TORONTO — The federal government’s spectrum allocation policies are the focus of the latest report from the C.D. Howe Institute’s telecommunications policy working group, which says the high cost of spectrum in Canada combined with regulatory impediments will negatively impact the rollout of 5G in the country.
Citing an analysis by U.K. economist Pantelis Koutroumpis in 2020, who looked at the impact of spectrum allocation on mobile communications in Canada, spectrum prices in Canada are almost four times higher than the international average, says the telecom policy working group (which counts among its members executives from Canada’s largest telecom companies). Koutroumpis used a dataset provided by the GSMA covering 27 countries for the 2010-2020 period and including all major spectrum auctions for frequency bands ranging from 700 MHz to 3800 MHz for the study, according to the C.D. Howe report.
The telecom group also cites “a contracted consulting report” from Christensen Associates that includes Telus cost data, which found “average costs for capital, labour, materials, and spectrum are 83 percent higher in Canada compared to a set of benchmark countries and that elevated spectrum costs account for more than 50 percentage points of the higher costs in Canada,” according to the working group.
“Elevated spectrum costs result in lower network investment and higher consumer prices. If spectrum costs were as low as those paid by European wireless carriers, Canadian wireless rates could be as much as 12 percent lower,” says the telecom group’s report.
Some of the factors contributing to the high cost of spectrum in Canada include its scarcity (which may be artificial due to “sluggish or unclear schedule for release of new spectrum”, the group says) and set-asides for new entrants and regional players which “restrict the spectrum available for national players, which compete intensely for the limited allocation,” says the report.
However, some working group members contend “spectrum set-asides are a necessary support for competitive entry in key markets and for national wireless carriage, which has resulted in a more competitive and dynamic wireless market,”reads the report.
“Working group members also raised concerns surrounding the timing and quantity of available spectrum. On timing, members observe that Canada lags peer jurisdictions in releasing spectrum for 5G. By Canada’s target for the auction of 3500 MHz spectrum (scheduled for June 2021), 37 countries will have already assigned this 5G band spectrum…and working group members observe that an auction for 3800 MHz is not expected until 2023.” (see illustration above)
For more information and to access the working group’s latest report, please click here.
