This Week’s Wireless Auction Won’t Do Much for Competition in Canada, but Not All is Lost

In 2008, a government-issued auction of wireless spectrum generated well over $4 billion in revenues and spurred the creation of several new carriers, including Wind Mobile and Mobilicity, who have slowly but surely weakened the iron grip that the Big Three of Rogers, Telus, and Bell have had over Canadian consumers for more than two decades.

But just when our nation needs another similarly successful auction—Public Mobile has been acquired by Telus and rumours are swirling that Mobilicity will also be swallowed this year by one of the Big Three—it is seeming that this time around, no significant impact will be made on Canada’s wireless market.

Without the presence of US telecom giant Verizon (a threat which last year brought out the worst in the Big Three), this week’s 700 MHz auction stands to simply empower the spectrum of Rogers, Telus, and Bell, with only Wind Mobile standing a chance of obtaining any meaningful quantity.

However, to its credit, the government is trying for real change: it has relaxed foreign investment restrictions and is now planning a third auction next year, one which has strict rules that it says are “specifically designed to put Canadian consumers first,” such as spectrum caps to ensure that four or more providers have the opportunity to access 2500 MHz spectrum; smaller geographic licence areas to provide more opportunity for rural internet service providers to participate; and provisions on transfers of the 2500 MHz spectrum “so that Canadian consumers continue to benefit from competitive market forces.”

And even if competition isn’t immediately increased, the 700 megahertz waves will at least boost service quality among the Big Three, as that level of spectrum is able to penetrate elevators, basements, and underground parking lots, and also requires fewer cellphone towers, a boon to those living in rural areas.

UPDATE: Wind Mobile has withdrawn from the 700 MHz auction after financial backer Vimpelcom opted out of funding the carrier’s participation. The move further empowers the Big Three and cripples Wind’s chances of a competitive future in Canada’s wireless market.

“In order to continue offering real choice for Canadian consumers and businesses long term, Wind needs more wireless spectrum which is the real estate of our business, so it is very unfortunate Wind is unable to participate in the 700 Mhz auction,” Wind CEO Anthony Lacavera said in a statement.