Ottawa has raised a whopping $5.27 billion through the sale of wireless spectrum – contrary to predictions of analysts who said the absence of a large foreign player would devalue the resource – and may well be on its way achieving its goal of seeing a fourth national wireless carrier in Quebec's Videotron.
Up for auction was the highly coveted and contested 700 megahertz band – valued for its reach and penetration.
Rogers Communications Inc. (TSX:RCI) ended up with the most valuable chunks of spectrum. It was awarded 700 MHz licences worth $3.3 billion.
Telus (TSX:T) acquired the second most valuable slice of spectrum– a package of licences worth $1.14 billion. Bell (TSX:BCE) paid $566 million for its share of spectrum.
In all three cases, the licences awarded to Bell, Rogers and Telus cover a population area of more than 33 million Canadians across the country.
The big story in the auction was Videotron's acquisition $233 million worth of 700 MHz spectrum, including licences outside of Quebec: B.C., Southern Ontario and Alberta.
Videotron's parent, Quebecor Inc. (TSX:QBR), has also reportedly made a bid on the financially troubled Mobilicity, which already has a presence in B.C.
That could give Videotron the reach it needs to become Canada's fourth national wireless carrier – something the federal government has been determined to create through a series of telecom policies that has angered Canada's Big Three wireless carriers: Bell, Rogers and Telus.
Telus has also attempted to buy Mobilicity but has been blocked by Ottawa, which refused to allow Mobilicity to transfer spectrum won in a previous spectrum auction to Telus.
Asked if his government would relax the rules to allow an incumbent like Telus to acquire spectrum from Mobilicty – and the company along with it – Industry Minister James Moore said it would not.
"Our spectrum policy is not changing," he said during a live telecast February 19.
The same restrictions on transferring spectrum from Mobilicity may not apply to Videotron, since they are intended to prevent the over concentration of spectrum by any of the the big three incumbents. Ultimately, Moore has the final say on whether Mobilicity's existing spectrum can be transferred as part of an acquisition.
Asked if Videotron could end up being Canada's fourth national wireless carrier, Moore said, "They have the capacity to be and I think they will be."
The 700 MHz spectrum is coveted by wireless companies, in part, because of its ability to travel further, which means fewer cell towers need to be built and there is better penetration through buildings.
"The addition of this 700 MHz spectrum will enable us to expand our LTE coverage into rural areas, extending Telus' national 4G LTE network to 97% of the population well in advance of the auction's build requirements," Telus CEO Darren Entwistle said in a press release.
Vancouver-based telecom watchdog OpenMedia said the result of the auction was promising for Canadians who want more competition and choice.
"Quebecor's potential entry into markets outside Quebec looks like it could provide welcome additional cell phone choice for many Canadians," said OpenMedia executive director Steve Anderson.
"It's important that Minister Moore make sure Quebecor use their valuable new spectrum to serve Canadians. More choice could be in the cards but the reality is that this auction will not fully address the high wireless prices that are holding our economy and country back.
"We need rules to ensure all Canadians have a range of affordable, independent options - but right now those independent providers are on life support."
