As my late afternoon update suggested yesterday, the race is on for wireless spectrum. It looks like most Canadians are going to have a substantial increase in choices when their mobile contracts come up for renewal. A year from now, most Canadians may be able to choose from 2 or 3 new facilities based wireless service providers.
The increased choice isn’t just for Canadians in major cities. In reviewing the applicant list, it appears that in some parts of the country, there could be a variety of specialized regional players.
There seems to be some mis-information and a lot of unknowns surrounding the first round of information released yesterday by Industry Canada in respect of applicants for the AWS auction in May.
I am happy to try to help clarify. First off, I should clarify that bid points are not the same as licenses. Bid points are a kind of proxy for the population covered in a geographic area multiplied by the number of megahertz – the size of the slice of spectrum being auctioned.
There are a total of 292 licenses coming up for auction. Each license covers a different geographic area and slice of spectrum, ranging from whole provinces down to sub-regions. Some of the licenses are for 20 MHz; some for 5 MHz. You can review the full list on Industry Canada’s website.
To bid for 10 MHz in all of the geographic regions of Canada takes 620 points. By the time Industry Canada considers your application complete, you need to have supplied a letter of credit as a deposit to cover the eligibility points you request. For the first 300 points, the deposit required is $40,000 per point. Everything over 300 points needs $140,000 per point.
So, to do some interpretation of the applications, we can see that Rogers wants the flexibility to be able to bid in all 65 MHz that isn’t set-aside for new entrants. That requires 6.5 times 620 bid points for a total of 4030. To determine the deposit required, the first 300 points are $40K ($12M) and the remaining 3730 points are $140K ($522.2M) for a total of $534.2M.
You can see that Telus wants the flexibility to bid on the equivalent of 30 MHz nationwide. Bell’s points equate to 20 MHz nationwide with enough points left over for another 10 MHz covering about half the population.
Looking at the other applicants, Niagara Networks appears to want to bid on everything – all 105 MHz – everywhere. MTS Allstream and Quebecor have enough points to be looking at national plays for all 40 MHz of new entrant spectrum – with a little left over in the case of MTS Allstream.
Although they aren’t the biggest bidder, Sasktel has applied for enough points to handle all the spectrum in Saskatchewan – with 3 points left over. Saskatchewan requires 20 points per 10 MHz slice. Watch for Saskatchewan to be a spoiler for companies looking to acquire a national license.