The IT Nerd

Three weeks ago, a new spectrum auction was started by Industry Canada to auction off 2500 MHz spectrum. And the winners are:

• Telus came out on top spending  $479 million for 122 licenses. The licences that they got covers most of the country.
• Videotron spent $187 million on 18 licenses. Of interest, some of those licences are in Toronto, Montreal, Ottawa, Edmonton, Calgary and Vancouver.
• Eastlink spent $5 million on 11 licenses. Of interest, some of those licenses are outside of its East Coast corridor as they got licenses in North Bay, Subdury, Kirkland Lake and Grand Prairie.
• Rogers and Bell picked up 41 and 51 licenses respectively. Neither company was able to get more licenses because they reached the limit set out by Industry Canada for this space in the previous 2500 MHz auction.
• Tbaytel, Corridor Communications and Xplornet spent $1.7m, $2.3m and $25.7m respectively on licenses.
• MTS picked up two licenses in Manitoba.
• Wind Mobile secured no licenses.

Based on this, I’d say that Telus and Videotron were the big winners in this auction. In the case of the latter, I’m thinking that national expansion is the cards for them.

One of the things that I missed out on yesterday was the announcement of who won and who lost in the AWS-3 Spectrum Auction held by Industry Canada. Now that I feel somewhat human after flying to Australia, let me fill you in on the results:

Winners:

• Eastlink was able to purchase spectrum in Newfoundland & Labrador, Nova Scotia & PEI, New Brunswick, and Northern Ontario.
• Videotron was able to purchase spectrum Eastern Quebec, Southern Quebec, Eastern Ontario and Northern Quebec.
• Telus and Bell split what was left in Southern Ontario and pretty much took everything else everywhere else.
• The big winner is Wind Mobile as they dropped $56.4 million on three successful bids in Southern Ontario, Alberta and British Columbia. This will allow them to roll out LTE services to their customers and they already operate in those areas which makes life easier. It will also make them very, very competitive with the “big three” carriers as well in those areas. Or at least, one would think so. Though, before you hop over to Wind, it’s going to take them a year or two to get LTE up and running. I’d sit and wait until then to see what they offer.

Absent:

Missing from the auction results was Rogers. I’m guessing that they have other things to spend their money on. Example, their LTE-Advanced rollout. SaskTel and MTS were missing as well. I’m guessing that they didn’t see the point of participating.

Loser:

The big loser was Mobilicity who lost their funding to participate just before the auction. This pretty much confirms that they don’t have long to live. Though, this lawsuit against Industry Canada for a mere $1.2 billion was given the green light to proceed. So they may have some life yet. Although without the spectrum that was on offer today, I can’t see how they could possibly make a go of it long term.

Mark March 3rd on your calendars as that’s the day that the latest spectrum auction begins. Industry Canada who is running the AWS-3 auction has posted a list of bidders, but I’ve got them below for your convenience:

• Bell
• Eastlink
• Mobilicity
• MTS
• Rogers
• SaskTel
• TBayTel
• TELUS
• Videotron
• WIND Mobile

Also, it should be noted that 30Mhz of the 50Mhz has been set aside for new entrants that own less than 10% national market share and 20% regional share. After this auction, they’ll be another auction for the remaining 2500 Mhz spectrum later this year.

We’ll see if either of these auctions finally brings about the lower prices and better service that the Government Of Canada has been trumpeting for the last couple of years.

James Moore, Canada’s Minister of Industry, today announced details of the upcoming AWS-3 spectrum auction. Here’s the high level bullet points:

• The auction is scheduled to begin March 3rd, 2015
• Newer entrants such as WIND Mobile, Mobilicty and Videotron and anyone else with below 10% national and 20% provincial market share will have spectrum set aside for them.
• This spectrum will allow carriers to deploy LTE
• The government will be developing a plan to enable use of the AWS-4 spectrum “so that a new competitor can offer more choice to Canadians, especially those in rural and remote areas.”
• An additional 2100 MHz of spectrum will be available for carriers to deploy “to deliver the services that Canadians want.”

Moore in his announcement continued to sing from the song sheet of wanting to “deliver more choice, lower prices and better service in Canada’s wireless industry.” Something that the Canadian government has failed to deliver on thus far. But in the interest of being fair, maybe all of these actions will make a difference. We’ll have to wait and see.

I got this question in my inbox late last night:

Hello IT Nerd. Why would the government go through the trouble of setting up a second spectrum auction that is heavily slanted towards the struggling wireless carriers in Canada? Will this attempt work? 

Thanks very much. 

Thanks for the question. The reason is simple. Efforts by the Canadian Government to lower cell phone prices in Canada have quite simply failed miserably. This is their last roll of the dice to do something that they’ve been promising for years before they have to go to the electorate in the second half of 2015. If they don’t solve this now, one of the opposition parties will call them on it.

Now will this roll of the dice work? I seriously doubt it. The problem is that they’re going about it wrong. This might sound familiar to frequent readers of this blog, but what the Canadian Government needs to do is convince a big telco like Vodafone, O2, Orange, or Deutsche Telekom (aka: T-Mobile) to come in and set up shop in Canada. That’s best done by changing the foreign ownership rules and offering incentives so that it makes sense from a dollars and cents perspective to set up shop. If that happens, the big three will drop prices so fast, you’ll suffer whiplash. That’s because a big foreign telco will actually force the big three to be competitive. I seriously doubt a fourth carrier that’s made in Canada so to speak can do the same thing.

Of course, I’m willing to be proven wrong. We’ll just have to wait until 2015 to see if I am or not.

Well, this media availability announcement that led to this story by The Globe And Mail has been confirmed in the last few minutes via a news conference with Industry Minister James Moore. The Canadian Government is going to have a separate auction for 2500 Mhz spectrum for new entrants before the main one for everyone. Here’s what a press release said on the subject:

To further encourage competition and make more spectrum available for operating new entrants, the Government will set aside one 30 MHz block of AWS-3 spectrum for these providers in each region of the country. Wireless carriers with less than 10 percent national and 20 percent provincial/territorial wireless subscriber market share will be eligible to bid on the set-aside in licence areas where they are providing services to Canadians. This auction will take place before the 2500 MHz auction, which is scheduled to start in April 2015.

Now the 2500 Mhz spectrum is just as valuable as the 700 Mhz spectrum auction last year because it functions well in both urban and rural areas and signals penetrate buildings better. Therefore, this is prime real estate for any wireless carrier. So if you’re Mobilicity, Wind, or Videotron, getting your hands on this spectrum will allow you to jump start your business and be instantly competitive with the big three. Potentially at a lower price point. Thus you can fully expect that the big three will likely try to do something to keep this auction from ever happening.

I would suggest that you should stay tuned as this story is going to get interesting over the next few months.

On Friday I posted a story on an upcoming announcement from Industry Minister James Moore who was going to announce something related to “wireless competition” today. Today The Globe And Mail has an idea as to what that announcement might be. It appears that the Canadian Government has hatched a plan to have an auction the 2500 Mhz spectrum that’s specifically focused on the newer wireless players. That would be Wind Mobile, Mobilicity and Videotron. The big three would be left out in the cold. This auction would take place BEFORE the main 2500 Mhz auction that’s scheduled for April 2015. What’s even more interesting is this:

The federal government’s end game is to create a situation where struggling smaller players Wind Mobile and Mobilicity merge and the spectrum they hold gets rolled along with other spectrum into a vehicle that’s sufficiently well-capitalized to succeed in the market.

If that’s true, then the rocky relationship between the Canadian Government and the big three is about to get rockier because it’s a safe bet that the big three will be less than thrilled with this idea. The article notes that this scheme will be a benefit to Videotron for this reason:

Quebecor’s Videotron has signaled it may be willing to become Ottawa’s long-sought fourth wireless player and this past winter spent $233-million buying valuable spectrum in Canada’s four most populous provinces.

But Quebecor has also strongly hinted it wants more help from Ottawa in order to make it more attractive to roll out wireless service across the country.

This is a great way for them to get this help. Tune in at 9:30 AM to see if this report pans out.

This could be something or nothing, but a press release on the Industry Canada website, there’s going to be an announcement on Monday relating to “wireless competition.” Your guess as to what that means is as good as mine. But we’ll see what the deal is at 9:30 AM on Monday.

Please your bets and watch this blog for details on whatever is announced.