The Canadian government delayed its personal communications services spectrum auction for a second time until mid-January, giving officials enough time to respond to concerns about strategic alliances.
The auction was supposed to take place some time in November, but Paul Lajoie, technical analyst at Industry Canada, said the government needs time to answer about 100 detailed questions regarding the auction and its policies.
“There are questions on policy such as strategic alliances, affiliates and how they will be treated,” Lajoie said.
Also contributing to the delay is the $4.5 billion merger of Telus Corp. and Clearnet Communications Inc. in August. The merged company boasts more than 1.8 million customers and annual revenues of $1.5 billion. Because each company also covered opposites sides of the country, the merger created an instant national carrier.
Yankee Group Analyst Mark Quigley predicted the merger would unsettle Industry Canada.
“The end result (of the Telus/Clearnet merger) is that there will be less competition during the upcoming spectrum auctions and John Manley’s (Minister of Industry Canada) dreams of U.K. or German-like spectrum dollars will not occur. Ironically, the benefactors of this will be the carriers, as they will pay less for spectrum than they originally anticipated,” Quigley said.
Telus/Clearnet has 80 megahertz of spectrum in British Columbia and Alberta and 45 megahertz of spectrum in the rest of the country.
Up for sale is 40 megahertz of PCS spectrum, available in 14 areas reflecting population size and geographic area. A total of 56 licenses will be allocated to cover the entire country. Originally, all companies had until Aug. 28 to apply to participate, with eligibility restricted to those who could guarantee their financial deposit.
Much of the opposition is coming from the smaller carriers, many of which cannot put up the kind of money Telus, BCE Bell Mobility and other carriers of their size have within their reach. Analysts noted that the auction appears to be open to new entrants, but there are actually barriers in place that impede smaller carrier participation, although specifics as to what those barriers are were not mentioned.
Some entrepreneurs have petitioned the government to restrict the spectrum auctions to new players only, in hopes it will keep bid prices at a reasonable level. Industry Canada, however, has publicly disagreed with this notion.
” … the department found no compelling arguments demonstrating that spectrum set aside for new entrants would significantly advance new service offerings and expansion of digital service,” Industry Canada said in a report released in August.
The spectrum up for auction is not intended to support upcoming third-generation technologies like the spectrum recently auctioned by Universal Mobile Telecommunications Services in the United Kingdom. Industry Minister John Manley has said that the Canadian government will not be ready to allocate 3G spectrum until 2002 or 2003.
