The biggest wireless story of 2008 is going to be Canada’s upcoming spectrum auction. Technically, Canada is auctioning three chunks of spectrum, but only one of which, the “1700″, is particularly interesting for most uses. So much so, they’ve even given it a brand name: Advanced Wireless Spectrum (AWS).
The shocker of course, is that the government has done something dramatic by setting aside 3 of the 6 blocks (40% of actual spectrum) to new entrants. Furthermore, they’ve mandated the existing carriers to share towers and even share roaming spectrum to give these would-be entrants a fighting chance at achieving scale.
This government largess, does hide another issue however. Before we sling too much mud at certain tacit oligopolies in Canada, remember also this is the same government that is about 3 years behind the U.S. in unlocking wireless spectrum. What is on the block now is NOT even the same (or quite as juicy) as the 700MHz spectrum currently up for grabs in the U.S.. Canada won’t be clearing this auction until as late as 2012.
As for the spectrum itself, it is divided up into six blocks, 3 big and 3 small called (a,b,c,d,e,f). B, C and D are the set asides and the other three are open to incumbents. Coincidentally, there are exactly three big incumbents in Canada. Nonetheless, it doesn’t mean one block will go to each. Each block is further divided into territories (some blocks big geographic chunks of 14 blocks and others 50blocks of smaller regions) just to make it more confusing.
Oh and each block is broken into two pieces (2×5MHz or 2×10Mhz). The first block is for uplink transitions and the second for downlink. This is so base stations can efficiently listen and talk to a fleet of devices at the same time.
So it’s entirely possible that a telco like Telus might scoop up more or even all of the spectrum bands out west (where they need it most) and vice versa, Rogers might be bidding higher in eastern Canada. The not-so industry secret is that Canada’s “national’ carriers are rather, rather regional.
How “advanced” is the spectrum?
From an incumbent or new entrant, the spectrum itself is pretty good.
- It supports the latest 3/4G standards of HSPA and LTE. Carriers could start rolling out 7MBs or even 14mbs HSPA equipment right away (in theory, this is faster than my home wired broadband
- These are the same auction blocks as auctioned off a few years ago in the U.S. so there is GSM/HSPA equipment and handsets/devices on the shelf supporting these frequency bands. Vendors are standing by to take your call.
- There’s no one using it right now. So, unlike problems in the US, rollout can begin quickly without the messy business of dealing with interfering legacy users of the spectrum
- You would be a nut to rollout CDMA on this network in this day and age. Or you would be Bell.
What does it cost? Opening bid price for 10MHz blocks is about 54M nationally, and 140Million for a 20MHz chunk. Practically speaking, 20MHz is at least what you need to be serious operator, but you could also get by on 10MHz with a little clever juggling, roaming and/or future spectrum purchases to greater handle subscriber growth down the road.
when is this all going down?
Auction Timelines:
Deadline for Applications: March 10, 2008
Government Publication of the list of Applicants: March 14, 2008
Government Publication of the list of Qualified Bidders: March 31, 2008
Auction begins: May 27, 2008
My Predictions
Among the incumbents, my money is on Telus vs Rogers. Telus could use the spectrum as a deft way of switching to GSM while keeping their existing network operational. Rogers could just plain use the extra spectrum.
Among the entrants, Quebecor has been most vocal, but they have been in a world of financial trouble lately. Manitoba Tel should be a player, and I bet Shaw will put a toe in to the auction. Watch though, for a spate of entrants you’ve never heard of, at least in the early stages. A market opportunity like this does *not* come along often, and the Canadian market is ripe for disruption.
The biggest challenge? undoubtedly financing. Even with the government concessions, it’s frightfully expensive to start a wireless operator, especially nation wide. So you could see entrants focusing on local/regional licenses and/or creative strategies for achieving scale nationwide.
For the official line, the Industry Canada Spectrum Auction page is here
After getting off to a slow start, the C block of the U.S. 700MHz spectrum auction has just crossed the magical 4.64B reserve price. This means whoever wins the spectrum (the bidders are as yet kept secret by the FCC), will be subject to two important “openness” regulations requiring open access to devices and to applications used on the network. Though the leading bidder may/may not be Google, this is automatically a win for the goog, as it opens the door to the Android platform and likely good news as well for American consumers and businesses.
