Canada seeks C$900 million or more in spectrum auction

Thu Apr 26, 2012 3:13pm EDT
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By Alastair Sharp

TORONTO (Reuters) - Canada aims to raise a minimum of nearly C$900 million through an auction of valuable wireless spectrum, based on ground rules published by the government this week, though the sale could bring in far more as carriers vie for the frequencies.

The online document spelling out the rules marks the start of a months-long consultation process that will bed down the finer points of an auction that will shape the wireless industry for years to come. The sale is scheduled for early next year.

In selling the rights to low-frequency 700 MHz airwaves, Industry Canada, the agency in charge, wants to thwart criticism over how it handled a wireless auction in 2008.

This time it plans to keep bids anonymous to reduce the potential for collusion. It will also offer packaged licenses to eliminate the risk that bidders will win some but not all the spectrum they desire.

The 700 MHz frequencies - which travel longer distances and penetrate walls more easily than other spectrum - are 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.

Some participants in a 2008 Canadian auction of higher-frequency airwaves have privately complained that Telus Corp and BCE Inc avoided bidding against each other as they could see the blocks the other was targeting. The two carriers later built a shared national network. That auction brought in C$4.25 billion ($4.32 billion) for the government.

"With the "blind auction" structure, it will be difficult for players to know that this harmonic situation is unfolding, and a combination of risk and greed could lead to extended bidding," TD Securities analyst Vince Valentini wrote in a note to clients on Thursday.

He estimated BCE, Telus and Rogers Communications, the country's largest wireless operator, would each spend at least C$500 million in the auction.   Continued...