Canadian Wireless Spectrum Auction Ends With Seven New Entrants

331 rounds, 39 days, 27 companies, $4.25 billion in revenue, and the Canadian wireless spectrum auction is over. The total amount raised vastly exceeded expectation, an encouraging start to what promises to be a new era in Canadian wireless competition. The auction was still dominated by the big three: Rogers ($999M), Telus ($880M), and Bell ($741M). However, 40% of the licenses were set aside for new entrants, with winners Globalive ($442M nationwide) Quebecor ($555M in Quebec), Data & Audio-Visual Enterprises ($243M in Ontario, Vancouver, Edmonton, Calgary and Victoria), Shaw ($190M in BC, Alberta, Winnipeg, Saskatchewan, and northern Ontario), Manitoba Telecom ($41M in Manitoba), Bragg Communications ($25M in Atlantic Canada), and the unglamorously named, US equity-backed 6934579 Canada Inc. ($52M in Ontario and Quebec). Check this Google Maps mashup for a breakdown by province.

With these new entrants, each province should get at least two new choices for wireless service. Of course, I remember a time when there were 2 or 3 other wireless companies to choose from, before mergers and acquisitions led to the current cerberus of RoBellus (variations considered: Tellogers, Bellogus). Hopefully we don’t find ourselves back in a wireless oligopoly in ten or twenty years.

$4.25 billion is a nice chunk of revenue for the Canadian government, handy to pay for things like an indefinite occupation of a country that posed no real threat, and it seems they are wasting no time to do it again. Via Reuters, Industry Minister Jim Prentice has said that an auction of 700 MHz airwaves will happen in “about 18 months”. The US recently auctioned their 700 MHz spectrum and raised $19.592 billion.

A spectrum auction isn’t the kind of thing that gets a lot of mainstream media attention, as the idea of selling airwaves seems strange, if not impossible, and some might argue immoral. For some thoughts on this subject, I present an excerpt from an essay “The Property Status of Airwaves”, by author and philosopher Ayn Rand, published April 1964.

Any material element or resource which, in order to become of use or value to men, requires the application of human knowledge and effort, should be private property – by the right of those who apply the knowledge and effort.

This is particularly true of broadcasting frequencies or waves, because they are produced by human action and do not exist without it. What exists in nature is only the potential and the medium through which those waves must travel. (That medium is not air; in legal discussions it is often referred to by the mythical term of “ether” – to indicate some element in space, at present unidentified.) Without the broadcasting station which generates the waves, that “ether” – on our present level of knowledge — is of no practical use or value to anyone.


Essay continues after the jump.

Just as two trains cannot travel on the same section of track at the same time, so two broadcasts cannot use the same frequency at the same time in the same area without “jamming” each other. There is no difference in principle between the ownership of land and the ownership of airways. The only issue is the task of defining the application of property rights to this particular sphere.

She goes on to rail against what the US government was doing at the time; granted licenses to who they approved of based on their judgement of what was “in the public interest”. Rand was a stanch defender of free market capitalism, recognizing the need to license the airwaves, but believed that the process should be by free market auction instead of government handpicking.

There is only one solution to this problem, and it has to start at the base; nothing less will do. The airways should be turned over to private ownership. The only way to do it now is to sell radio and television frequencies to the highest bidders (by an objectively defined, open, impartial process) — and thus put an end to the gruesome fiction of “public property.”…

…it took hundreds of centuries before primitive, nomadic tribes of savages reached the concept of private property — specifically, land property, which marked the beginning of civilization. It is a tragic irony that in the presence of a new realm opened by a gigantic achievement of science, our political and intellectual leaders reverted to the mentality of primitive nomads and, unable to conceive of property rights, declared the new realm to be a tribal hunting ground.

The breach between man’s scientific achievements and his ideological development is growing wider every day. It is time to realize that men cannot keep this up much longer if they continue to retrogress to ideological savagery with every step of scientific progress.

Half a century later, Rand’s concept has become reality. While Canada is far from being a textbook model of a free market, let’s hope it’s promise of competition becomes reality as well.