Canada auction aims to reshape wireless market

Tue May 27, 2008 12:53pm EDT
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By Louise Egan

OTTAWA (Reuters) - Canada's government launched an auction of wireless spectrum on Tuesday that it hopes will bolster competition and lower prices by allowing new players to break into the cellular phone market.

In a process that Industry Minister Jim Prentice estimates could take up to a month to complete, 24 companies can bid electronically on 292 licenses for chunks of wireless airwaves in different geographical regions across the country.

Of the 105 megahertz (MHz) of spectrum to be auctioned, 40 MHz will be set aside for new players.

That provision is a source of worry for the three big players -- Rogers Communications Inc, Telus Corp and BCE Inc -- which control about 95 percent of the wireless market in terms of revenue.

Canadian cellphone users pay higher prices than their U.S. or European counterparts, Prentice said, largely because there are so few mobile service providers.

A list of qualified bidders, released in April, included newcomers Quebecor Inc, Manitoba Telecom Services (MTS) and Shaw Communications Inc.

But analysts have said they doubt any of the new players have enough money to launch a very aggressive network-building campaign to become serious rivals to the incumbents on a national scale.

Quebecor, for example, is expected to initially target its home province of Quebec. Shaw, a cable and satellite TV company, has cautioned that its participation in the auction doesn't necessarily mean it will build a network at all.   Continued...

<p>A pedestrian walks past a Bell World Store in Toronto May 19, 2008. REUTERS/Peter Jones</p>