ISED got it right

Is it possible that ISED got it right? As Canada’s 3800 MHz auction closed yesterday, it appears that ISED’s use of “caps” (as contrasted with spectrum set-asides) may have contributed to an auction that kept prices internationally competitive.

The total money raised in the auction was $2.16B, far below the Bay Street financial analysts expected range of $4B – $10B. The average cost per Mhz-pop was $0.29, more than 60% lower than Scotiabank’s pre-auction estimate of $0.70. As I wrote earlier this week, the $0.29 is in line with Australia’s recent auction which worked out to C$0.26 per MHz-pop.

Recall that only 2 years ago, the 3500 MHz auction raised $8.9B, with an average cost of $3.28 per MHz-pop.

With significantly higher costs of capital, financial analysts were expecting bidding to be lower, but the results came in significantly lower than expected. BMO Capital Markets called it “A much more disciplined auction.” Scotiabank said “Finally a spectrum auction that does not break the bank”. TD Securities said, “In short, we are delighted with the outcome of the auction. Each of Rogers, Bell, TELUS, and Quebecor spent materially less than what we and the Street had expected in this mid-band auction.” A note from National Bank credits the cross-band spectrum cap and more available spectrum.

The lower spectrum cost means carriers will be in a better position to invest in physical infrastructure.

A number of carriers released statements last night:

  • Bell: Bell secures the most 5G+ spectrum nationwide with acquisition of 3800 MHz licenses
  • Cogeco: 3800 MHz spectrum auction: Cogeco acquires 99 licenses in Québec and Ontario
  • Rogers: Rogers Acquires 3800 MHz 5G Spectrum Across Canada
  • Sasktel: SaskTel invests $10.2 million to acquire 3800 MHz wireless spectrum as part of its mission to deliver advanced 5G connectivity to customers across Saskatchewan
  • TELUS: TELUS secures critically important 3800 MHz spectrum licences, unleashing the full potential of 5G
  • Videotron: 3800 MHz wireless spectrum auction – Quebecor and Videotron invest nearly $300 million to move forward with Canadian expansion

Reading these, we might conclude that ISED got it right.

In any case, remember, there is a free webinar from the International Telecommunications Society next Thursday (December 7): “Optimizing spectrum auctions”. See you there!

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