Auction raises $3.47 billion
OTTAWA – The results of Canada’s 600 MHz spectrum auction were announced after the markets closed Wednesday afternoon.
Rogers Communications acquired the most licences, 52, for a whopping $1.725 billion. “We are proud to make leading and meaningful investments to build the 5G ecosystem in Canada and to help drive our country’s global competitive advantage,” said Joe Natale, president and CEO, in the company press release. “This 5G spectrum is a precious and scarce resource that will benefit Canadians and Canadian businesses across the country.” Rogers was awarded licences in the A and B blocks in all service areas, as well as licences in blocks C and D in some service areas.
Despite acquiring 12 licences for $931 million, Telus was disappointed with the auction’s construction and criticized that design for leading to the highest priced 600 MHz auction in the world. “Telus secured the spectrum it needed in spite of the challenges given the set-aside design resulted in inflated pricing for the open spectrum blocks,” said company president and CEO Darren Entwistle, in his press release.
“The average price per MHz-pop paid by the national carriers in the open auction was $1.08 higher on average than what was paid by those in the set aside, which equates to an approximate subsidy of $1.1 billion by Canadian taxpayers. Disappointingly, the design of the 600 MHz auction resulted in the highest prices paid for 600 MHz spectrum in the world. In the U.S., for example, providers paid on average $0.93 per MHz-pop. By contrast, Canadian national carriers paid on average roughly two times as much, at $1.89 MHz-pop.”
Shaw Communications’ Freedom Mobile obtained 11 licences for $492 million. “We have made significant investments to improve the wireless experience for Canadians, becoming a true alternative to the incumbents, with a differentiated value proposition. The addition of this 600 MHz low band spectrum will not only vastly improve our current LTE service but will also serve as a foundational element of our 5G strategy providing innovative and affordable wireless services to Canadians for years to come,” said Brad Shaw, in the company release.
Vidéotron, too, was pleased with the auction results. “Acquisition of this spectrum will enable Vidéotron to continue its expansion in mobile telephony markets in Québec and the Ottawa area, and support genuine, sustainable competition that benefits consumers," said Pierre Karl Péladeau, president and CEO of Vidéotron’s parent, Quebecor. "Thanks to sensible auction rules that allowed for a fair division of spectrum between incumbents and regional carriers, we are now able to reaffirm our determination to be a tech builder, one that is fully equipped to break new ground in order to better serve its customers.” Vidéotron was awarded 10 licences for $256 million.
"Telus secured the spectrum it needed in spite of the challenges given the set-aside design resulted in inflated pricing for the open spectrum blocks." – Darren Entwistle, CEO, Telus
Iristel won seven licences for $2.6 million. “This is exciting on many levels,” said Samer Bishay, president and CEO of both Iristel and Ice Wireless. “First, from a technology standpoint the 600 megahertz spectrum works exceptionally well in remote areas (where Ice mostly operates) by covering longer distances so we’ll be able to enhance services in the Territories. Second, we can now offer the benefits of real competition to consumers and businesses in Newfoundland and Labrador and give them relief from the Big Three wireless oligarchs. This is an important step toward more choices, lower prices and higher quality cell phone services for Newfoundlanders, Labradorians and those in remote areas of Canada’s North, including Quebec.”
Bragg (Eastlink) was awarded four licences for just over $13 million. A spokesperson indicated the company is “very pleased with the outcome. Having access to this important spectrum will allow us to continue to invest in and deliver the best, most advanced mobile customer experience to Canadians in the communities we serve,” reads the company’s statement.
The remaining winners were Xplornet, SaskTel and TbayTel, with four (for $35.7 million), three ($12.2 million) and one ($2.8 million) licences respectively.
In total, 104 licences were awarded to nine Canadian companies, including 40 licences to regional providers, covering the entire country. Innovation Minister Navdeep Bains added: “We know that Canadians want more choice, lower prices and better service. Through this process, we have strengthened wireless competition, which will drive prices down and improve coverage. It is clear that the big winners in this auction will be Canadians in both urban and rural areas."
(Ed note: For what it’s worth, wireless companies get their money from Canadians, so that $3.47 billion is coming from all of us.)
All of the licences acquired by Xplornet, Vidéotron, TbayTel, SaskTel, Iristel and Freedom were from spectrum set aside for regional providers in each area.
“We are very pleased with the results of the auction, since access to spectrum is an integral factor to assist Tbaytel with long term planning and preparing for the future needs of our network and our customers,” said Tbaytel president and CEO Dan Topatigh, in a press release. “Spectrum auctions in Canada and around the world are extremely competitive and this mirrors the telecommunications industry as a whole, so this win enables Tbaytel to build our newly acquired spectrum into future-proofing our network and accommodating for growth and capacity demands as we move forward.”
There were 54 rounds of bidding that took place over 18 business days. Winning bidders have until April 26, 2019, to submit 20% of their total final payment. The remaining 80% is due May 27, 2019.
Bell, Novus Entertainment, and SSi Micro, all of whom were registered in the auction, did not acquire any licences. According to Bell, this was by design. In a statement released following the auction, the company said the supply of other low-band spectrum Bell already possesses means 600 MHz is not required for Bell to deliver broadband 4G and 5G services. That’s not to say that Bell isn’t looking for additional spectrum. Bell CTO Stephen Howe stated, “Bell looks forward to participating in upcoming federal auctions of the mid band 3500 MHz and high band millimetre wave spectrum that will be required to drive the Fifth Generation of wireless.”
"Acquiring licensed low-band spectrum is an important next step in our plan to advance the availability of reliable broadband services to rural Canadians," said Tim Dinesen, CTO at Xplornet, in a press release. "We have made significant investments in our broadband network in recent years and are excited to put this 600 MHz spectrum to work, complementing our current 3500 MHz licensed holdings, in service of our customers." Xplornet holds licensed spectrum in the 3500 MHz, 2500 MHZ, 600 MHz, 700 MHz and AWS-1 bands.
Next up on the road to 5G are anticipated auctions for 3500 MHz spectrum in 2020 and millimetre wave spectrum in 2021.
Before then, the industry is rather anxious to see ISED’s next auction design framework, as well as the Department’s policy decision on revisions to the 3500 MHz band to understand how Canada will make the mid-band spectrum available for 5G.
