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AWS-3 Spectrum Rules Look to Bring Affordable Network Upgrade for Entrants

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Small wireless carriers will be able to secure more spectrum for a relatively cheap price, according to the rules of the AWS-3 spectrum auction — scheduled for March — published by the federal government on Monday.

Cell tower

As industry consultant Mark Goldberg pointed out to Montreal Gazette, “the opening bid threshold could be meaningful for the auction, because the bidding will be structured so that only one bidder may qualify in many of the 14 territories identified by Industry Canada.”

Considering that 60% of the AWS-3 spectrum is set aside for new entrants, the government’s calculations show that Industry Canada will raise about $162 million in total from the auction if it receives the minimum bid for each parcel of the spectrum.

The opening bid varies by territory: For the southern Ontario region covering a population of about 10.1 million, the minimum is set for $33 million, but for the southern Quebec region it drops to $20.5 million, as it includes only 5.7 million people. For northern Quebec, the opening bid drops to $300,000.

“In Quebec, I think there’s only one qualified bidder — Videotron,” Goldberg said. “If they choose to bid, they’ll be able to purchase that at the minimum bid price because there won’t be any other bidders.”

On the other hand, Videotron would not be able to bid for spectrum in Ontario because it doesn’t operate there — unless it does some sort of deal before the bidding, such as acquiring Wind Mobile or Mobilicity.

As the Montreal Gazette highlights, recent comments from the CEOs at Videotron and Wind hinted that the two carriers may join forces in some way. We know from Pierre Dion, the company’s CEO that Quebecor has the power become the fourth national player, but certain conditions need to be met for the carrier to expand beyond its coverage area, according to Barclays analyst Philip Huang.

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  • Christopher

    Videotron operates in Ottawa.

  • FamiGami

    So then this auction will fail to create a 4th national carrier unless one decides to buy out all others in jurisdictions it doesn’t operate in? This is oligopoly by definition!

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