Canada to open cell industry in new auction

An upcoming wireless frequency auction in Canada will mirror the 700MHz auction in the US in its attempt to foster genuine competition, says the country's Industry Minister, Jim Prentice. Under a new set of rules, the government will deliberately set aside 40 percent of the available spectrum for companies new to the field in an attempt to prevent incumbents such as Bell or Rogers from shutting out competitors. The amount of airwave space up for grabs will be enough to start a national wireless carrier and offer a fourth alternative that could drive down the high cellular calling and Internet access prices that are hurting customers, Prentice says.

"Our goal at the end of the day is lower prices, better services, and more choices," he explains.

Established carriers will also have to allow any new carrier to roam on their own networks at a "reasonable" price, both to help foster growth of the new companies and to prevent exclusionary tactics.

Incumbents have objected to the move, which is targeted at the regional level but nonetheless forces them to bid for a smaller portion of the newly free spectrum if they choose to bid at all. The lack of higher-valued bids will actually hurt taxpayers by reducing the amount of money collected from the auction, Bell claims. Its primary CDMA network rival Telus argues that many of the companies who now have a chance to bid, such as cable providers Quebecor and Shaw, can already afford to bid and potentially win frequency access without government protection.

Opponents, however, argue that many of these complaints are just attempts to mask the true goal of maintaining existing pricing schemes, which are far more expensive than for similar services in the more competitive US cellular business. While prices for data have been dropping steadily among competitors as a reaction to the iPhone and its likely launch in Canada, an analysis this summer shows that a subscription to Rogers could cost $295 per month to match a $60 iPhone plan from AT&T while still denying unlimited data and offering fewer minutes. Many believe the eventual release of the iPhone in the country will bring US-like rates and may be further helped by wireless auctions such as those in the US and Canada, as they may either spur competition or else give Apple an alternative network once exclusive contracts with incumbent carriers come to an end.

The needed competition to lower these artificially high prices could surface relatively quickly, the Industry Minister notes. Although the Canadian auction is set to start later than its FCC equivalent in the US, taking place in late May, a new carrier comprised of several partners could appear as early as late 2008 while the US will have to wait until February 2009.

Filed under: industry
Other story tags: Rogers, Canada, 700MHz, Telus, Bell, Shaw, Quebecor, mobile network