A fourth national wireless player in Canada: Part III – Spectrum Requirements

As potential new entrants strive to convince the federal government that more competition is needed in Canada's wireless sector and that this can only be accomplished through a set-aside of spectrum, debate surges regarding the amount of spectrum Bell Mobility, Rogers Wireless and Telus Mobility - the Big Three - require for the future. It's difficult to determine how much they need, but one thing is certain: as spectrum is the life blood of the wireless industry, the Big Three will try to secure as much as possible. In Part III of the series, A fourth national wireless player in Canada (Part I and Part II), Report on Wireless discusses spectrum requirements from the Big Three's perspective, as well as from that of potential new entrants. The Big Three maintain they will need additional spectrum to meet the ever-growing demand for bandwidth-intensive broadband data and video applications. In its comments Rogers suggests that a video session can use between 30 and 50 times the capacity of voice. Equally, downloading music and picture messaging consume considerably more than voice. "A broadband data session running over Rogers' HSDPA network can use 300 times more data than voice," the company claims in its comments.Telus notes in its comments that the auction is to "ensure there is available network capacity to manage broadband and video demand. As the Internet has demonstrated, there is never sufficient capacity to meet demand. Wireless is no different," the company writes. Competitors are convinced that the three national companies don't need all that much more. According to Mike Kedar's MobilExchange Ltd., the existing national players don't need more than 10 MHz of spectrum to address future mobile bandwidth requirements. He points to a report from Lemay-Yates Associates that demonstrates the American national wireless carriers have served larger populations with less spectrum than Canadian carriers. "There is more spectrum capacity licensed per carrier in Canada compared to the US," reads the report prepared for MobilExchange. "US carriers often serve much larger and more dense markets with less spectrum than their Canadian counterparts." MTS Allstream Inc. also raises the possibility of spectrum not being used in its totality by the Big Three. The company suggests that if Bell and Telus can enter into a reciprocal roaming agreement then both operators must have some unused spectrum. MTS goes further stating "it stands to reason that Rogers is likely to have some capacity that is unused, and indeed, lying fallow." Usage levels should also serve to illustrate spectrum usage, according to MTS. "Demand for spectrum in any given market area is driven by both the number of subscribers and by their aggregate usage levels. Thus, even where US and Canadian carriers have comparable amounts of spectrum in comparably sized markets, with per-subscriber usage in Canada averaging only 51% of that in the US, the Big carriers' need for spectrum should be commensurately lower than their US counterparts," reads the company's submission.Despite differing opinions with respect to how much spectrum the big incumbent carriers require, some suggest that may not be the issue: it's about the lengths they will go to keep out new entrants and this is why a spectrum set-aside is required in the auction. The degree to which the Big Three wireless carriers will go to acquire spectrum can perhaps be summed up best by comments from Wispra Inc., a company headed by Joe Church, regarding the 2001 spectrum auction. "In 2001, where there was no set-aside, W2N Inc. bid over $300M for just 10 MHz of PCS spectrum in the Toronto area alone and was outbid by all three of the incumbent carriers. In a subsequent conversation with an executive of an incumbent carrier, the president of W2N was told that they would have bid double $300M to keep out a new entrant," reads Wispra's submission. Wispra is a major shareholder in W2N, a winner of three licences in the 2001 spectrum auction that were eventually sold to Bell Mobility in June 2005. W2N describes itself as an unsuccessful bidder for nationwide PCS spectrum. The spectrum auction will likely be one of the hot topics of discussion at the upcoming Canadian Telecom Summit in Toronto from June 11 to 13. Report on Wireless will be attending the annual event.

A fourth national wireless player in Canada: Part III – Spectrum Requirements

News | June 7, 2007

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