My wife likes to go to estate auctions when we are at the cottage. She’ll come home with some interesting treasures, like a couple beautiful old phones. And often there will be a box of junk that was thrown in by the auctioneer in order to clear the table.
After all, the auctioneer has a responsibility to clear out the house. As a result, he’ll combine whatever isn’t selling into a lot that is more attractive. So, my wife ends up getting a collection of cut crystal shot glasses combined with some Tony the Tiger cereal bowls. Can you guess which she was actually bidding on?
Some would say that the AWS spectrum auction has proposed to combine lots the same way as estate auctioneers. Combining less attractive rural areas with more desirable urban territory.
I have mentioned in the past that I act as an advisor to Barrett Xplore Inc. (BXI). BXI has focussed on serving rural Canada:
Our vision is simple — more for rural Canada: more choice, competition, and availability of broadband access, applications, and accessories.
BXI’s submission in the AWS consultation has a novel suggestion to address the level of competition in rural markets.
Unlike many who suggest a set aside for new entrants or mandated roaming and access to incumbent infrastructure, BXI simply wants some of the regional spectrum blocks to be broken up into more manageable, bite-sized chunks. Barrett Xplore isn’t asking for a handout or help in lowering competition for the spectrum. Just let them bid for the parts they really want.
Barrett Xplore is a company that just wants the rural pieces. Without changes, most bidders will pick up unwanted rural territories when their target was the urban core.
The problem of urban-rural market segmentation can also be seen in the results of the 2.5 GHz MCS comparative selection process conducted in 2000 that awarded almost all of the Canadian licenses to Inukshuk Internet Inc. through a comparative licensing or “beauty contest” approach. Unfortunately the very large MCS license areas include both rural and urban markets. The lure of the large urban population and easier business case returns likely explains why the deployments, announced to date, focus on large urban areas.
Barrett Xplore’s proposal merits consideration. If there are bidders that want the cereal bowls, why would we make them pay for the crystal? And vice-versa.
John Maduri of Barrett Xplore will be speaking on June 11 at The 2007 Canadian Telecom Summit.