The players are at the table, and there are a couple of surprising faces looking to be dealt into Industry Canada's advanced wireless spectrum (AWS) auction.
No-surprise bidders like MTS Allstream (fronting a consortium that includes Canada Pension Plan and Blackstone Group) and Quebecor subsidiary Videotron have been joined by Halifax-based privately owned EastLink, Globalive, parent company of alternative carrier Yak Communications, and Calgary-based cable company Shaw Communications, which has in the past seemed indifferent to wireless.
Last week, Industry Canada released a list of the companies who had filed a deposit in order to participate in the 2.4 GHz spectrum auction, scheduled for this May. At the end of March, Industry Canada will announce who among the applicants qualifies to bid.
Globalive is the Canadian face of an international syndicate funded by Weather Investments (owners of Wind telecom operations in Italy and Greece) and alternative investment firm Novator (which recently established 3G wireless operations in Poland and Iceland, along with investments in several other European carriers).
"Obviously, (the consortium members) have got some experience. And certainly, what the government was looking for was for Canadian networks to resemble those of Greece and Italy, and not Gabon," said Iain Grant, principal of telecom consulting firm The SeaBoard Group.
EastLink said in a press release the company "does not intend to provide further comment regarding our plans surrounding the auction." It's not clear whether EastLink is bidding for spectrum nationwide or regionally. Under the spectrum auction rules, bidders can buy spectrum in three tiers: national, regional (by province or, in the cases of Ontario and Quebec, large portions of a province) and metropolitan.
Lawrence Surtees, vice-president and principal analyst for IDC Canada's Canadian Communications Practice, said EastLink would be "hard-pressed" to play on a national stage as a wireless carrier.
Grant figured that the structure of the auction would encourage smaller players to bid to compete in a city-by-city or town-by-town basis.
Wireless broadband provider SSI Micro of Yellowknife, for example, will be bidding in the auction. "The most interesting thing about the list is guys like SSI Micro can make a go of it. You can bid for just Brandon, Man., if that's all you want," Grant said.
On the other hand, for a regional tier, companies would be bidding against deeper pockets.
Surtees said he sided with analysts who called Shaw's bid "speculative," since CEO Jim Shaw has in the past said the company is comfortable offering the triple-play of cable, digital phone and Internet, and doesn't feel it's necessary to deliver wireless as well.
Videotron had planned to be a regional carrier in Quebec, but "exceptionally favourable conditions for new entrants, which may never occur again," convinced the company to go national, said CEO Pierre Karl PC)ladeau in a press release.
Those conditions include a 40 GHz block of spectrum set aside for new entrants -- incumbents Bell, Telus and Rogers can't drive up the price or buy squatting spectrum -- and mandated roaming.
Videotron already offers wireless services in Quebec as a mobile virtual network operator (MVNO), and so owning its own spectrum isn't as critical to the company as it is to MTS Allstream, Surtees said.
"One could argue, especially if you're a regional player like Videotron, that you don't need to get access to your own spectrum to compete," Surtees said.
"Clearly, the player that most needs to be there, that desperately needs to become a national wireless player if it's going to continue to be a viable competitor and to find growth beyond its core market, is Allstream," Surtees said.
"Wireless is the future of the telecom enterprise, globally and in Canada," he said. In 2006, wireless became the single biggest sector of the Canadian telecom services market -- bigger than local and long distance combined, and accounting for one third of the $36-billion Canadian telecom market. And the rest of the market -- including data and Internet -- is flat, Surtees said. "Wireless is single-handedly making the Canadian telecom market grow," he said.
IDC Canada believes that, at the end of 2007, the number of wireless subscribers surpassed the number of wireline customers, something that happened five years ago internationally, Surtees said.
MTS Allstream is solely in the business market, and without a national wireless play, its viability would be questionable. The consortium "clearly has the clout and the wherewithal to compete with not just the existing wireless incumbents but a Bell Canada that's backed by Ontario Teachers (Pension Plan)," Surtees said.
CPP's backing of the MTS Allstream bid is "a delicious irony," Surtees said, since CPP was one of the unsuccessful suitors in the bid to take Bell Canada private. "Rather than turning its back on the market, it found a more exciting way in," Surtees said.
Mike Kedar, president of spectrum leasing company Mobilexchange and founder of now-absorbed wireless companies Microcell and Call-Net, said the Globalive bid didn't surprise him. "I think it's going to be a regional play, not a national play," Kedar said.
"Sure, it's an opportunity is one thing. Being able to deploy and build and operate (is another)," he said.
Kedar has argued that through better wholesaling of existing spectrum, the scarce resource could be more efficiently used. In a May 2007 submission to Industry Canada, he asked the government to reserve some of the 2.4 GHz spectrum for future applications like health care. Instead, the government is auctioning off the entire 105-MHz block, even though it won't be fully used for many years.
"For the purpose that the three major carriers are using spectrum -- mainly to generate revenues from teenagers downloading music and for e-mail going back and forth and traditional voice -- for what we call the traditional cellular wireless services as they've evolved, there's definitely enough spectrum," Kedar said.
"But as we move to special applications which are specific to industries such as health care, I think there should be some spectrum dedicated for those kinds of applications so we can improve our services and get the maximum efficiency."
"The process has shaped up for a very strong and robust auction at the end of May," Surtees said, unlike the flagging 700 MHz auction in the U.S. "It's going to be like an auction you see on TV at a rodeo or a hog show."
Grant concurs it'll be interesting. "I'm not sure it's going to get a lot of money for the government. But we know there are at least two and now three potential national plays among the new entrants, that begins to sound like when the music stops, someone's not going to have the spectrum they need."
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