OTTAWA – Telus says that its proposal for an spectrum cap in the 700 MHz auction is the “fairest” way the federal government can meets its competition agenda and ensure that there are multiple winners outside of the three incumbent wireless players.
In an interview with Cartt.ca, Telus’ senior VP of regulatory and government affairs Michael Hennessy explains that the company has heard, loud and clear, the government’s message that it wants to continue with its competition agenda begun with the Advanced Wireless Services (AWS) auction, maximize investment in Long Term Evolution (LTE) networks and ensure that rural Canadians enjoy the same benefits from wireless as those living in urban regions.
This was the genesis of Telus’ position on the 700 MHz auction, a position that was relayed to the Minister of Industry Christian Paradis during an August 2011 meeting and in official submissions.
“We think that auction caps are the fairest way to ensure that this competition agenda is met, that investment in LTE is maximized and that service is delivered to rural areas without delay,” Hennessy says of the main message to the minister.
While Bell Canada and Rogers Communications Inc. have decided to fight for an open auction, Telus opted to present an option that it says would not only be fair to new entrants but also meet the government’s competition agenda.
“This is a fundamental difference of position relative to Bell and Rogers who are calling for open auctions in that we’ve accepted the government’s policy. It’s the government’s right to make that policy and we’ll work within that,” Hennessy says.
Using a spectrum cap could also solve the matter of what meets the definition of a new entrant. Rather than having to determine which companies meet the new entrant criteria, a cap treats all participants the same by limiting the amount of spectrum any one company can purchase.
Hennessy also took an opportunity to discount suggestions from the new entrants Mobilicity and Wind and consumer group Openmedia.ca that a set-aside was the only practical solution to ensure the incumbents don’t buy all of the 700 MHz spectrum. The suggestion that the three incumbents would outbid other players to foreclose on competition doesn’t hold water, he adds.
While there are three main blocks of spectrum in the 700 MHz – two that align with AT&T and one larger block that aligns with Verizon – the fact of the matter is that Industry Canada is likely going to split the Verizon block into two, just due to the number of companies likely to enter the auction. The A-Block can’t be ignored either, notes Hennessy, pointing to Leap Wireless’ purchase of this band in the U.S. from Verizon.
He acknowledges that it is at more of a developmental stage, but says many considered the G-band in the AWS auction to not be that useful and yet Public Mobile was able to develop an ecosystem for the band in Canada. For the 700 MHz, it will be much easier because whomever buys this spectrum will be able to rely on Leap developing the ecosystem.
Hennessy also suggests that the second public safety band in the 700 MHz – it has been held in reserve waiting for decisions on how the U.S. is going to use this block – may yet be turned over to commercial wireless.
Despite suggestions that there are only three good bands and that the incumbents would buy them all, this doesn’t seem to be the case.
“Regardless of whether we’re talking five or six FDD blocks for 700 MHz, if you cap it within the auction, that’s more than any one player could acquire or any three players could acquire. And that’s really the critical point,” he tells Cartt.ca.
Telus, as all the players are saying, needs a piece of this critical wireless real estate. “We’ve got to have the 700 MHz because that’s the ecosystem. We recognize that we can’t have a whole bunch of it because there’s too much contention for it,” Hennessy says. “It is the U.S. ecosystem so if we’re going to roll out quickly, then we have to have a fair shot at it and that’s all we’re asking. We’re saying we’ll live with the compromise.”
It’s clear why there is such a focus on the 700 MHz band: it travels long distances making it very well suited for rural deployment and it penetrates buildings which is critical for mobile broadband. But Industry Canada will also be holding an auction for the 2500 to 2696 MHz band in the future. Hennessy says this band meets the international standard for LTE and shouldn’t be discounted as an option for wireless companies deploying LTE in urban areas.
In some provinces there will be upwards of 90 MHz of this spectrum available and in others there will be 60 MHz.
Industry Canada is expected to release the rules of the next spectrum auction sometime in the first quarter of the year.
