The approaching spectrum auction in Canada could not be more important. The telecom firms are fighting it out over how to handle the auction, with Monday being the deadline for submissions to Industry Canada as to how to handle the event.
Perhaps the most pressing question facing Industry Minister Tony Clement about this whole thing is whether or not he should be setting aside spectrum for the new entrants. The spectrum, prime 700 MHz airwaves, will be absolutely vital to the progress of Canada’s telecommunications industry. Experts consider this spectrum to be akin to “beachfront property” because the airwaves can travel long distances and are ideally suited for the wave of smart phones and mobile devices that are so popular right now.
The government will be reclaiming the 700 MHz spectrum later this year when the UHF broadcast band gets shut down.
For the incumbents, the spectrum is obviously precious. They currently hold 95 percent of the market and want the auction to go ahead without any special treatment for the new entrants. Because Canada has “enough” wireless competition, there’s no need to set aside the good stuff for the newbies.
“The number of entrants in the market is no longer an issue. There are probably more entrants than the market is going to support,” said Michael Hennessy, senior vice-president of regulatory affairs at Telus.
Among the fears the incumbents have over the auction is that there will be caps on how much spectrum can be snapped up. Ken Engelhart, senior vice-president for regulatory affairs at Rogers, says that caps would be a mistake. He also fears that some companies would “hoard” the spectrum by not rolling it out after its purchase. “Everybody needs it, everybody wants it, and the only way to sort that out is to have a wide open auction,” he said.
The new carriers have other ideas, however. Globalive wants to see Clement set aside the entire 700 MHz spectrum for auction among the new carriers only. The argument here is that the national market is so heavily concentrated among the Big Three (Telus, Bell, Rogers).
“Many, if not most, provinces continue to be dominated by one or two players. WIND estimates that the new entrants together account for only about 1.9 per cent of the Canadian marketplace, measured by subscriber numbers,” Anthony Lacavera, Globalive’s chairman, said.
It’s clear that Industry Canada won’t please everyone with the way the auction is carried out. The critical event may be a year and a half away, but the battle over how the spectrum will be won could rage on for a while.