Industry Canada’s decision on whether to tighten the rules on cellular roaming and tower sharing will play a big role in whether startup Wind Mobile participates in the next year’s important auction of 700 MHz spectrum, according to a senior company official.
Simon Lockie, the wireless carrier’s chief regulatory officer, said in an interview Thursday that Wind isn’t hanging its hat on the decision.
But, he added, ensuring that roaming and tower sharing work more effectively than it has in the past will be a “critical input” to Wind’s auction strategy.
When new wireless entrants were encouraged to bid on spectrum in the 2008 spectrum auction, the government told incumbent carriers that they had to share space on their transmission towers with the startups and negotiate reasonable roaming agreements.
But startups like Wind, Mobilicity, Public Mobile and Videotron have complained for years that the incumbents put up roadblocks to tower sharing – forcing the newcomers to find expensive alternative locations for their antennas – and imposed unsatisfactory roaming agreements.
Earlier this year Industry Canada said it will take another look at the two issues. A decision is expected before the 2013 auction.
Lockie was interviewed after speaking at the Canadian Wireless Trade Show in Toronto, where he said roaming and tower sharing rules are among the components Wind uses in its business plan for raising money.
Wind still hasn’t decided whether it will bid for spectrum in the auction, Locke said, repeating statements from CEO Anthony Lacavera that the limited amount of spectrum new carriers will be able to bid on makes it tough to participate.
The government has decided to largely auction off 10 MHz of spectrum in areas across the country in a way that basically ensures four carriers in each area will be winners. New entrants and industry analysts agree the effect is probably only one new entrant per region will win spectrum, leaving incumbents Bell Mobility, Rogers Communications and Telus Corp. to take most of the rest.
The auction has been eagerly anticipated by all carriers because the 700 MHz band is more efficient that other spectrum, and therefore ideal for devices using the latest high speed broadband LTE technology.
But Lacavera has been vocal in saying 10 MHz of spectrum isn’t enough.
Lockie – who replaced Lacavera as a speaker at the show due to illness — repeated that on Thursday.
“Where there is spectrum available we’ll look at it, but the limit that we can spend is what we can earn a reasonable return on. And the limited amount of 700 is going to make it difficult to allocate a lot of money to that.”
In 2008 Wind was able to get hundreds of millions of dollars from its main backer, Orascom Telecom Holdings (now part of VimpelCom Ltd.) for three reasons, Locke said: The amount of spectrum the government set aside for new entrants, the tower sharing rules and the roaming rules.
The tower sharing and roaming rules haven’t worked out well, he said, and the amount of spectrum available for the 700 MHz auction isn’t near what was available in 2008.
As a result, he said, Wind is looking at all of its options, which includes merging, buying or partnering with a competitor.
“There has to be a commercial case for us or anyone else to acquire that (700 MHz) spectrum,” he said, “and we have to look at things holistically to figure out not only whether we’re going to participate but also the value we’re going to put on that spectrum.”