What is a wireless spectrum auction?

It’s perhaps notable that two blog posts I’m linking to about the announcement by Industry Canada that part of the wireless spectrum auction will be set aside for new entrants to the market start with the word “finally”.

Though Michael Geist did a good job explaining the issue back in June (certainly better than Industry Canada’s very technical policy framework document), I take a crack at it in today’s Gazette.

In short, it means some wireless frequencies (which cellphones use to communicate with cell towers, and for which wireless providers need licenses from Industry Canada to operate) will be reserved for new companies in the market, like Shaw or Yak or Videotron (which currently re-sells Rogers service under its own brand). This wasn’t the idea of the current oligopoly (Bell, Rogers, Telus) because they say it gives an unfair advantage to newcomers (even though many of their licenses came through similar breaks given to their predecessors).

So now, the only thing standing in the way of at least one new entrant into the business (either regionally or nationally) is the opening bids, which for a high-bandwidth national frequency could reach past $200 million.

Videotron plans to use $500 million to setup a Quebec-wide network (including the cost of the cell site equipment and administrative costs of running an entire wireless network), which might expand to other provinces if successful.

Also included in the decision this week is a requirement for existing cell providers to share tower space with new entrants (which will significantly lower their startup costs) and a requirement to allow roaming (so, for example, new Videotron customers will be able to use their phones outside Quebec with reasonable fees being billed for use of the other company’s network).

Read more of my article here.

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