Wireless spectrum may determine fate of new Canadian carriers

Wireless spectrum may determine fate of new Canadian carriers

A debate over wireless airwaves is heating up in Canada as the government prepares to set the ground rules for a 700 MHz wireless spectrum that will be auctioned off next year.

The 700 MHz blocks up for grabs offers better penetration through buildings, the signal can travel farther, it has improved reception during bad weather conditions and it could bring new entrants like Wind Mobile a chance at advanced wireless data technology. Likely, the reason the major players such as Telus Corp. are insisting that Industry Canada leave the spectrum auction wide open, allowing anyone (including them) to bid with no restrictions or caps.

Back in 2008, the government opened up the wireless market allowing new entrants like Wind Mobile to bid on the blocks of airwaves. At that time, the carriers already dominating the wireless industry in Canada (Telus, Rogers, Bell) were forced to allow the new carriers the ability to “roam” their networks. This allowed the new carriers a chance to compete in a market that had been monopolized by only a few giants.

As IT Word Canada explains:

In 2008 Industry Canada said incumbent carriers had to offer new spectrum winners the ability to roam on their networks, a way to ensure the newcomers’ subscribers wouldn’t be stranded on small networks. However the startups have always complained about the rates they have to pay. To combat that, Wind proposes this time there be caps on the rates incumbents can charge.

When Wind Mobile launched in December of 2009, it seriously shook up the wireless pricing scheme in Canada, providing customers with never-before-seen deals like unlimited data. And since the 2008 wireless spectrum auction, Globalive the owners of Wind Mobile, have remained fighting to stay in Canada because of its foreign ownership. Globalive (Wind Mobile), is owned by Egyptian interests that also control an Egyptian-based Telecom, Orascom Telecom.

It was just announced that The Federal Court of Appeal set a May 18th date to hear arguments by Wind and Ottawa to determine whether its foreign ownership complies with the Canadian Telecommunications Act. And depending on how the appeal plays out, this will be another deciding factor for Industry Canada, the department of the government responsible for setting the spectrum rules.

This Spectrum is Prime Real Estate

Even if Globalive is able to win this battle, if it’s not able to snag some of the 700 MHz blocks it may be game over, according to Toronto-based analyst Ron Gruia. Referring to the 700 MHz spectrum, Gruia says “It really is prime real estate” and stated this spectrum will determine the fate of the new entrants.

This auction is going to help determine which of the new entrants is going to stay and which ones will fold.. The ones who don’t get any spectrum will probably exit eventually the ones that will get new spectrum will remain competitive for the foreseeable future. – Ron Gruia, analyst with Frost and Sullivan

Do you think the government should give new entrants like Wind Mobile, Mobilicity and Public Mobile an advantage? Or do you think this new spectrum is fair game to all? In this case, I’m rooting for the little guy. Is it ever a good thing for a small few to control the entire market? Please let us know your thoughts.

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