Canada’s business department plans to auction AWS-3 airwaves before its planned tender of 2.5 GHz scheduled for April 2015.
Industry Canada has laid out plans to weight the sale in the favour of existing smaller operators – setting aside a 30 MHz…
Canada’s business department plans to auction AWS-3 airwaves before its planned tender of 2.5 GHz scheduled for April 2015.
Industry Canada has laid out plans to weight the sale in the favour of existing smaller operators – setting aside a 30 MHz block for them to purchase – creating an incentive for investors to buy up the market’s minnows.
Only wireless operators with less than 10% of national market share and 20% of regional market share will be eligible to bid on the set-aside licences, and only in areas where they are already operating.
The rules mean that in Toronto, by far Canada’s largest city, only Wind Mobile and Mobilicity would be allowed to bid for the reserved frequencies.
Mobilicity has been under creditor protection since last September after Industry Canada effectively blocked its C$380m sale to Telus. Meanwhile Wind’s backer, VimpelCom, is no longer injecting cash into the business as it once was and has been trying to offload the unit.
The government does not want the three incumbent operators – Telus, Bell and Rogers – to acquire any more spectrum. Instead it is keen for a well-capitalised investor to emerge and consolidate the smaller players to create a scaled fourth player.
One potential candidate to consolidate Wind and Mobilicity is Quebec operator Videotron.
In June the telco laid out its vision to become Canada’s fourth nationwide mobile operator and said it was open to consolidating willing partners.
However, the operator would want the government to reform the rules around roaming policy and wholesale pricing. The CEO of its parent company, Quebecor, cited a previous comment from the Competition Bureau of Canada, which has said incumbent players have used the roaming policy as a “strategic tool to eliminate or reduce the competitive pressure… in Canadian mobile wireless markets”.
Another possibility could be Verizon Communications, which examined the possibility of entering Canada last year before going cold on the idea. After evaluating the market Verizon’s CEO Lowell McAdam said the company was “not going to Canada” because it did not offer sufficient value creation for his shareholders.
The AWS-3 band is adjacent to the AWS spectrum auctioned in 2008, which Wind and Mobilicity operate on. Like the frequencies sold in 2008, the AWS-3 airwaves will be subject to strict transfer regulations to prevent them being sold on to the big three at a later date.
The government will launch a consultation this summer to help develop the framework for the auction and the licensing. In particular it will look at whether the AWS-3 licences should include deployment requirements for the next five years and the next 10 years.
Industry Canada also wants feedback on whether a sealed-bid format would be the best approach to encourage participation.
Industry minister James Moore commented: “Today’s announcement will help operating new entrants acquire valuable new spectrum to help expand their networks and deliver fast, reliable service to Canadians.”
He added that the rules “will encourage more competition in the wireless market”.
