Ottawa to ease way for small wireless carriers

The federal government offered a new source of hope for Canada’s small wireless companies on Monday, giving them a shot at high-quality wireless spectrum earlier than expected and limiting how much can be purchased by the largest players.

The federal government offered a new source of hope for Canada’s small wireless companies on Monday, giving them a shot at high-quality wireless spectrum earlier than expected and limiting how much can be purchased by the largest players.

Industry Minister James Moore said Monday that the government will hold an auction of high-quality AWS-3 spectrum early next year and set aside about 60 per cent of the available capacity for the companies that have emerged since 2008.

“This set-aside represents over half of the AWS-3 spectrum being made available and is the largest single block ever reserved for new entrants in Canada,” Industry Minister James Moore said Monday at a Toronto news conference.

Industry Canada will set aside 30 megahertz of the 50 MHz of available spectrum for the newer companies. The spectrum up for sale can carry high-speed Internet video over the airwaves and penetrate buildings, much like the 700 MHz frequencies that were auctioned off earlier this year for about $5.27 billion.

Details of the ground rules for the AWS-3 auction, which will be in addition to a previously announced auction of less desirable 2500 MHz spectrum in April, will be worked out over the coming weeks, Moore said.

“The rules for this auction, consistent with the ones for the 700 MHz and 2500 MHz auctions, will encourage more competition in the wireless market while ensuring the interest of consumers first,” the minister told a news conference.

The government has sought to increase competition in the wireless sector which is dominated by Rogers (TSX;RCI.B), Telus (TSX:T) and BCE’s Bell (TSX:BCE).

However, so far, none of the smaller rivals to the big three has amassed even a million subscribers — compared with between about 7.8 million and 9.4 million at each of the Big Three.

“We have seen this story before and it has not resulted in success for the new entrants,” CanaccordGenuity analyst Dvai Ghose wrote in a commentary.

Ghose wrote that 40 MHz of AWS spectrum was reserved for new entrants in the 2008 auction that opened the door for a new generation of carriers, but he noted Public Mobile has been since sold to Telus, Mobilicity is under court protection from creditors and Wind Mobile’s largest shareholder, Vimpelcom, has said it won’t provide more funds.

“The majority of new-entrant-owned AWS and 700 MHz spectrum is not being utilized. We wonder why the government believes that following the same strategy that has failed to date would have a different outcome this time around,” Ghose said.

The head of Toronto-based Wind Mobile, which has 735,000 subscribers in three provinces, said that the government is on the right track, but it’ll take more time to see how investors react.

“This spectrum is prime, prime, prime spectrum in terms of meeting the demand for mobile video, for example,” Lacavera said. “It’s very good, very efficient for the mobile Internet and now the mobile video Internet.”

Lacavera said he hasn’t had time to discuss the news with investors, “but I would expect the economics of this whole discussion is going to become clearer in the next several weeks.”

Wind Mobile was unable to bid in this year’s auction of prime 700 MHz spectrum because it couldn’t secure funding for the bidding.

Instead, Rogers acquired the bulk of the licences for $3.29 billion. Telus also paid $1.14 billion in the 700 MHz auction and Bell paid $565.7 million.

Rogers and Telus didn’t comment Monday on Moore’s announcement, but a Bell spokesman said the Montreal-based company “has always asked for a level playing field in Canadian wireless” in which all competitors, new or old, follow the same rules.

“Spectrum is a valuable national resource owned by taxpayers and shouldn’t be given to selected companies at a bargain,” Bell said in a statement.

Lacavera — who noted that the new players had to build a business from zero — has said that it would make sense for the smaller players, such as Wind, to co-operate with each other so they can concentrate their resources on winning market share from the big three companies and says there are always discussions among the various industry players.

“I don’t know if this announcement today is a catalyst for any of those discussions, frankly,” Lacavera said.

“I think this is just another step in the government’s six- or seven-year policy on competition in wireless. And they’ve made a variety of moves, particularly in the last 12 months.”

Among other things, the federal government passed a bill that temporarily caps how much the larger network operators can charge on a wholesale basis for smaller carriers.

Ottawa has also moved to ensure that the smaller companies have access to shared cellphone towers, which are used to position their transmission equipment, and has blocked Telus from buying Mobilicity.

In 2008, Ottawa set aside a portion of the spectrum up for auction for new companies and saw several launch.

Quebecor’s Videotron (TSX:QBR.B) has indicated it wants to expand beyond Quebec if the conditions are right. Other regional players include EastLink, primarily in Atlantic Canada, as well as Manitoba Telecom (TSX:MTB) and SaskTel.

Just Posted

Red Deer city council aims to force larger non-profits to become more accountable

New bylaw defines which not-for-profits must pay for a business licence

Red Deer city council will seek public input on portable signage March 4

Council gave initial approval to retaining 100-metre separation distance

Smaller, more affordable, lots wanted in Red Deer’s Evergreen neighbourhood

Council approves first reading of requested lot-size changes

RDC’s new name to be unveiled in February

The next big milestone for Red Deer College is a new name,… Continue reading

Lacombe considering licensing cats

Council is expected to take a look at cat potential licensing regulations next month

2-for-1: Total lunar eclipse comes with supermoon bonus

On Sunday night, the moon, Earth and sun lined up to create the eclipse, which was visible throughout North and South America

Opinion: Faith in immigration must be preserved

Canada has a deserved reputation for extending its arms to newcomers, but… Continue reading

Olympian Adam van Koeverden wins federal Liberal nomination in Ontario riding

MILTON, Ont. — Former Olympic flag-bearer Adam van Koeverden will be carrying… Continue reading

World champion Osmond says it’s “really nice” not to know what future holds

SAINT JOHN, N.B. — Kaetlyn Osmond has a world title, Olympic medals… Continue reading

World economy forecast to slow in 2019 amid trade tensions

For Canada, the IMF’s estimate for growth in 2019 was 1.9 per cent, down from expected global growth of 3.5 per cent

Timberlake pops in on patients at Texas children’s hospital

DALLAS — Justin Timberlake has pulled some sunshine from his pocket for… Continue reading

UK police speak to Prince Philip about not wearing seatbelt

LONDON — British police have spoken with Prince Philip after the husband… Continue reading

‘Gotti’ leads Razzie nominations, Trump up for worst actor

The nominations were announced on Monday, Jan. 21 with some movies earning up to six nominations

Curtain rising Sunday night on total lunar eclipse

CAPE CANAVERAL, Fla. — The celestial curtain will be rising soon on… Continue reading

Most Read