* Government sets Nov. 19 to start 700 MHz spectrum auction
* Puts floor on opening bids totaling C$897 million
* Expands roaming, cell tower sharing rules
* No immediate plans to lift foreign limits on big telcos
By Randall Palmer and Alastair Sharp
OTTAWA/TORONTO, March 7 The Canadian government
said on Thursday it would start the process of auctioning more
prime wireless spectrum on Nov. 19 and announced other steps
designed to stimulate competition and reduce high roaming
In selling carriers the rights to use the additional
frequencies for wireless service, Ottawa aims to assure at least
four competitors serve each region of the country. To accomplish
that, it will limit the three dominant carriers, BCE Inc's Bell
, Rogers Communications Inc and Telus Corp
, to three of four prime blocks in each area.
"Our government's priority is to provide greater wireless
coverage at lower rates for consumers," Industry Minister
Christian Paradis said in a statement.
Canada's wireless market, which has some of the highest
roaming charges in the world, is dominated by Bell, Rogers and
Telus, which together command a 90 percent share.
The government sought to weaken their dominance in a 2008
auction of airwaves in which it set aside some spectrum for new
entrants. Among the upstarts that emerged are Wind Mobile, a
carrier in the process of being acquired by Amsterdam-based
VimpelCom Ltd, and closely-held Mobilicity and Public
In another measure to promote competition, Ottawa is
indefinitely extending a requirement that wireless carriers
provide roaming on their network to rivals, and expanding that
requirement to all carriers. When introduced in 2008, the
roaming requirement, designed to make upstarts more attractive
to customers, applied only to them, and for five years.
But Ottawa stopped short of requiring that networks provide
so-called "seamless" roaming, a major win for the Big Three,
according to Desjardins analyst Maher Yaghi.
The policy still allows calls to be dropped when a customer
strays out of the coverage area, but gives the customer the
right to reconnect on the roaming network.
Canadians have paid among the highest roaming rates in the
world, according to an OECD report from May 2011, and the
highest average bills, according to a September 2010 report from
Bank of America Merrill Lynch.
That said, there is some evidence to suggest that the
government's overall initiative is succeeding.
Since the 2008 auction, wireless prices for consumers have
fallen by 10 percent, Industry Minister Christian Paradis said
in announcing the latest wireless initiative.
Iain Grant, the managing director of telecom consultancy
Seaboard Group, said the upstart providers had shaken up the
industry and forced the established companies to lower rates.
"In urban centers, they have done an excellent job. The
entire rate structure has in effect been set by Mobilicity and
Public Mobile and Wind," he said, referring to three entrants
that have offered cut-price talk-and-text deals centered in the
most populous cities.
The established providers have defended the rates they
charge, countering that both voice and data usage are higher
than average in Canada and that per-minute or per-megabyte
comparisons paint an accurate picture.
The latest spectrum to be auctioned is highly valued for its
ability to penetrate buildings and travel long distances, and is
compatible with a new mobile broadband technology known as
long-term evolution. LTE is already being introduced into U.S.
markets after an auction of the same spectrum four years ago.
Paradis would not say how much revenue he hoped to raise
from the auction but said he expected there to be strong
"There is no certainty with this. We put a floor with which
we are comfortable," he said at a news conference. "We expect
there will be interesting competition."
Ottawa set minimum opening bids totaling C$897 million ($870
million) for the auction, with initial applications due June 11.
The 2008 spectrum brought in C$4.25 billion.
Analysts expect each of the three main players to pay at
least C$500 million to secure more airwaves. Limited resources
may stop some of the newer carriers from bidding aggressively.
In another step that could loosen the Big Three's grip,
Paradis said the government would review its policy on the
transfer of spectrum licenses.
That could lead Ottawa to take a more aggressive stance on
proposed transfers, and it could veto Rogers' planned purchase
of airwaves owned by Shaw Communications Inc.
Shaw bought set-aside spectrum in the 2008
auction before scraping plans to build a wireless network.
WHEREVER THEY MAY ROAM
The new rules also step up the pressure on carriers to
increase sharing of antenna towers and sites, and reduce the
time it takes to negotiate such deals.
Municipalities are eager to limit the proliferation of
cellular towers, while incumbent operators that own existing
towers can be slow to reach commercial agreements to share them
with the new entrants or one another.
There are seven blocks available in the wireless spectrum
auction, but bidders will likely covet four aligned with
spectrum bought by AT&T and Verizon Wireless in the United
States. Verizon is a venture of Verizon Communications Inc
and Vodafone Group Plc.
Those carriers hold more sway with device manufacturers and
can push to ensure future smartphones and tablet computers work
on those specific frequencies.
The government has said BCE, Telus and Rogers can only
obtain one of these prime blocks each, leaving the new entrants
and regional cable operators such as Quebecor Inc and
Shaw to compete for the fourth.
Last March, Paradis reduced foreign investment restrictions
on small carriers that have a market share of 10 percent or
less. He said on Thursday it was premature to talk about
expanding this to the larger companies.
"What we understand is that we would have to hold public
consultations. We're not there yet," he said. "What we sent here
is a clear signal that we want to have more competition in the
Shares of BCE, Rogers and Telus slipped between 0.4 percent
and 1.7 percent by midday on the Toronto Stock Exchange. Shaw
was also down 1.1 percent, while Quebecor gained 0.6 percent.