Auction ends with little fanfare, incumbents walk away with majority of spectrum

The roller-coaster ride of Canada’s first-ever auction for PCS spectrum ended last Thursday with the arrival of a potential new competitor, a larger spectrum cache for three national incumbents and nearly $1.5 billion in new money for the federal government. Bell Mobility, Rogers Wireless Inc and Telus Communications Inc walked away with most of the 52 licences, while W2N Inc landed one licence in each of Eastern Quebec, Alberta and BC. There were 62 licences up for grabs and the 10 unclaimed properties will revert back to Industry Canada which will make them available in a future auction. That will likely happen in late 2002 or early 2003 when the department moves to auction bandwidth designated for third generation services. Bell Mobility ponied up more than $720 million for 20 licences including two in the prized Greater Toronto Area (GTA) market. The average selling price for a single licence in the GTA was nearly $310 million. The BCE Inc subsidiary was also successful in landing a healthy portion of spectrum in Telus’ home territory of Alberta and British Columbia. It took three licences in each of those markets. For its part, Rogers Wireless chipped in nearly $400 million for 23 licences. It gained two licences in several markets, but was shut out of a second in the GTA. Telus got what it wanted according to company executives, which were licences in the most populated regions outside of Alberta, BC and Eastern Quebec. W2N and its Canadian partner itemus Inc were expected to fiercely compete for licences in the major markets of the GTA, Vancouver and Alberta. While W2N’s principal Joe Church didn’t disappoint in that respect, he bowed out of the Montreal and Toronto races in the latter stages of the battle. It is still unclear what Church plans to do with the three licences, but without spectrum in Montreal and Toronto, rolling out a national service isn’t in the cards. He may choose to sell them. If he does, Bell for one could do a lot with 40 MHz of bandwidth in Alberta and BC. Thunder Bay Telephone had the least amount of work in the auction. It placed a bid in Northern Ontario in round two that stood up for the rest of the auction. To round out the results of those that didn’t go the distance, Microcell dropped out before the end of the first week of action. Dean Proctor, VP regulatory affairs at the Montreal-based wireless carrier, told Report on Wireless at the time that the company wasn’t going to bid for spectrum it didn’t need. "As we have told anybody who is willing to listen, we don’t need spectrum. This is not a 3G auction. This is leftover 2G spectrum - what was hanging around in the back of the fridge," he said. "We were going to be opportunistic in this. We put down a deposit for the maximum in an attempt to understand what was going to be going on." The Sprint PCS-based 3050443 Nova Scotia Co, which backed out early in the second week, was never really considered a contender by Report on Wireless, which provided daily coverage of the auction. Sprint’s participation may have only been a courtesy to its long-time friend Mike Kedar. As Report on Wireless maintained from the outset, this auction wasn’t the place for green field operators. As expected, the major battles in this auction were fought over Toronto, Alberta and British Columbia. By the beginning of week two, bids for Toronto were already hitting about $50 million, a figure that escalated quickly as incumbents and newcomers waged a monumental battle for control of Canada’s largest and more lucrative market. Once Sprint dropped out, the stage appeared set for a four-way split of the GTA. But Bell’s determination to pay whatever it took to get two 10 MHz licences in Toronto, combined with W2N’s price exhaustion and Telus’ inability to bid on more than once licence, resulted in a three-way split with Bell emerging as the biggest winner. West and East turn out to be unlikely battleground Week two opened with a major push into the hinter regions with Bell, Rogers and Telus moving in to grab a major chunk of the remaining virgin properties. The Prairies and Atlantic Canada became hotbeds of activity. Even W2N got into the game, picking up a licence in Eastern Quebec. Bidding in Manitoba, Nova Scotia and Prince Edward Island was far more intense than expected. While Rogers and Bell battled to gain control of a second licence in the two regions, Telus displayed a savvy strategy to land the "D" licence, thwarting the much larger players’ plan to split the two markets among them. Round after round, the Western-based telco continued to bid on the "D" licences in every market in which it was active. It’s still unclear what the goal of that strategy is, but there may be some correlation with the eventual licensing of additional spectrum for third generation services. Industry Canada is expected to announce a timetable for releasing that spectrum sometime this year.

Auction ends with little fanfare, incumbents walk away with majority of spectrum

News | 02/05/2001 5:00 am EST

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