Tomorrow the auction begins for the remaining field of 25 companies to bid on spectrum designated for Advanced Wireless Services (AWS). Last week saw withdrawals from 2 companies that had been approved for bidding and a third bidder saw its consortium dissolve.
There are 292 licenses up for auction and the opening bids add up to a little more than $600M. There are 10 rounds of bidding scheduled for this week.
Industry Canada promises to be keeping a webpage current with information about the auction as it proceeds.
The spectrum auction home page is another great resource.
Of course, those pages give you the play-by-play action. You can always check in with me for colour commentary.
I mentioned last week that I would get back to the OECD broadband report that caused some Canadian observers to whine about the report reflecting poorly on us and how woefully uncompetitive we are. I disagree.
Woefully uncompetitive? I’d say there is a woeful lack of critical examination of the data.
The complete report, issued as a backgrounder to prepare for the upcoming Inter-Ministerial meetings in Seoul, is available for download [pdf, 2.08MB].
While some have looked at the OECD’s latest broadband rankings and bemoaned Canada’s supposed fall from 9th place to 10th, it is important to put this semi-annual study into perspective. During the period that we slipped down to 10th – thanks to a surge in installations in Luxembourg. Canadian service providers added more broadband connections (more than 500,000) than the entire population of the Grand Duchy. And Canada remains on top of all G7 countries.
There are a number of problems with the way some people use the OECD numbers, but the most egregious problem is the fallacy of trying to use the OECD national broadband figures as representative of household penetration.
You just can’t. First off, the OECD numbers represent connections per 100 people, not connections per 100 households. Can we agree that households buy internet access, not individuals? As a result, household size matters. Since Canadian household size is larger than the OECD average, we have a theoretical limit on connections per 100 people that is below average.
In fact, let’s assume for a minute that the entire OECD has succeeded in getting broadband connections to every home. Canada would rank 18th out of 30, because of our household size. And that is assuming all countries are tied at 100% penetration.
That didn’t keep some news reports from blaming the state of competition, where people have limited choice of internet service providers or high prices.
Of course, before we blame carriers for all the woes, let’s also remember that the real ceiling on broadband is the number of households with access to computers. After all, if you don’t have a computer, you are unlikely to have purchased a broadband connection. Before you leap to comment, I know that I have promoted the possibility of applications providers, government health care systems and other groups buying the broadband pipe on behalf of users. But that isn’t happening yet.
The OECD numbers are said to include business DSL connections in some cases. That may explain how Korea has more broadband connections than households with access to a computer (93% versus 80%).
Bottom line: I would have liked to see some critical examination of the OECD numbers rather than folks simply parroting the standard politically motivated lines.
Without such analysis, the OECD statistics are interesting, but somewhat meaningless. We have seen this before. Densely populated Japan continues to rank well behind Canada – not only using OECD’s metric of broadband connections per 100 inhabitants, but on more useful measures of connections per 100 households or connections per 100 households with access to computers. Why is that?
The OECD’s commentary on their report, with policy recommendations, provides interesting guidance. More on that later in the week.
For now, let’s hope the Canadian contingent to Seoul next month takes a more serious look at the materials sent out from the OECD.
Yesterday, I provided the closing remarks at the CWTA WiMAX event. It was an interesting day with service providers, technology developers and suppliers, government officials and industry analysts speaking about how Canada should set its sights on wireless broadband connectivity.
Other than the WiMAX event, yesterday was a slow day in the Canadian telecom sector, wasn’t it? The attendance was pretty good at the CWTA event, but I suspect that some of you were sorting out your telecom stock portfolios, or trying to assess what the implications are for the spectrum auction or trying to figure out who is liable for what.
I spoke of WiMAX as another tool to assist in bringing broadband to the remaining unserved territory, but agreed with David Robinson of Rogers that no single technology fits all needs. As John Maduri of Barrett Xplore noted, satellite continues to have a role to play in Canada. I pointed out the remaining unserved areas in Saskatchewan: despite its crown ownership and focus, by the end of 2008, 12% of the population will still be outside its DSL and wireless broadband footprint. That is a measure of the broadband challenge in Canada.
While critiquing the superficial reporting of the OECD’s latest broadband statistics, I also mentioned some of the highlights of its recommendations for government policy.
I’ll write more about the OECD report early next week.
Last quarter’s carrier earnings reports show the value of corporate clients in enhancing ARPU in the wireless segment. Those corporate clients are more likely to have data plans to feed their Blackberry habits and are less sensitive to international roaming charges.
No question, kids are buying add-ons like messaging packs, music, ringtones – but watch for incentives on multi-year contracts for corporate wireless plans, prior to the arrival of new competitors in the wake of this month’s AWS auction.
MTS Allstream is likely to emerge as a national wireless carrier when the final gavel comes down. Over the coming days, I will put together some thoughts that emerge from an analyst briefing session that the company hosted yesterday in Toronto. Among other themes, MTS Allstream spoke about their unified communications portfolio that would seem to be screaming for mobile wireless integration.
How well will MTS Allstream be able to leverage its corporate wireline relationships to quickly build a high value wireless customer base? What strategies are most appropriate for the incumbents to retain these high value accounts and what should customers do to benefit from the attention that all of these account managers will bestow upon them?
Update [May 22, 6:20 pm]
Obviously, the collapse of the MTS Allstream bid consortium puts the likelihood of the company emerging as a national wireless carrier in some doubt, however, the concepts in this posting still hold true. Continue to watch for MTS Allstream to leverage its enterprise-centric customer base as part of a national brand emerging from the auction.
Preparing for the inevitable, Netflix has announced a set-top box that allows its customers to download movies for viewing on their TV.
The box is said to be similar to one from Apple and the news story also talks about a streaming capability to be embedded in some DVD players to be released later this year by LG.
I’m not sure that the age of physical video rentals is coming to an end (sometimes, I like browsing through the aisles), but we can view these services as providing an alternative to video-on-demand from your TV provider.
Of course, high-definition on-demand downloading will have an impact on internet service usage allowances. So, will we see demand for these services limited by consumers concerned about having to pay excess download fees?
Alternatively, perhaps the rental services like Netflix and iTunes will look at commercial arrangements to ‘reverse the charges’ for downloading movies. The idea would be for them to enter into arrangements with major ISPs to exempt their traffic from subscriber usage caps – think of it as an internet 800 service where the usage charges are reversed.
What would the characteristics need to be for such a service in order to avoid concerns about violations of net neutrality?
Update [May 21, 10:20 am] Bell Canada has announced its own video store with 1500 titles for rent or purchase.
