quickly in a few days to find a buyer or the licences will revert back to Industry Canada unless the government gives it an extension.

NextWave holds spectrum from St. John’s, Nfld. to Williams Lake, B.C., including Edmonton. Winnipeg, Ottawa and Montreal.

The government has already said flatly that it wouldn’t approve the transfer of AWS spectrum owned by financially troubled Mobilicity to Telus, at least before a five year ban on new carriers expires this month. It wasn’t clear if the government would give the green light after that ban expires, although it did announce last summer that from that point on all proposed spectrum transfers will be reviewed regardless of the AWS spectrum ban expiring.

It did allow Telus to buy Public Mobile, but that startup owned older PCS spectrum which is not as desirable as AWS frequencies.

Inukshuk is a different matter. The spectrum it owns was supposed to be targeted at bringing wireless service to rural areas. Originally it owned by a consortium of companies including Microcell Telecommunications — which was bought by Rogers in 2004 — Inukshuk became a Rogers-Bell partnership in 2005.

It was allowed in 2010 to buy WCS spectrum by Vecima Networks, Craig Wireless and Look Communications, but that was long before last year’s attempt by incumbents to get hold of AWS spectrum. Those attempts not only included the proposed Telus-Mobilicity deal (which Telus hasn’t given up on), but also a deal giving Rogers Communications Inc. first right of refusal over AWS spectrum in Toronto to be sold by Shaw Communications and Quebecor.

Those attempts and battles last summer over whether Verizon Communications would be able to participate in the 700 MHz spectrum auction if it bought Mobilicity or Wind Mobile led to verbal spats between Moore and the big three incumbents, leading some to speculate that the government wouldn’t be receptive to future spectrum sales.

In a statement Rogers said wanted to acquire the unused spectrum to meet the increasing use of wireless. “The decision doesn’t affect our plans to rollout 4G LTE to more customers in more areas across the country,” he added.

Rogers already holds 2300MHz and 3500MHz spectrum in several areas through the Inukshuk, it said.  “We’re in the process of deploying our half of a new 4G LTE broadband wireless network using this spectrum. We’ll be providing broadband wireless services to Canadians using the new network beginning later this year.”

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Jim Love, Chief Content Officer, IT World Canada

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of ITWorldCanada.com and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including ITBusiness.ca 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 [@] soloreporter.com

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