OTTAWA – The Canadian government got its wish for four wireless carriers in each region of the country in its recently completed 700 Mhz spectrum auction, which netted federal coffers $5.27 billion.
Overall, the results of the auction show that it was the Big Three that divvied up the majority of the spectrum even though they were limited on buying prime spectrum in the B, C, C1 and C2 blocks. While Rogers Communications focused on the prime B band and the A block, Bell Canada and Telus licence purchases appeared to complement each other in the C2 and the unpaired D and E blocks. In the other prime C1 block, it was Videotron, EastLink, MTS and SaskTel that purchased licences in various regions.
Videotron’s purchases in British Columbia and Alberta should be considered one of the big surprises in the 700 Mhz auction. It bolstered its holdings in Quebec and eastern Ontario by acquiring the same prime spectrum licences for those regions. The Quebec-based company paid more than $233 million for seven licences. Other than Videotron’s foray outside of its home territory, all existing wireless carriers were able to purchase licences.
James Moore, the Minister of Industry, highlighted the success of the government’s policy to ensure four wireless operators secured licences in each region, by pointing to the results as evidence. He took the media on a cross country stroll during his press conference, using a graphic as a visual aid to show the number of carriers that acquired spectrum in each licence area.
Rogers acquired 22 licences – the majority of it in the A and B blocks – in every region of the country, except for the Far North. And it spent big for these properties, dishing out nearly $3.3 billion. Where the company was unable to get contiguous A and B band spectrum, it bought licences in the C band.
For Bell and Telus, the auction results demonstrate that they are very likely to continue to co-operate on network rollout. Bell spent slightly more than $565 million to acquire 31 licences, while Telus was able to grab 30 licences for a little more than $1.1 billion.
Telus secured spectrum in several areas in the C2 band, with Bell acquiring the other ones. Their presumed co-operation was also evident in the bidding in the unpaired D and E bands where they acquired the same licences, only but in reverse.
Regional wireless carriers, MTS, SaskTel and EastLink were able to bolster their spectrum holdings in the 700 Mhz auction. EastLink was able to add to its AWS holdings by securing the rights to licences in the four Atlantic provinces as well as Northern Ontario. It paid $20.2 million for 4 licences.
SaskTel and MTS also maintained their regional stranglehold on licences, each acquiring a licence for their respective province. MTS paid $8.7 million, while the Crown Corp to the west spent $7.5 million.
The John Bitove backed Feenix was able to acquire a single C2 band licence in the far North.
A total of 97 licences were purchased by eight bidders. Only TBayTel and Novus were unable to secure spectrum.
"Little has changed with today’s results." – John Lawford, PIAC
While Industry Moore positioned the auction result as a win for Canadian consumers, the Public Interest Advocacy Centre was far less pleased. “Unfortunately, the list of bidders, and eventual winners, preserve the competition status quo in Canada, with the exception of Videotron, which has acquired some spectrum that may, by acquiring and piecing together spectrum licences from a previous auction, be enough to launch a national wireless service,” said the PIAC release.
“Despite efforts by the Federal Government to promote competition, and previous efforts to improve access by competitors to towers and roaming requirements, little has changed with today’s results”, added John Lawford, PIAC’s executive director and general counsel. “We urge the government to use other methods to attempt to address the lack of competition in the Canadian wireless market as consumers in Canada will continue to pay more for wireless than in other countries, at least in the short to medium term.”
As for the companies themselves, they each issued what small statements they are allowed. Auction participants are not allowed to say much until they make their final payments to the federal government but SaskTel reiterated its disappointment with the auction format.
The provincial Crown Corp said it is concerned that the overall outcome of the auction will not result in the effective use of scarce spectrum necessary to support improved 4G LTE coverage in rural areas in Saskatchewan. SaskTel was only able to license one block of spectrum in the C1 band, which will not allow the company to build out its 4G in rural areas until wireless devices are available in Canada for this band of spectrum. Nor will one block provide the capacity to provide LTE speeds in rural areas, it stated in a release.
"This incredibly complex auction format is clearly biased against regional carriers." – Ron Styles, SaskTel
“Our primary concern with the auction outcome is that other carriers who have so far chosen to invest very little in rural Saskatchewan have received more prime spectrum,” said Ron Styles, SaskTel president and CEO. “SaskTel has continually made significant investments to serve its rural customers and since device options are not available for the C1 band our rural customers will not see a benefit for some time unless the Federal Government continues to focus future efforts on ensuring no spectrum remains unused in rural Canada… This incredibly complex auction format is clearly biased against regional carriers, in addition to having a number of other systemic flaws. Had there been a 4th national bidder in the auction, it is questionable when any of this valuable spectrum would be used to the benefit of our rural residents,” added Styles.
"We went into this auction with our customers' needs front and centre,” added Rogers president and CEO Guy Laurence. “We believe they want the ultimate video experience and this spectrum will allow us to deliver just that. Not all 700MHz spectrum in the auction was the same; we secured the beachfront property we wanted. You either want your customers to have the best for the next 20 years or you don't. As Minister Moore said today, the 700MHz spectrum is the highest-quality wireless frequency ever auctioned in Canada. This was a clear strategy for the long-term and our customers won.”
Said Bell: "Bell's accelerating success in wireless is built on the world's fastest, most advanced mobile technology, LTE, which is powering next-generation broadband services like mobile TV and an infinite range of new mobile apps and media for consumers and business users," said Wade Oosterman, president of Bell Mobility. "Bell already offers LTE service to 82% of the national population, and this new 700 MHz spectrum will help us take the network further: To towns, rural locations and remote communities across the country including Canada's North."
"Given the way the auction unfolded, Quebecor Media could not pass up the opportunity to invest in licences of such great intrinsic value in the rest of Canada. We now have a number of options available to us to maximize the value of our investment." – Robert Depatie, Videotron
"The wireless network Videotron launched in the fall of 2010 already has more than 500,000 customers," said Robert Depatie, president and CEO of Quebecor Media and CEO of Videotron. "With the high-quality frequencies acquired in this auction, Videotron is now well-equipped to develop its network in the years to come and to continue offering its customers the best in wireless technology… Given the way the auction unfolded, Quebecor Media could not pass up the opportunity to invest in licences of such great intrinsic value in the rest of Canada. We now have a number of options available to us to maximize the value of our investment."
“The addition of this 700 MHz spectrum will enable us to expand our LTE coverage into rural areas, extending TELUS’ national 4G LTE network to 97 per cent of the population well in advance of the auction’s build requirements,” said Telus CEO Darren Entwistle in his release. “Moreover, the spectrum will enable us to further enhance our coverage in urban areas, adding much needed capacity for our more than 7.8 million customers. Indeed, we have already begun to prepare our wireless cell sites to deploy 700 MHz spectrum, and plan to begin operationalizing the spectrum for the benefit of our customers as soon as it is made available to us later this year.”
