Tuesday, May 27, 2008

Canadian Wireless Spectrum Auction Currently Underway

The Canadian Advanced Wireless Spectrum Auction (AWS), where Industry Canada auctions off the airwaves requires for cellular services to operate, is currently underway. This is bigger news than it normally would be, however, because the Government has, for the first time, set aside a portion of the spectrum exclusively for new entrants. What does this mean? It means that, when all is said and done, we will most likely see a new wireless carrier in Canada.

For the past few years, any "new carrier" we've seen has actually been in bed with one of the "big three" cellular providers: Rogers, Telus, and Bell. Fido is owned by Rogers. Virgin Mobile piggybacks on the Bell network. And the latest newcomer, Koodo Mobile, is owned by Telus. As a result, many claim that, because of the perceived lack of competition, Canadians pay exorbitant mobile data rates. With the 40 MHz of spectrum that is now available for new carriers to snag up, we could see a major shift in the Canadian wireless landscape.

The auction likely won't be 100% complete for another month or so. The bidding process, currently still in "round one", begun at 9 a.m. (EDT) this morning. In addition to the "big three", other qualified bidders include companies like DAVE Wireless, a partnership between an investment vehicle controlled by John Bitove (formerly of XM Canada); Quadrangle Group, a New York-based private investment firm, and Vulcan Capital; Blue Canada Wireless Inc.; Novus Wireless Inc.; and Celluworld, Inc., among others. Two of the top bidders thus far are known only as 9193-2962 Qu├ębec Inc. (likely Videotron) and 6934242 Canada Ltd. (MTS-Allstream?) Thus far, there have been 298 bids for a total of $490,855,050. All bid are made online using a secure network.

Who will win the available spectrum, and what will this mean for wireless service plan rates going forward? Will a new provider offer significantly lower prices, forcing the big-three to follow suit? Will the company simply offer more of the same? Will we see more than one carrier enter the foray? It's obvious that some form of change is needed in Canada, and it looks like this auction is just the ticket to bring on such change.

Stay tuned to this blog for updates as they happen, and to the June issue of Marketnews Magazine for a full summary of the bidding process and its outcome.

[Industry Minister Jim Prentice makes the announcement late last year that wireless spectrum will be set aside exclusively for new entrants.]

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1 comment:

Anonymous said...

Hopefully this new competition will throw Rogers off it's game and force it to drop the atrocious system acess fees a la Koodo and Solo Mobile.

I wonder how long it would take the new company/brand to start business? I sure hope it's before everyone gets into the back-to-school madness because that's when most people buy their phones.