Poison pill and more in the spectrum policy

There are a couple interesting twists that emerge from a closer review of the AWS spectrum policy announcement. These are beyond the serendipitous observation that the spectrum auction should be wrapping up just in time for The 2008 Canadian Telecom Summit.

One twist reveals a perverse definition for new entrants that will see the least competitive provinces stay that way; the other thing I noticed is the creation of a potential poison pill for new entrant spectrum winners.

As I mentioned earlier, new entrants are defined as:

An entity, including affiliates and associated entities, which holds less than 10 percent of the national wireless market based on revenue.

So, MTS and Sasktel are defined as new entrants, and that definition will allow them to bid on the new entrant spectrum – even in their incumbent province – despite enjoying 60% and 80% market share at home respectively!

While the intent of the government policy was to be introduce more competition, this part of the policy appears to be ill conceived, because the two provinces with the least evidence of competition will have the least opportunity to have that situation changed.

Oops! Don’t consumers in those two provinces deserve the same benefits of new entry?

Now, if you are a successful new entrant winner of spectrum, that spectrum will serve as a poison bill to ward off Bell, TELUS and Rogers as potential future suitors:

While all licence transfers must be approved by the Minister, licences obtained through the set-aside may not be transferred to companies that do not meet the criteria of a new entrant for a period of 5 years from the date of issuance.

How will this kind of poison pill influence shareholders?

Shaw had been looking for favourable auction conditions to help it decide on whether to bid in the auction. Will the risk of poisoning a future acquisition influence its decision?

Update [November 29, 3:10 pm]
I appeared on BNN [clip available here] this morning with perspectives on the auction rules. Be generous: I had to get up early to get downtown to be in make-up for an 8:15 appearance!