TORONTO-Industry Canada conducted its first spectrum sale in November, raising CAN$172.5 million (US$116.7 million) in online bidding for licenses in the 24 GHz and 38 GHz bands.
In the process, which began in October and followed 118 rounds of bidding, Industry Canada sold six large blocks of spectrum. Carriers will use the spectrum to transmit wireless services such as voice, data and other forms of broadcasting.
Montreal-based phone company Wispra will pay CAN$74 million (US$50 million) for six licenses in Canada’s larger cities, including Toronto, Montreal and Vancouver. Norigen Communications, a Toronto a start-up carrier, took the second spot with 37 successful bids, valued at CAN$40 million (US$27 million), for 19 markets.
Toronto-based Stream Intelligent Network gained a national footprint by acquiring 92 licenses in 59 markets for CAN$22.5 million (US$15.2 million).
“We got more than what we wanted and for less than we expected to pay,” said Mark Etherington, Stream’s president and chief executive officer.
Established nine months ago, Stream is building a hybrid fiber-optic/wireless network, focusing on urban centers and extending into the outlying regions with wireless services. The company has signed IBM Canada, Bell Canada and Canadian Depository Services as initial clients.
Until now, Industry Canada has used a comparative process, based on business plans, to evaluate license proposals. “It was basically a beauty contest. Auction bidding is essentially a much fairer way to allocate services,” said Etherington.
Twelve of the 13 bidders gained licenses. Five companies, including Sprint Canada parent Call-Net Enterprises, withdrew before the auction opened.
“Some companies dropped out because they didn’t want to get stuck in a bidding war,” said George Karidis, director of research and consulting at The Yankee Group based in Brockville, Ontario. “They believe it might be easier to buy out players later on who already have the capacity.”
The auction is the first in a series. Canada plans to auction an additional 40-megahertz block of spectrum by fourth-quarter 2000.
“Industry Canada may be looking at the CAN$1 billion (US$676 million) mark for the new PCS licenses for [2000],” Karidis speculated. “Who knows what they’re going to fetch?”
In related news, Karidis said foreign ownership rules for Canadian telecom may be altered. The World Trade Organization is pressuring Ottawa to lower barriers to foreign investment. The government limits direct outside ownership in a Canadian telecom company to no more than 20 percent.
“If the rule book is thrown out, you’ll see aggressive moves by established U.S. carriers gaining control of Canadian broadcasting spectrum,” said Karidis.
