Mark Goldberg


www.mhgoldberg.com





Fox Group Dispatch

Will Canada see a new new-entrant?

Could the “Consultation on a Technical, Policy and Licensing Framework for Spectrum in the 600 MHz Band” lead to a new mobile service provider entering the market? As stated in the Minister’s news release, “the Government is proposing measures to support competition and encourage investment in wireless services.”

The most significant “pro-competitive measure” being proposed for this auction is a 30 MHz set-aside for bidders other than “companies with 10% or more of national wireless subscriber market share” – which is a more polite way of saying “almost anyone other than Bell, Rogers and TELUS.” The government is proposing a further set of restrictions for companies that want to bid on the set-aside spectrum: as of the date of registering to bid, the companies must be registered with the CRTC as facilities-based-providers, and must be actively providing commercial telecommunication services to the general public in the licence area of interest.

It is notable that the language in the proposed rules use the broader term “telecommunications service” not a “wireless” or “mobile” service. As a result, there is a significant number of potential bidders or bidding partners for this spectrum. A potential bidder may be registered as facilities-based in a limited area, but offering commercial telecommunications services (such as internet services) nationally.

Today’s market conditions appear to be much more favourable compared to the environment at the time of the 2008 AWS-1 auction which stimulated the creation of a number of regional competitors. Among other factors, consider: foreign ownership restrictions have been lifted; roaming rules and rates are in place; early termination conditions in contracts are no longer meaningful; and, there is 30 MHz of spectrum being auctioned in a band with much better propagation characteristics than the AWS bands, leading to lower costs of initial network deployment.

As a result, the set-aside spectrum might be seen as an attractive opportunity for the creation of a new wave of new-entrants. What role will foreign capital play in the auction?

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