July 24, 2008 / 1:14 AM / 9 years ago

Canada plans another wireless spectrum auction

<p>Canada's Industry Minister Jim Prentice speaks during a news conference on Parliament Hill in Ottawa in this May 27, 2008 file photo. REUTERS/Chris Wattie</p>

TORONTO/OTTAWA (Reuters) - The Canadian government plans to sell off more wireless spectrum in the next year and a half, following a heated auction of airwaves that raised C$4.25 billion ($4.21 billion) and could soon reshape the country’s mobile phone market.

“There is what I refer to as the 700-series bandwidth,” Industry Minister Jim Prentice told reporters. “There is an auction of that which will happen at some point in the future ... as I recall, it’s about 18 months away.”

The 700 megahertz airwaves are considered valuable because they can cover long distances and more easily penetrate obstacles such as thick walls and buildings.

Such an auction could further shake up Canada’s wireless landscape by opening up more spectrum to firms other than the Big Three providers -- BCE, Telus Corp and Rogers Communications -- who currently rule the market.

In the United States, major wireless carriers spent billions earlier this year on securing 700 megahertz licenses. Verizon and AT&T won more than $16 billion of the licenses, according to auction results.

“They scored big time in terms of government revenues,” Amit Kaminer, an analyst at telecom consulting firm SeaBoard Group, said of the U.S. auction. He added the 700 megahertz spectrum was formerly used for television broadcasting.

Prentice characterized the 700-series spectrum is “highly prized.” The auction that concluded on Monday was a sale of spectrum in the 2 gigahertz range.

Prentice also said on Tuesday it could take up to a year to see increased competition in Canada’s cellphone market in the wake of the latest auction.

“I’ve seen estimates ... that it will be approximately a year before we see new competition, but I certainly anticipate that at some time between now and that date that we will begin to see new competition in the marketplace,” he told reporters from a news conference in Edmonton, Alberta.

Ottawa has taken steps to avoid “hoarding” by prohibiting new market entrants from selling their spectrum licenses to the three big incumbents for the first five years of the 10-year license, Prentice said.

He added he expects those who won licenses will put the spectrum to “its highest productive use.”

The auction, which ended on Monday after almost two months of bidding, raised more than twice the amount analysts had expected.

The government had set aside a chunk of airwaves exclusively for new players, a move aimed at fostering more competition and lowering prices for consumers.

It has conditionally assigned 282 licenses to 15 companies but will only award the final licenses after ensuring the firms comply with a series of financial and ownership requirements, which could take weeks.

Prentice declined to comment on whether he would like to invest part of the windfall from the auction on improving the national broadband infrastructure, a strategy pushed by the political opposition and also by Canada’s second-biggest phone company Telus Corp.

Rogers, which owns Canada’s largest wireless firm, was the top bidder in the auction with offers totaling C$999.4 million. The amount let the company secure spectrum in every area of the country.

Telus had C$879.9 million in standing high bids. BCE, the biggest telecoms company in the country, had bids totaling C$740.9 million.

The newcomers that appear to pose the most serious threat to existing carriers are Quebecor Inc, which bid a total of C$554.5 million, and Globalive Communications, with bids totaling C$442.1 million.

($1=$1.01 Canadian)

Editing by Rob Wilson

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