OTTAWA – Industry Canada’s latest auction kicked off earlier this week with 11 companies looking to secure some of the more than 300 licences up for grabs in the 2500 MHz band. A combinatorial clock auction (CCA) format, the same as was used in the 2014 700 MHz auction, is in place, meaning the bandwidth sale could last a few weeks.
Along with the Big Three – Bell Mobility, Rogers Communications and Telus Mobility – new entrants Wind Mobile, Vidéotron and Bragg Communications (Eastlink) are all participating. Regional wireless company MTS, rural satellite and wireless broadband providers SSi Micro and Xplornet Communications, TbayTel and little known Calgary-based Corridor Communications are also vying for a swath of spectrum.
The 2500 MHz auction also features constraints limiting how many licences any one operator can acquire. The spectrum cap is set at 40 MHz, this means that Bell and Rogers – both already over that limit in most of the big cities – will be limited in their ability to acquire additional bandwidth in the urban areas. This is because the two companies were once partners in Inukshuk Internet.
New entrants are expected to battle hard to acquire additional spectrum, bandwidth they need to strengthen their holdings to compete with the Big Three. But just as the new entrants need to bolster their spectrum assets, so too does Telus. And with no 2500 MHz spectrum in its portfolio of airwaves, this auction represents a prime opportunity for the national wireless carrier to capture a large swath.
Canaccord Genuity telecom analyst Dvai Ghose highlighted the Telus opportunity a research note this week.
“As Telus has no 2500 MHz spectrum at this time, we assume that it will win in all major markets.” – Dvai Ghose, Canaccord Genuity
“As Telus has no 2500 MHz spectrum at this time, we assume that it will win in all major markets. We assume that it will pay a relatively modest $268 million or $0.20 per MHz PoP for 40 MHz across the country,” he wrote, adding that Wind will end paying approximately $120 million for its share of the band or about $0.15 per MHz PoP.
Vidéotron also has an opportunity to bolster its out-of-territory spectrum, that is, if the Quebec-based cable and wireless firm wants to pursue national expansion. The company owns 700 MHz spectrum in British Columbia and Alberta and could use this auction to fill the geographic gap.
Ghose, though, is uncertain Vidéotron will bid outside of Quebec and Eastern Ontario because the department continues to block new entrant to incumbent spectrum sales and it may actually not want to go national.
“It may concentrate on Quebec and Eastern Ontario and purchase 40 MHz of spectrum in these markets for only $60 million or $0.15 per MHz PoP,” he added.
The vast majority of the 2500 MHz spectrum will be sold in Tier 3 licensed areas. The exceptions are the Northwest Territories, the Yukon and Nunavut where licences will be available on a Tier 4 basis. In this auction, there are a total of 318 licences available.
