New media incubator sets sights on spectrum to be auctioned in January

New media incubator itemus Inc plans to build a new Internet-based wireless network if it’s among a handful of winners in the federal government’s radio spectrum auction, scheduled to begin January 15. The Toronto-based startup has taken a 20 per cent stake in Wispra Inc, one of the players vying to win cellular spectrum set aside in 1995 by Industry Canada for next-generation personal communications services (PCS) services. If successful, itemus CEO Jim Tobin says his company is prepared to deliver a raft of new personalized applications that could change the nature, and mobility, of online content. "If you get a PDA or cell phone that’s web-enabled, it’s every waking hour," he explains, adding it can observe "your behaviours, your preferences, your patterns, your networks – all of the things that will allow for deep personalization. So, the wireless Internet will bring about, in our view, the very strong personalization of content for the first time – more than anything that’s been done on the web to date." Itemus has been heavily involved with both wireless communications and new media content since launching as an incubator and as an Internet services company in February this year. Since then, the organization has been on an aggressive buying streak, including making investments in U.S. and Canadian content creators such as Trailervision Inc (CNM, Aug. 23/00) and NYC-based Shooting Gallery. It has also invested in several wireless commerce companies and advanced networking firms in an attempt to provide a complete portfolio of services under one umbrella. Tobin says itemus decided to compete in the spectrum auction when deals with existing carriers failed to materialize this summer. "One of the main reasons we’re interested is we have a set of wireless applications coming that we think are revolutionary," he told Canadian NEW MEDIA. "We want to ensure that we have access to a distribution platform. We didn’t have relationships forming with existing carriers around distribution of those applications and we were concerned about the priorities of some of those incumbents – that they would match ours in terms of the applications that we’re going to deliver." To improve its odds in the auction, itemus teamed up with Wispra, a new company started up by long-time wireless mover Joe Church. Earlier this month, Industry Canada revealed that Wispra’s majority-owned subsidiary Wireless2Net Inc placed a deposit of $112 million to secure a bidding spot in the PCS auction. The other companies planning to bid include Bell Mobility, Telus Mobility, Rogers Wireless Inc and Microcell Communications Inc. Also joining the fray is American-based Sprint Corp, though it will have to comply with Canadian ownership and control regulations. Itemus has a tough row to hoe if it wants to win new PCS licences. Most insiders believe the auction will pull in at least $1.5 billion. CIBC World Markets has predicted a final tally of up to $5 billion. Tobin says he doubts the final number will be that high, and that much of the bullish talk amounts to puffery by the well-funded incumbents. "There’s been talk about big numbers… it’s a lot of posturing to try to scare the non-incumbents off. But, what I will say is that our team is pretty sophisticated themselves." He says no matter how high the bidding goes, itemus won’t be on the hook for paying radio frequency licence fees to government. He notes that the final bill will be paid by other partners in the consortium. Church has longstanding ties with NextLink, which helped him pay a $70 million tab for fixed wireless licences in Canada’s major centres after a similar auction in late 1999. Tobin is tight-lipped about his company’s plans for using the PCS spectrum should it win any, saying only that it would take advantage of an "Internet-centric" network to provide an array of new services, including Internet access eventually achieving speeds of 384 kbps in a mobile environment. While the devices and networks that can take full advantage of a high-speed wireless Internet are still years away, he says the trends are moving in that direction. He points to the new Research in Motion 957 Blackberry device as an example of accelerating adoption rates for new wireless technologies. Company to play active roleThe company won’t be entering the auction without some significant bench-depth. The itemus team, he says, will play an active role in the bidding, backed partly with his own experience as a member of McKinsey & Co, which led the auction team for an unnamed participant in last October’s spectrum auction. "We’re not in short-pants on this one," he says. Nor does Tobin worry that the incumbents are at an advantage in building new infrastructure as a result of existing relationships with building owners and vendors. "What’s unique about our approach is this Internet-based approach which means that there’s more opportunities for shared infrastructure than in a traditional cellular model. We certainly have a view on that which is – I’m choosing my words carefully – it will affect the likelihood of being able to deploy the way we want to." The auction will be for 40 MHz of spectrum at 1.9 GHz, the same frequency in which current digital PCS services are offered. The frequencies were reserved by Industry Canada in 1995 when it allocated spectrum to the current crop of carriers. The band has been broken into four equal licences, offered in areas roughly corresponding to the provincial borders, with extra serving areas carved out of the big population centers. CNM affiliate publication Report on Wireless is carrying extensive news and analysis of the event.

New media incubator sets sights on spectrum to be auctioned in January

Broadcast | November 29, 2000

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