OTTAWA – The participant list for Industry Canada’s upcoming AWS-3 and 2500 MHz auctions this spring is beginning to take shape. Among those who have confirmed to Cartt.ca that they have submitted applications to participate in the two aforementioned auctions are Rogers Communications and Telus Corp.
SaskTel says it applied for the AWS-3, but noted it is ineligible for the 2500 MHz sale. Bell Canada and Eastlink wouldn’t confirm or deny that they filed applications. Vidéotron and MTS hadn’t replied to Cartt.ca by deadline.
Wind Mobile, which recently completed a restructuring, had previously announced its intention to partake in the two auctions via news release last week. It’s also likely that Mobilicity will throw its hat into the ring for the AWS-3 auction since it recently won approval from an Ontario Superior Court of Justice for a debtor-in-possession financing that gives it some wiggle room to submit the deposit. (Mobilicity didn’t confirm to Cartt.ca that it had filed the necessary paperwork for either auction.)
Unlike the CRTC, which usually makes such submissions public quickly on its web site, Industry Canada has yet to post a list of those who declared for the auction by Friday’s deadline.
A total of 42 licences will be made available in the AWS-3 auction – one set aside and two non-set aside licences in each of the 14 Tier 2 serving areas. The AWS-3 auction will be a single-bid, second-price format.
As with the previous AWS-1 and 700 MHz spectrum auctions, Industry Canada has instituted rules that restrict the amount of bandwidth the large wireless companies (Bell, Rogers and Telus) can acquire. The department has set aside 30 MHz of the 50 MHz available for operating new entrants. Regional wireless carriers SaskTel and MTS will also be affected by the set aside provision as the department has determined that any regional carrier holding more than 20% in its territory will be ineligible to bid on the set aside.
This rule will make for some interesting dynamics in the Prairies where SaskTel and MTS, if it decides to participate, will therefore have to vie for the mobile airwaves with the Big Three in the 20 MHz non-set aside block. There will be two 10 MHz licences available in the open spectrum.
This set aside provision also states that for a carrier to qualify to bid in a particular region it has to demonstrate that it has an operating network, is offering service and has retail distribution.
“There is a 30 MHz new entrant set-aside in Manitoba and Saskatchewan, even though there are no qualified operating new entrant bidders in these regions." – Dvai Ghose, Canaccord Genuity
In a January 30 research note to investors, Canaccord Genuity telecommunications analyst Dvai Ghose noted that this is one of the shortfalls of Industry Canada’s spectrum policy. “There is a 30 MHz new entrant set-aside in Manitoba and Saskatchewan, even though there are no qualified operating new entrant bidders in these regions,” he wrote.
Ghose speculated that new entrants will largely be able to win spectrum at reserve prices or just slightly above the opening bid. Wind may face some competition for spectrum from Mobilicity, but it’s still expected to prevail and secure the set aside licences in British Columbia, Alberta and southern Ontario.
Vidéotron will win set aside spectrum in Quebec and in eastern Ontario and only have to pay the reserve price. This, said Ghose, will mean the federal government is conferring an estimated $980-million subsidy on the wireless company, which is “controlled by an avowed Quebec separatist.” (Quebecor scion turned possible Parti Quebecois leader Pierre-Karl Péladeau.)
For the 20 MHz of open spectrum, Industry Canada has decided to license it in two 10 MHz paired blocks. As well, it is allowing package bidding for these licences but carriers interested in a one of the two will still be able to bid on a single licence.
Overall, Ghose predicts the AWS-3 auction will net the federal government approximately $2.4 billion, significantly lower than the recent auction of the same bandwidth in the U.S. which generated a total of US$42.5 billion for the U.S. treasury.
The 2500 MHz auction, set to begin in April, will use the same combinatorial clock format as was employed for the 700 MHz auction. It will also feature a 40 MHz spectrum cap, limiting the amount of spectrum carriers can acquire. This rule has already eliminated SaskTel from the sale and limited Bell and Rogers’ ability to acquire spectrum in urban areas. The two companies were once partners in Inukshuk Internet, a firm that used the 2500 MHz band for fixed wireless Internet in many rural areas across Canada.
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.
Bids for the AWS-3 are due March 3, while the combinatorial clock 2500 MHz sale is scheduled to begin on April 14.
