Bidding for a coveted piece of Canada’s wireless market gets underway Tuesday.
A new batch of spectrum is being offered by the federal government through auction and 10 players are in the bidding, including the big three telecom companies — Bell, Rogers and Telus.
The other bidders include Quebecor’s Videotron, MTS in Manitoba, Saskatchewan Telecommunications and Bragg Communications, which operates EastLink in Atlantic Canada.
The term “spectrum” is the radio frequency in Canadian airspace that wireless operators lease and use to transmit their signals.
Experts say the 700 megahertz waves up for auction are highly prized, because they let cellphone signals travel longer distances and can penetrate buildings and tunnels where calls are often dropped.
However, the amount of spectrum the companies can buy or lease over the next 20 years is capped to ensure that some of the other smaller operators can get into the 700-megahertz level, which 680News senior business editor Mike Eppel says will improve the quality of phone reception.
“It goes to places where the current wireless spectrum doesn’t, i.e., elevators and underground parking garages. It just has a broader bandwidth,” Eppel said.
Wind Mobile’s parent, Globalive Communications, has pulled out due to a lack of funds — a decision Industry Minister James Moore has reportedly called a private business decision.
Once the bids are submitted, it is expected to be weeks before Industry Canada discloses who won the licences and how much they paid for them.
The previous auction in 2008 for different spectrum raised $4.3 billion, but experts say lack of new competition means this auction won’t likely raise as much.
Hopes for foreign competitors to shake up the industry were dashed last September when U.S. giant Verizon dropped the idea of expanding into Canada.
Eppel says now that foreign bidders have walked away from the table, the auction will not achieve the government’s goal of lower rates through real competition for the big three.
“The federal government has been trying to expand the amount of competition in the sector. Verizon was speculated to come in last year already, [but] they pulled out at the time,” he said.
“We’ve had Wind Mobile now just over the past 24 hours pull out of its auction process, so there are just 10 bidders. The big three incumbents are in there, but at the same time, the smaller players are going to get first dibs – but it is not necessary going to expand the competitive landscape by a large margin.”
The federal government hopes to raise a few billion dollars through the spectrum auction.