Major Incumbents, Challengers Win Big in Canadian AWS Auction
Incumbent carriers Rogers, Telus and BCE, the Canadian wireless market’s dominant players, were the major winners as Industry Canada on Monday ended an advanced wireless service auction. The auction brought in C$4.25 billion, nearly three times the totals analysts projected last year. No national challenger emerged, but the three main incumbents could face tough new regional competition.
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Industry Canada auctioned licenses for 105 MHz of spectrum, including 40 MHz set-aside as open to bidding only by a new entrant. The licenses are in the 1710-2200 MHz band. The auction began May 27 and lasted 331 rounds.
The auction, a big win for Canadian regulators, means more wireless competition, Iain Grant, analyst at Seaboard said in an interview. Regulators are “grinning from ear to ear,” he said. “It’s roughly double to triple what most people expected.” The auction illustrates investor confidence in Canadian wireless, Grant said. “People who know wireless were the ones writing the biggest checks and I think that’s a very healthy sign,” he said.
Canadian regulators learned from recent U.S. auctions and decided to set aside spectrum for smaller players, said Carmi Levy, an industry analyst at AR Communications. “The surprising thing is that a fourth national carrier has not emerged from the process … to compete against the incumbents,” Levy said. “Early on it became apparent it would be the existing incumbents against a lot of small players.” With the 40 MHz set-aside, the government made room for another large competitor, he said. “I fully expect conversations will happen and at some point [smaller players] will pool their resources and you will have a national or a near national player emerge,” he said.
Rogers Communications, Canada’s largest wireless carrier, led bidders with 59 high bids worth a total of C$999.4 million. Close behind, Telus Communications had 59 high bids for a total of $879.9 million. Bell Mobility made 54 winning bids worth $740.9 million.
Unlike the U.S.’s 700 MHz auction, dominated by Verizon Wireless and AT&T, regional competitors bid nearly as much as incumbents did. Montreal-based Quebecor, parent of cable operator Videotron was the top competitor with bids of C$554.5 million for licenses in Quebec. Globalive Wireless bid C$442.1 million for licenses across Canada. Data & Audio-Visual Enterprises Wireless bid C$243.2 million.
“The auction exceeded our expectations in terms of the level of competitive bidding activity,” Industry Minister Jim Prentice said in a statement. “I hope the industry keeps this competitive spirit alive as it enhances and expands its services with improved access to the spectrum.”