TORONTO-The established Canadian wireless fraternity scooped up most of the available spectrum licenses contested in the February auction. All told, Industry Canada’s auction for wireless spectrum in the 2 GHz band raised US$964 million for federal coffers.
Rogers Wireless and Bell Mobility were the two biggest spenders and gained the most new licenses. Telus Communications augmented its spectrum presence in Eastern Canada. But Microcell Telecommunications, which operates the Fido mobile-phone service, withdrew in the early rounds.
Bell Mobility, the wireless arm of Bell Canada, spent US$469 million for 20 licenses. “We’re pleased that Bell Mobility was able to acquire the right amount of spectrum for a reasonable price,” said Pierre Blouin, Bell Mobility’s president and chief executive officer.
In the scheme of things, the prices paid by Bell and the other Canadian carriers were a bargain compared with the recent U.S. wireless spectrum auction that ended in January.
Rogers Wireless paid US$256 million for 23 licenses, including US$184 million for access to the greater Toronto area. Indeed, the major battleground for the airwaves was for southern Ontario, including Toronto.
“Our A license for the region was significantly cheaper than the B and C licenses Bell ended up with and the D license that Telus got,” said Charles Hoffman, chief executive officer (CEO) of Rogers Wireless.
Besides one 10-megahertz block of spectrum in southern Ontario, Rogers secured 20 megahertz of new spectrum in southern Quebec, Alberta, British Columbia, Central Canada and the Maritimes.
“We obtained licenses for a lot less money than we originally expected to pay. In fact, we got double what we hoped for,” said Hoffman.
His negotiation team, backed by British Telecommunications (BT) veterans of the European auction wars, expected Ottawa would fetch somewhere between US$1.6 billion and US$1.95 billion for the new broadband frequencies. Rogers’ third-generation (3G) spectrum needs are now assured through 2007, said Hoffman.
No doubt the Canadian bidding was tepid because there was no serious threat to the national incumbents. W2N of Montreal purchased three licenses for US$7.4 million, but gained only a regional presence. At one stage, W2N had bid well more than US$130 million for key licenses, but in the end, pulled back with limited spectrum in Alberta and British Columbia. W2N has not disclosed details regarding its plans for the spectrum.
For its part, Thunder Bay Telephone bought one local license in northern Ontario for US$39,000.
The fact that a numbered company backed by U.S.-based Sprint withdrew early on eased the competitive fray. “Obviously, Sprint has a relatively full plate in the United States. If it had a stronger partner in Canada, Sprint might have made things interesting,” said Iain Grant, managing director of The Yankee Group in Canada.
Mark Langton, spokesman for Telus Mobility, said it is significant the established carriers kept a fourth major player from entering the market. The Canadian wireless industry is characterized by some of the lowest rates in the world. The sector is mostly unprofitable. “There’s more than enough competition already,” said Langton.
Somewhat surprisingly, spectrum-rich Telus, which became a national force after its US$3 billion acquisition last year of Clearnet Communications, forked out another US$232 million for spectrum licenses in Toronto, Montreal and farther east.
The spectrum is for so-called 3G services, although Industry Canada might hold other 3G spectrum auctions within the next two or three years.
