Auction Day 7: Canada’s big three take the lead as more competitors drop out

As bidding in Industry Canada's Advanced Wireless Services (AWS) spectrum auction works its way through week two, the country's Big Three wireless carriers - Bell Mobility, Rogers Communications and Telus Mobility - have risen to the top of the bidders list both in terms of money committed and numbers of standing high bids. As expected, the wireless ILECs, with their deep pockets and overwhelming desire to keep new entrants off "their spectrum", were willing to play the waiting game as wannabe competitors reached price exhaustion. Take David Parkes and his crew over at Jaguar Wireless. The upstart was only interested in the lucrative Toronto market, but spent all of Tuesday on the sidelines instead issuing waivers. By Wednesday morning, Jaguar still had all of its 250 eligibility points, but didn't have any waivers remaining after using all of them on Tuesday. It seems $213 million, its last bid, was as high as it could go. This might also be the case for 6934579 Canada Inc. The numbered-company watched most of the day and didn't place a bid until Wedenesday's final round. The firm had previously used a waiver in round 16, and then issued four consecutive beginning in Round 20. Without any waivers left and only 386 eligibility points, the company now appears resolved to the 10 MHz G-band PCS extension band in Southern Ontario and Southern Quebec. Previous auction winner TBayTel is also gone from the auction. It seems like the price tag of $600,000 for a 20 MHz licence and $400,000 for a 10 MHz property was simply too much. As the saying goes, "The cream always rises to the top" and that's what we saw today. At the end of Round 24, it looked like Rogers had locked up near control of the most populated corridor in the country with standing high bids on the vast majority of 20 MHz A-band licences from Quebec City well into Ontario's Golden Horseshoe region. But Bell and Telus don't seem to be having too much difficulty getting the bandwidth they want either. The two companies have split up the other ILEC spectrum among themselves with Bell sitting on most of the Quebec 10 MHz E-band licences and Telus owning the Ontario ones. In the 20 MHz F-band this situation is largely reversed save for a few exceptions. New entrants honing inWith the incumbent wireless providers seemingly enforcing their dominance in the non-reserved spectrum, this caused ripples in the new entrant bidding strategies. Day 7 saw a resurgence of bidding between new entrants with Globalive Communications and Vidéotron ltée waging war for most of the day over several licences in Quebec, primarily the 20 MHz B-band and the 10 MHz D-band. Globalive isn't giving up on the more populated licences though, despite suggestions that the company was out of the running for Toronto. While the company hasn't placed a bid on the Tier 3 Toronto licence in any of the bands since Round 16, Globalive now seems content to go after the entire Southern Ontario licence in the set-aside bands. As well, the Yak Communications parent company continues to bid for lucrative licences in British Columbia and Alberta as well as some of the small licences in Quebec. Auction strategies becoming clearerJust as the Big Three seem to have settled on their properties of choice, the map of auction winners is becoming a lot clearer for new entrants as well. Shaw Communications is going to stick to its knitting and play in the West as well as Northern Ontario. Although it will have a fight on its hand with MTS Allstream and SaskTel in their respective territories, it's pretty much decided Shaw isn't going to fight to get a licence in Southern Ontario or Quebec for example. For Vidéotron, the company is in a very good position to capture the majority of licences covering Quebec both 10 MHz and 20 MHz properties. It has also been sitting on a number of Ontario properties extending from Ottawa as far west to Toronto. If these two companies do decide to get together after the auction is concluded, they would form formidable competitor with only minor gaps in its network. Throw Bragg Communications into the mix with its control of licences in Atlantic Canada and you could have Canada's newest national wireless operator. Heading to next stage of auction?Bidding activity slowed considerably on Day 7 compared to previous days and that could signal a change to the next stage of the auction. Bidding on Day 6 for example increased total standing high bids by approximately $460 million, while Day 7 saw an increase of slightly more than $300 million. Moving to the second stage would increase the percentage of eligibility points a bidder has to use each round without losing any. The current percentage is 75% and a second stage could see that level increased to upwards of 90%. With having to commit 90% of eligibility points in each round, bidders could start to shed points quicker, decreasing their flexibility and potential bidding strategies. It is at this stage that the men are separated from the boys, laying the foundation for a furious fight to grab licences as bidders drop off. Total standing high bids at the end of Round 24 stood at $2.8 billion.

Auction Day 7: Canada’s big three take the lead as more competitors drop out

News | 06/05/2008 11:06 am EDT

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