Canada Competition Bureau

Canadian Spectrum Auction Designed To Push Merger Of Smaller Carriers

July 7, 2014 - Written By Cory McNutt

The Canadian Industry Minister, James Moore, made a small announcement on Friday, that today (Monday) would be another exciting day for the wireless industry in Canada.  Very little was revealed about what was coming, he only said it would, “support more consumer choice and better service in the wireless market.”  He has already mentioned several “pro-consumer” initiatives, such as reducing the overall roaming costs, loosening restrictions of cell-tower building, and a “use it or lose it” policy with regards to carriers that are buying up spectrum, only to hoard it away.

The Canadian Government is adamant about have a fourth major wireless carrier to strengthen competition and lower prices for consumers – something that Rogers, Bell, and TELUS are not interested in seeing happen.  The incumbents argue, as well as many others, if it will really make the prices in Canada decrease at all.  During the last auction, Quebecor’s Videotron spent $223 million of the valuable 700MHz spectrum in four of Canada’s most populated provinces.  They have hinted that they would like to become Canada’s fourth large player in the wireless market, but says it will do so only if it has more concessions or help from the Government, and thus far has held off launching any service in new regions.

According to The Globe and Mail, the Federal Government will announce that is offering chunks of the coveted AWS-3 spectrum ahead of schedule and in such a way that it will force smaller players to merge to form a larger company to do battle against the Big Three incumbents.  Much of this has to do with a Federal Election on the horizon and the Conservatives have still not made good on their promise of better wireless service and lower prices.  They have not allowed Mobilicity to become part of the Big Three, still insisting that the market can support another large competitor. The way the auction of the AWS-3 spectrum is setup, an investor would have to go through entities such as Wind or Mobilicity in order to make a purchase.  A government official told our source:

“It is an ideal time to inject additional spectrum into the marketplace in order to incent new wireless investors and to improve the conditions for the purchase of new entrants.  We recognize that, in order to continue making progress on this path, companies need clarity on how and when wireless spectrum will be allocated in the future.” The Tories force Telus to cease their efforts to try and buy Mobilicity or else they would not be allowed to participate in the next 2,500MHz auction and Telus promptly dropped their efforts.  Sounds an awful lot like ‘blackmail’ to me…please hook up with us on our Google+ Page and let us know what you think of the Canadian Government efforts to create a fourth carrier – is it really needed and will the prices actually come down…as always, we would love to hear from you.