Industry experts expect delays in 700 MHz spectrum auction; not before 2012

Industry experts say foreign ownership questions and delays in the transition to digital television are likely to hold up an auction for “ultra prime” spectrum in the 700 MHz band. Industry Canada plans to launch consultations this year for auctions in the 2500 MHz and 700 MHz bands to support mobile technologies. But the 700 MHz band—currently used for analog over-the-air television—cannot be freed up for a wireless auction until the broadcasting industry completes its transition to digital television broadcasting. Digital television’s more efficient use of spectrum is clearing the way for Industry Canada to set aside leftover spectrum for mobile wireless technologies such as broadband and cellphone services. “I don’t expect an auction on it before 2012 because of the problems with the digital broadcast transition,” Michael Hennessy, senior vice-president of government and regulatory affairs at Telus Corp., said in an interview. Broadcasters are struggling to meet the Aug. 31, 2011 deadline and the move to digital television broadcasting. They have told the told the CRTC that they cannot feasibly meet the deadline for technical and logistical reasons. Industry Minister Tony Clement said this week that he does not want to see delays in the shift to digital broadcasting, and that he would “really like to stick to the deadline.” Mark Goldberg, a consultant at Mark H. Goldberg & Associates, said the 700 MHz band’s radio characteristics make it “ultra prime” spectrum for mobile wireless technologies. An auction for licences the 700 MHz band could also be delayed by the Conservative government’s pledge to open up the foreign ownership restrictions for the telecom sector. Industry Minister Tony Clement has said the department will soon announce consultations for liberalizing the foreign ownership restrictions. That pledge—which would involve amendments to the Telecommunications Act—could determine whether foreign or foreign-financed players can participate in the auctions. “The 700 is really attractive spectrum. If you’re going to have that kind of an auction, it might make sense to hold off on the auction until the foreign ownership issue is settled,” Goldberg said. “Are they going to set aside some for new entrants? Who are the new entrants? Do you set aside spectrum for a participant affiliated with an international giant, or do you let them bid on the open market? All those kinds of questions are the kind that need to be canvassed during the consultation period.” Industry Canada spokesman Derek Mellon told The Wire Report by email that consultations for both bands will be launched this year. Mellon said Industry Canada will release a consultation notice “shortly” on the 2500 MHz band (2500-2690 MHz) to study “the band plan structure and accommodation on existing incumbents.” Mellon said the department will issue another consultation paper this year on the use of the 700 MHz band “for broadband mobile systems.” The 700 MHz consultation will cover “general allocation issues, frequency band structure, anticipated applications, coverage requirements, technical conditions and spectrum requirements,” he wrote. Following the consultations, the department will hold further, separate consultations on licensing rules and processes. Hennessy predicted that an auction for the 2500 MHz band will be held in 2011 and for the 700 Mhz band, no earlier than 2012. “These are both big events for the wireless industry,” Hennessy said. “They are, if you will, the next primary source of increased capacity for mobile wireless. With the introduction of smart phones and the accelerated consumption of spectrum, it’s critical to begin to define the timing of those two auctions.” Access to broadband services has become an issue of national importance as industry and government leaders discuss the “digital divide” and the discrepancy between rural and urban broadband access—let alone broadband speeds. Major Internet service providers Bell Canada and Rogers Communications—through their Inukshuk partnership—argue that building wireless broadband services are key to connecting Canada’s remote and rural areas. “It’s so important to have the spectrum available for the increasing demand for wireless broadband services, both fixed and mobile. There’re an awful lot of people trying to keep an eye on this,” Goldberg said. Most of the 2500 MHz band is currently licensed to the Inukshuk partnership for fixed wireless services. According to existing policy, Industry Canada can claw back one-third of licensed spectrum for re-auction from licencees that want to repurpose spectrum from fixed-use to mobile. At the World Radiocommunication Conference in 2000, the 2500 MHz band was identified for third-generation mobile (3G) services. Industry Canada announced in March 2006 a policy to facilitate mobile services in the band, such as mobile and broadband Internet access. Spectrum expert Wayne Stacey, president of Wayne Stacey & Associates, said the 2500 MHz band was at one time licenced for wireless cable services, but “it didn’t take off.” It’s too early to estimate the value of the spectrum, and opening them up to foreign players would increase their value, Stacey said. “Those are all balls up in the air right now. It’s hard to say where they’ll land,” he said. “There’s a lot of valuable spectrum that’s not being used very effectively.” Goldberg said he does not expect an auction for the 2500 MHz band until after April 2011. “To me it would not be surprising that it’s a year-long process,” he said. --With files from Jonathan Migneault sdoyle@thewirereport.ca

Industry experts expect delays in 700 MHz spectrum auction; not before 2012

News | April 9, 2010

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