TORONTO - Industry Canada's month-long wireless spectrum auction ended yesterday, radically changing the outlook of the Canadian telecommunications industry.
With no bids placed in Round 331, the federal government pulled the plug on the auction, which has raised more than $4.25 billion in revenue. About 300 spectrum licences were up for grabs, 40 per cent of which were set aside for new entrants in the wireless industry.
The results, almost triple market watchers' predictions, will certainly surpass Industry Canada's mandate of lowering cellphone prices and increasing competition in the $16-billion telecom industry.
"I hope the industry keeps this competitive spirit alive (with) improved access to the spectrum," said Industry Minister Jim Prentice. "We think consumers will be the big winners in this auction."
Canadians will have between two and five new cellphone companies to choose from in each province and territory.
Globalive Communications Corp., parent company of long distance dial-around reseller Yak, is set to emerge as a strong "national" player, with 30 spectrum licences worth $442-million to provide service in every Canadian region.
For the most part, Globalive's national plans was stymied by Quebecor Inc., which spent the most among the new entrants, $554.5 million for 17 licences, mostly in Quebec. A recent report by UBS analyst Jeffrey Fan suggests Globalive will partner with Quebecor's Vidéotron business unit to form a true national competitor to the "Big Three" incumbent companies -- Rogers , Telus and BCE Inc.
Other new regional entrants include Shaw Communications Inc., owner of Canada's second-largest cable business after Rogers Cable. Shaw will likely build a network in Western Canada. Bragg Communications Inc. will operate a cellphone service in Atlantic Canada through its EastLink brand and Data & Audio-Visual Enterprises (DAVE) Wireless Inc., a company controlled by satellite radio entrepreneur John Bitove, won spectrum in 10 urban-centric areas across Canada.
Analysts have said a new entrant could offer cellphone service anywhere from three months to one year following the end of the auction.
Yesterday's big winners may actually be Canada's incumbent wireless companies, which have bid the most for spectrum during the auction.
Rogers holds 59 licences worth $999.3 million, while Telus holds 59 licences worth $879.8 million and BCE's Bell Mobility unit holds 54 licences worth $740.9 million. Industry analysts, such as Genuity Capital Markets' Dvai Ghose, have speculated that Bell and Telus will use the spectrum they win to deploy a 3G HSPA/GSM network.
© Ottawa Citizen
