Here are the facts on mobile spectrum use in Canada

Let’s get the facts straight. The complaint by Telus Corp. of paying too much for spectrum must be examined in light of the overall Canadian wireless situation. Let’s consider the following facts: the three dominant Canadian wireless carriers (the Big Three) have 95% of the licensed mobile spectrum and over 95% of market share of the Canadian population of 35 million, with penetration of 65%. In the US, the five big wireless carriers control the same quantity of licensed mobile spectrum as do the Canadian Big Three, yet have achieved over 85% penetration in a population of some 360 million. So in a comparison of population/penetration/spectrum the Canadian Big Three have 13.5 times more mobile spectrum. The efficiency of mobile spectrum use in the US clearly demonstrates that the Canadian Big Three do not need any additional spectrum, if they deploy similarly efficient use of the spectrum, not now nor in the foreseeable future. They are spending all these billions on spectrum auctions with a single aim: to prevent competition. Their argument can be summarized as follows: if we don’t buy it, it may be bought by competitors. We must be the high bidders and hoard it so that any new spectrum can be taken off the market and not be a competitive threat. No one has forced Telus, Rogers or Bell to bid the high bids for this latest auction. Why is Mr. Michael Hennessey so angry about the high costs? His company has not been dragged by force to spend these billions. They do not need the additional spectrum. They say they need the spectrum and are willing to spend the money to buy it, but when you look at the network deployment the picture is of inefficient spectrum reuse and a great opportunity (because there is so little competition) to transfer any new unused spectrum auction costs to their subscribers. The mobile spectrum (below 3000 MHz ) is a national heritage entrusted to Industry Canada to be managed for the benefits of all Canadians and not to be inefficiently deployed by a few market dominant players regardless of how much they are willing to pay. The Big Three hide too often behind the commonly used phrase in Ottawa “market forces”, which they interpret as giving them the right to fight competition not by offering better or more cost efficient services but by establishing insurmountable barriers to entry by taking off the market any scrap of spectrum that becomes available. Both Industry Canada and the CRTC have been faced with a number of proposals by would-be competitors unable to enter the market for lack of mobile spectrum, to allow them access to some of the unused or inefficiently used mobile spectrum held by the Big Three. Allowing access to unused mobile spectrum at present licensed to the Big Three will eliminate their need to hoard, to keep buying unneeded spectrum at exorbitant rates. Opening access to unused spectrum will allow the market to self regulate the wireless carriers to buy at auctions or access through lease (at market prices) only such mobile spectrum as they can efficiently use. Any excess they can’t or would not use efficiently will be available to competitors. I hope this inside look at the facts of how mobile spectrum is being used and misused in the Canadian wireless telecommunications industry will put Mr. Hennessey’s “Unfair fees for incumbents” complaint in the proper light. Mike Kedar, president of Mobilexchange Spectrum Inc., is responding to an editorial from Mr. Hennessy that appeared in one of Canada’s national newspapers. Kedar is past president and chair of CallNet/Sprint Canada and co-founder of Microcell/Fido (both companies now under Rogers’ ownership). He was inducted to the Canada’s Telecommunications Hall of Fame in 2007.

Here are the facts on mobile spectrum use in Canada

News | July 27, 2009

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