Canadian wireless startup takes maverick approach

Wed Aug 24, 2011 11:54am EDT
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By Alastair Sharp

TORONTO (Reuters) - When the Canadian government auctioned off wireless airwaves in 2008, most carriers had no interest in bidding for the so-called G band - "orphan" frequencies used nowhere else in the world.

Most handset makers don't bother making phones that are G band compatible, meaning any bidder would have a very limited selection of handsets to offer customers.

It was a drawback that scared away all but Public Mobile. The small upstart took a gamble in buying G band rights on the cheap with an eye to launching a no-frills service for cost-conscious customers in Toronto and Montreal.

"Most people looked at it and said, 'It's not really useful for much of anything'," said Bruce Kirby, the head of strategy and business development at Public.

Public spent only about C$52 million ($52.5 million) to take the prize, out of a total C$4.2 billion raised in the auction.

Most of the money came from bids from big established operators such as BCE's Bell Canada and Rogers Communications, and to a lesser extent from Globalive's Wind Mobile and Mobilicity, two other newcomers to the country's telecom sector.

For Public, the low cost of the G band rights was a decided benefit. But, looking ahead, its investment may pay even bigger dividends if Sprint Nextel, which owns the same frequency in the United States, decides to use the spectrum for the first time.

"Sprint will determine the future of the G band," said Philip Marshall, an analyst at Tolaga Research.   Continued...