Latest wireless spectrum auction raises $2.11B, Industry Canada says

New wireless spectrum licences will give small, regional carriers the capacity to prepare for the future of the wireless market

TORONTO – Wind Mobile took a step closer to its aim of becoming a national telecommunications player on Friday, winning key wireless spectrum licences in southern Ontario, Alberta and British Columbia in the latest federal auction.

The new licences gives Wind Mobile and other regional carriers the capacity of AWS-3 (Advanced Wireless Services) airwaves that will help prepare them for the future of the data-guzzling wireless market.

Industry Minister James Moore announced Ottawa raised $2.11 billion in its the auction of wireless spectrum on Friday.

Moore said the move helps each company improve their services in the future.

For Wind Mobile, the AWS-3 frequency will boost its capacity but doesn’t expand its reach into new parts of the country.

But the latest effort by Ottawa to help encourage a fourth national wireless carrier won’t have any immediate impact on consumers.

“Overall, it doesn’t change the dynamic in the marketplace,” said Maher Yaghi, a telecom analyst at Desjardins Securities, in an interview.

“We have four players in most markets, but that fourth player is not a national player. That means they don’t have the same scale as the other three incumbents to be as competitive.”

Wind Mobile has some 750,000 wireless customers concentrated in populated areas of Ontario, Alberta and British Columbia and has made no secret of its hopes to become the fourth national carrier.

But while it hasn’t faced the same type of financial problems that pushed Mobilicity and Public Mobile into court-supervised protection, Wind holds just a small fraction of the market compared with the larger players.

The new spectrum is essentially an investment in their future. Eventually, it will allow Wind Mobile to boost its 3G network to the faster LTE network, which is the current standard for major carriers.

Wireless spectrum, which is essentially a radio frequency, is a prized asset for any carrier because it’s one of the crucial pieces of the service it provides customers.

Depending on the type of spectrum, the characteristics and value will vary. Lower frequencies generally have a better ability to penetrate walls and travel a further distance, while AWS-3 is more adept at carrying large quantities of data very quickly, which is vital to handle the growing demand of streaming video and other data-heavy features of the latest smartphones.

Governments control who can use what spectrum with licences that allocate certain amounts to individual companies. In this auction, 60 per cent of the available spectrum was reserved for smaller carriers, while the remaining 40 per cent will be available to all bidders.

Breaking down the details of the auction, Wind Mobile was the successful bidder on three licences, paying $56.4 million for spectrum in areas covering 18.1 million people in southern Ontario, Alberta and British Columbia.

Other successful regional carriers were Videotron (TSX:QBR.B), which paid $31.8 million for four licences in Quebec and eastern Ontario, and Bragg Communications, which operates EastLink in Atlantic Canada, paid nearly $10 million for four licences in Newfoundland and Labrador, Nova Scotia and Prince Edward Island, New Brunswick and northern Ontario.

Telus (TSX:T) was the biggest spender, paying over $1.5 billion for 15 licences covering areas serving more than 30 million people. Bell Mobility (TSX:BCE) paid nearly $500 million for 13 licences covering areas serving 13.5 million people.

Ottawa has been attempting to boost competition in the wireless market, but Bell, Rogers and Telus continue to represent 90 per cent of the market.

Rogers Communications (TSX:RCI.B), the biggest buyer in the 700 megahertz spectrum auction last year, did not win any licences this time. A spokeswoman for the company said Rogers acquired the key spectrum it wanted last year.

A second spectrum auction covering higher-end 2,500 MHz spectrum used in rural communities is scheduled for April 14.

In the 2,500 MHz spectrum, Ottawa has placed caps on how much spectrum companies can own, a move that it has said will largely shut out Rogers and Bell because they already own large chunks of it.

Wind Mobile is also seeking to participate in that auction which will take place in April. Bell, Rogers and Telus have also applied to participate as well as a number of smaller regional companies.

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