The Canadian government is opening up its telecommunications market for new wireless players and giving incumbents a chance to acquire the spectrum they need to offer third-generation and enhanced services.
The federal government said it will auction off sometime in November the C- and E-blocks of spectrum in the personal communications services 2 GHz frequency band. The C-block, consisting of 30 megahertz of spectrum, will be subdivided into three blocks of 10 megahertz. The E-block, consisting of 10 megahertz, will be auctioned as is.
The blocks will be available in 14 areas, reflecting population size and geographic area, for a total of 56 licenses allocated to cover the entire country. All companies have until Aug. 28 to apply to participate, with eligibility restricted to Canadian companies that can guarantee their financial deposit.
If the final bids submitted in the recent Universal Mobile Tele-communications Services auction in the United Kingdom are any indication of how much companies are willing to pay for a piece of the wireless pie, the auction could net billions for the federal government.
Analysts indicate that bids could go as high as $4 billion, although there seems to be little concern right now that the Canadian PCS auction will get as chaotic as the U.K.’s.
“Certainly I don’t get that feeling in the street or amongst those in the industry. The auctions are open-ended,” said Peter Barnes, president and chief executive officer of the Canadian Wireless Telecommunications Association.
Canada’s established mobile operators, including BCE Inc., Bell Mobility, Telus Mobility, Clearnet Communications Inc., Microcell Telecommunications Inc. and Rogers Cantel Mobile Communications Inc. are expected to participate. Rogers Cantel, Bell Mobility, Microcell and Clearnet already are licensed PCS operators.
Telus Mobility President John Maduri expressed his enthusiasm for the auction, saying it is “a very significant step in our national wireless strategy that the federal government has chosen to encourage true competition on a national basis.”
Telus Mobility resells wireless services in Saskatchewan, Manitoba and Ontario, but Maduri noted “resale does not encourage capital investment or research and development.”
Unlike the U.K. auction, new entrants like Telus will not get a break from having to compete with the incumbents. A report from Industry Canada said “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.”
Opening bids for the licenses have yet to be set.
Industry Minister John Manley also said the government is preparing for the planned international allocation of a common band for 3G spectrum in 2002 or 2003.
