Without Prejudice

It is usually against my habits to write about the political or economical issues since this is a technical blog. However, I do make exceptions when there is certain overlap between the technical and political/economical sides of a problem that results in slowing down the technological progress. And this is the case, unfortunately. If you are Canadian, you will understand me, for sure.

How did it start: Government of Canada Opens Up Wireless Industry to More Competition

OTTAWA, May 27, 2008 — The Honourable Jim Prentice, Minister of Industry, today announced the opening of the bidding process for the Advanced Wireless Services (AWS) spectrum auction. This auction follows a commitment made by this government to enable more competition in the wireless market….”Our government's intentions are clear: to achieve lower prices, better service and more choice for consumers and business,” said Minister Prentice. (taken from this article).

At the beginning it appeared to be a great idea. Here in Canada we definitely lack the competition. Especially when it is about the telecommunications. You want a cellphone? Yes, you have plenty of choices: you can pay $40-50 CAD to Rogers. Or, alternatively, you can pay the same amount to Bell. Telus? Oh, right, I heard about this operator too…Guess what - you will see the same price and the same conditions. Actually, these days the only reasonable choice is the operator with a GSM network. How many of them do we have? Exactly one :) Do you know how much does it cost for a Rogers customer to send an SMS from NYC to Montreal (600 km)? More than it would cost to send a regular letter!

Some of use were very frustrated when Rogers have made their iPhone offer. Want to learn more - go to this site and read the user messages there (warning: contains coarse language and viewer discretion is advised :) ). This iPhone offering perfectly demonstrates the position of Rogers on the development of wireless service in Canada.

So, back to the auction. It was a long and interesting process, with new players getting in, some players dropping off and some previously unknown names appearing from nowhere. But at the end…

Sold! 15 Companies Bid Almost $4.3 Billion for Licences for New Wireless Services

OTTAWA, July 21, 2008 — Consumers and businesses will be the winners in a more competitive wireless market. Industry Canada today announced that 282 licences have been conditionally assigned to 15 companies in the Auction of Spectrum Licences for Advanced Wireless Services and Other Spectrum in the 2 GHz Range….”The auction exceeded our expectations in terms of the level of competitive bidding activity. I hope the industry keeps this competitive spirit alive as it enhances and expands its services with improved access to the spectrum,” said the Honourable Jim Prentice, Minister of Industry. “The industry now has an unprecedented opportunity — thanks to the government's Advanced Wireless Services (AWS) policy and auction — to develop products and services that offer choice to Canadian consumers and businesses. We think consumers will be the big winners in this auction.” (see the full article here).

Now let look at the list of winners more closely. I will not quote the entire list, just first 3 entries:

Winner name Total Amount of Winning Bids Total Number of Winning Bids
Rogers $999,367,000 59
TELUS $879,889,000 59
Bell Mobility Inc. $740,928,000 54

Almost entire block A has been purchased by Rogers, block E and F - by TELUS and Bell. The names look suspiciously familiar…But this is not the worst thing - at the end, on the 4th line of the list we actually see “9193-2962 Québec Inc” (AKA Quebecor Inc) nd “Globalive Wireless”. These are the saviors of the Canadian consumer who were expected to change the rules of the game.

Auction winners and the Canadian geography

There is a little problem with these two winners - Globalive has bought the frequencies in every Canadian province but Quebec (except a tiny part in Northern Quebec). And Quebecor - nowhere but in Quebec. As result of this auction we have not got any potential national operator in Canada.

Quebecor/Videotron and their plans

Recently Quebecor has finally made a decision what are they going to do with the airwave rights they have acquired. Surprisingly, they are actually going to build an HSPA network!

Quebecor Inc. said it will be investing upwards of $800-million to build a high-speed wireless network to launch a cellphone service in Quebec by the end of 2009….He later added that bundling its cellphone service with its TV and Internet offerings will give the best value to its customers....Although there has been widespread speculation Quebecor would partner with fellow new entrant Globalive Communications Corp. to share the cost of building a network, Globalive's CEO Anthony Lacavera said no deal has been made between the two companies. (read the full article here).

Apparently Quebecor is not looking for the partnership with Globalive. Which means if you are a Videotron customer who has home phone, Internet and TV from them you may get a small rebate on your wireless service but once you drive for 200 km to the west - welcome to the roaming zone. As well if you come to visit Montreal from Toronto you will have to pay roaming fees just like if you are coming from another country.

It seems that the success of the auction is measured only by the amount of money raised by the participants. The primary goal (to provide the frequencies to a winning company that could become a national operator) has not been achieved. The winners are actually the existing operators who make the using of cellphones and the data service a luxury here in Canada.

  ### References

  1. Spectrum Management and Telecommunications

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23 October 2008