Additional PCS frequencies to be sold off in next year’s spectrum auction

PCS spectrum bidders will have an extra 20 MHz to compete for in Alberta, British Columbia and Quebec when Canada’s second spectrum auction begins January 15. The extra spectrum comes from Telus Mobility, which found itself exceeding Industry Canada’s spectrum cap following its parent’s acquisition of Clearnet Communications Inc, (RoW, Sept. 5/00), and that of QuebecTel in March. Telus had to return the spectrum as a prerequisite for competing in next year’s PCS auction. Companies expected to bid in next year’s auctionIncumbents wireless companiesMicrocell Telecommunications IncBell MobilityTelus Mobility (including Clearnet)Rogers AT&T Wireless Inc New entrantsWireless2net.com IncMobilXchange Ltd3G TechnologiesDynamics of the auctionThe surplus of spectrum in the auction from Telus Mobility will more than likely translate into lower bidding as more spectrum is available. All four incumbents will more than likely land spectrum where they need it, particularly Bell in the West. There just might be enough spectrum available for a new entrant to get some licences, albeit regional ones. The incumbents won’t allow a new national player.The other 11 licensing areas will remain the same, with 40 MHz of spectrum up for grabs. Where the dynamics have changed is in the two western provinces and in Quebec where the government has decided to release the entire 60 MHz. Ed Prior, director of issues management at Telus Mobility told Report on Wireless that while the company had a fair bit of room to manoeuvre in Quebec, it didn’t in Alberta and BC. The company, therefore, decided to give back spectrum in all three markets to ensure spectrum compliance. As a result, he says the company is now "fully eligible to participate in the auction, which we fully intend to do." Industry Canada says it intended to include the surplus spectrum in next year’s auction in its Amendments and supplements and clarifications questions to the policy and licensing procedures for the auction of additional spectrum in the 2 GHz frequency range, released Oct. 23. The department notes that even when spectrum authorizations are transferred from one party to another – except for those won in an auction – it is not guaranteed that the new licence holder will have access to all of the spectrum concerned. "No property right was bestowed with respect to the frequency blocks assigned," the department writes concerning the PCS special authorizations issued in 1996. "Further, the fact that a complement of frequencies is specified on a given authorization gives no assurances that same complement will be automatically transferred with radio authorization, particularly where frequencies are in short supply." Additionally, Industry Canada states that since spectrum is considered a public resource, the Canadian citizenry should earn a fair return for access to, or exploitation of, publicly owned or controlled resources. As such, the department decided to include the surplus spectrum in this auction. "Should the means executed (by Telus) to come into compliance with the spectrum aggregation limit result in additional PCS spectrum being available for licensing, it would be Industry Canada’s intention to include such spectrum in the current auction so as to maximize the possibilities for an economically efficient allocation," the department writes in its Oct. 23 amendments. Following the Oct. 25 agreement between Telus and the department, the newly formed national wireless player now has 12 months to decide how to move consumers from the frequencies it’s giving back to Industry Canada. "If we give back a block that is chock-full of subscribers that means we have 12 months to move folks over either by reflashing their phones or doing something at our switch," says Prior. Much in the same way that microwave systems had to vacate the PCS frequencies originally doled out in the mid 1990 authorizations, Prior explains that Telus will have to find a home for users currently in those frequency blocks (see table below). Telus has proposed two alternatives to the department to become spectrum compliant. The following table illustrates the blocks of spectrum that Telus is proposing to give back to Industry Canada. It has until November 1/01 to return the spectrum.AreaLicenseePCS BlockFrequencies (MHz)BCBC TelD1865-1870/1945-1950BCClearnetB31880-1885/1960-1965AlbertaClearnetB21875-1880/1955-1960AlbertaClearnetB31880-1885/1960-1965QuebecQuebecTelD1865-1870/1945-1950QuebecClearnetB31880-1885/1960-1965Second alternative:BCBC TelD1865-1870/1945-1950BCClearnetB31880-1885/1960-1965AlbertaAGT Mobility D1865-1870/1945-1950AlbertaClearnetB31880-1885/1960-1965QuebecQuebecTelD1865-1870/1945-1950QuebecClearnetB31880-1885/1960-1965 Clarifications on joint bidding between partners The Industry Canada document also clarifies the bidding rules for companies involved in an alliance, marketing agreement, or other such joint operating partnerships. The department clearly states that in such circumstances, the parties involved in the alliance or partnership will only be allowed to have one qualified bidder. Those same companies will also have to abide by the spectrum aggregation limit of 55 MHz. "(…) for the purposes of participating in the auction, any entities (which) enter into any partnerships, joint ventures, agreements (including agreements in principle) to merge, consortia or any arrangements, agreements or understandings of any kind, either explicit or implicit, relating to licences being auctioned or relating to the post-auction market structure, will be treated as Associated Entities and will be jointly subject to the spectrum aggregation limit," the department writes. Such arrangements must be disclosed to the department at the time of the deadline for applications. They will subsequently be made public. "Changes which create an Association with another applicant after the application deadline will not be permitted," the department points out. According to auction principles, only competitors will be allowed to compete in the auction. Aligned companies are not allowed to bid separately. "Therefore, any Associated Entities (which) are jointly subject to the spectrum aggregation limit will not be permitted to bid separately," Industry Canada writes. "Associated Entities must, therefore, decide prior to the application deadline which entity will apply to participate in the auction in order that only one application is submitted."

Additional PCS frequencies to be sold off in next year’s spectrum auction

News | October 30, 2000

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