July 20, 2008 / 3:06 AM / 9 years ago

Bids slow to trickle in Canada's spectrum auction

4 Min Read

TORONTO (Reuters) - A morning round of bidding in Canada's wireless spectrum auction on Friday produced no new offers, suggesting the months-long process that could result in a new national wireless phone provider may soon end.

After the bidless round passed, a single new offer trickled in around noon and a handful of others arrived throughout the afternoon before bidding concluded for the weekend.

The auction of rights to airwaves for wireless telecom services has so far raised C$4.25 billion ($4.21 billion) in more than 300 rounds of bidding, according to a federal government website. That is more than double the amount analysts had expected.

Auction managers will wait for a period without any new bids before officially declaring the end of the auction. Bidding kicked off in late May, with 292 spectrum licenses offered across the country.

Canada's wireless market has been dominated by BCE Inc BCE.TO, Telus Corp (T.TO) and leader Rogers Communications Inc (RCIb.TO).

But Industry Minister Jim Prentice has set aside a portion of the spectrum exclusively for bids from new players.

The big mobile-phone companies have spent much more than expected in the auction and analysts have said that could leave them more vulnerable if newcomers enter the market.

According to the government's website, Rogers had so far bid the most on licenses at C$997 million, followed by Telus at C$879 million, and BCE at C$738 million.

Of the newcomers, the top bidder was a company controlled by Montreal-based Quebecor Inc QBRa.TO QBRb.TO with C$555 million, followed by privately held Globalive Communications with C$444 million and Data & Audio-Visual Enterprises Wireless with C$243 million.

"The biggest question of all will be: will Globalive partner with (Quebecor) to get into Quebec," said Troy Crandall, an analyst at MacDougall, MacDougall & MacTier.

Quebecor has bid aggressively in its home province, while Globalive has targeted other markets. A partnership to share their resources could make sense for both companies.

However, Crandall pointed out that while Quebecor's Videotron brand is well known and established, Globalive is not. Globalive's Yak brand is a discount long-distance provider and is relatively unknown outside a handful of large markets like Toronto.

That sort of brand discrepancy could lead them in turn to pursue divergent strategies, which could scuttle chances of a partnership.

And while newcomers have had spectrum set aside under the auction's rules, the amount of bandwidth they are able to secure is still very limited compared with what the Big Three have locked up.

"The amount of services they could offer may be limited," Crandall said.

Bandwidth will become even more important as smartphones like Research In Motion's RIM.TORIMM.O BlackBerry and Apple's (AAPL.O) iPhone continue to gain more widespread popularity.

That's because surfing the Internet from a mobile or sending wireless e-mail eats up much more bandwidth than simple voice calls.

It's also very lucrative -- both the wireless carriers and the handset makers have pegged such data services as an engine of profit growth.

"The iPhone is just a great example of showing all the different applications that will come in the future," Crandall said.

Editing by Rob Wilson

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