The 700 MHz auction, will this bring about real competition in Canada's wireless market?

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Mark November 19, 2013 on your calendar. Why? On this date, the federal government (Industry Canada/CRTC) plan to accept bids as they auction off the 700 MHz wireless spectrum.

The 700 MHz spectrum will allow networks to transfer larger amounts of data faster, that in turn, promises to alleviate network load. This "newer" spectrum designation will allow cell signals to penetrate structures or areas such as basements, elevators, subways and tunnels where previously signals were either sporadic or non-existent.

"Canada’s wireless industry finally has a date for a long-awaited auction of prime airwaves that the government hopes will foster increased competition and better prices for consumers".

We'll be the judge of that, but in the meantime, let the games begin...

The plan is to open up four blocks of “prime” licences in each jurisdiction and limit the big three (BCE Inc., Rogers Communications Corp. and TELUS Corp.) to one in each market while permitting new entrants to purchase two.

It doesn't stop there. Apparently, Industry Canada (CRTC) plans to reinforce the rules for companies providing competitors access to their networks for roaming and encourage cell tower sharing. This will in effect, dispense the need to deploy additional towers, saving new entrants the cost of deploying and maintaining new towers.

But what's in it for the government?

The last time the government auctioned off wireless spectrum (back in 2008), more than 4 billion dollars was raised, far exceeding preliminary estimates. Minimum bid levels along with conservative estimates imply that Ottawa stands to earn at least 900 million dollars, although the final dollar figure will likely be much higher.

The bigger question is whether the auction will attract the competition the government is hoping for from both new entrants and regional players alike.

A representative from Wind Mobile’s parent company Amsterdam-based VimpelCom Ltd. mentioned that its Canadian subsidiary had added almost 80,000 subscribers in the fourth quarter of 2012 and has almost 600,000 customers.

The representative goes on to say that results were encouraging, but wonders whether Wind’s backers have the desire to pour another billion dollars into investing in Canada.

So there you have it. Don't expect rates to plummet overnight, but it appears to be a small step in the right direction. I'd really like to see some of the smaller wireless providers get in there and give the big three a run for their money.
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rikkster, Mobile Master

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Posted 5 years ago

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Mark Kokolsky

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Isnt Wind already looking for a new buyer though? With Mobilicity going through the government to find out if Telus can buy them, Wind is up for grabs, and Public trying to restructure, who is really left out of the new entrants?

And while I know its a sensitive subject, they said the plan is to encourage people to share in order to save the new entrants the cost of deploying and maintaining towers. That sounds kinda unfair to the people who built those networks, I know people will probably say they make enough, but it would be like you building a house and the government saying your neighbor is moving in with you so they don't have to spend the money to build their own house.
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rikkster, Mobile Master

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Looks as though the Mobilicity merger with TELUS fell through. Wind reportedly has its eye on Mobilicity. I'm not taking sides, I just want to see how this will all play out. The spectrum auction has since been moved forward to January 14, 2014.

TELUS's proposed buyout of Mobilicity was overturned because it went against regulations set out by Industry Canada, where under the rules of the 2008 auction through which Mobilicity came into existence, any new wireless carriers were prohibited from selling their spectrum to an incumbent within five years.

Tower sharing is nothing new and dates back to (1999/2000) when, for example, TELUS acquired Clearnet Communications and QuébecTel to expand its coverage to the eastern provinces.

These acquisitions, along with a tower sharing agreement with then-primarily eastern Canada based Bell Mobility, allowed TELUS to boast a coast-to-coast CDMA network in all provinces. TELUS continues to remain partnered with Bell.

Industry Canada mandates tower site regulation and enforces ground rules for tower sharing, it's the carrier's responsibility to comply.

Other factors come in to play when deploying additional cell towers including; the preservation of the character of neighborhoods, property devaluation, potential electromagnetic interference along with any foreseeable adverse health and/or environmental impact(s) where cell towers are located in close proximity to populated areas.
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I like everyone else is looking for cheaper prices. From milk to gas and everything in between. :-) That said you cant say cell phone rates haven't dropped over the last 3 years. If anything the new entrants forced the incumbent to sharpen their pencils. Except the new entrant are loosing their shirt because their business model is unsustainable. As Mark said, Wind is itching to get out of Canada and the 600 thousands customers they have now is a third of what they were expecting at launch.

Teaming up with Blockbuster to sell your phone was also a major misstep.

So no, I doubt there will be more competition than what we have today. That said you can see yourself that when one of provider does something it takes a mere few days for the others to match. If that's not competition I don't know what. That said yes, I want free cellphone service too. :-)
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rikkster, Mobile Master

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We'll just have to wait and see.
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How does one set items to "not needing an answer?"

Also given the Big 3 looked at competition and one has bought Mobilicity, will Wind Canada get sold?
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Well WIND are in a better shape than Mobilicity so I don't expect them to be sold to one of the Big 3 because the spectrum they can get from WIND isn't what we can call a good deal for what it would cost.
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The problem is Wind needs a tower infrastructure otherwise it's not worth it for those that leave the big cities. Now if I lived in a big city, I'd have one of the newcomers but not as the only phone in our family.
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Apparently, Eastlink has expansion plans for mobile services to the regions where they already offer other telecom services.

Let us be realistic, these will probably be auctionned very high and unless they give permission to companies with comparable sizes like FRtel or TelCel to bid, nobody else will have the means to buy these frequencies. I hope the Bell/Telus agreement gets these over Rogers because our service will get much better if they do (better coverage accross thick walls).
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rikkster, Mobile Master

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@Geoff. Not sure what you mean. Wind with its 600,000+ customers, already has an established tower infrastructure with over 1,600 towers. Wind can only focus on small pockets of major centres because the big three have effectively cornered the wireless market. This is why the CRTC has laid the ground rules for tower sharing.

@Don. The idea behind this auction is to give new entrants and smaller players alike, a chance to bid on the 700 MHz spectrum. The CRTC is there as a referee of sorts, to ensure that the big three play by the rules and can only purchase one block of the spectrum, while new entrants can purchase two blocks.

This will mean that new entrants and smaller players will likely form alliances in an effort to raise capital to purchase blocks of the 700 MHz spectrum. This will prevent the big three from simply buying up the spectrum outright, thus creating a level playing field while at the same time generating much needed competition for the wireless sector in this country.

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