Videotron’s Dépatie calls for spectrum cap for 700 MHz auction

TORONTO—Industry Canada should impose a spectrum cap at the next spectrum auction for the “valuable” 700 MHz band, Videotron Ltd. president and CEO Robert Dépatie told a crowd of industry insiders at the 2010 Canadian Telecom Summit. “For wireless solutions to work, spectral resources will be required,” Dépatie said at the conference Tuesday. “A number of strategies have been adopted to manage the spectral allocation process to maximize the public good. These strategies include the use of such tools as spectral caps to ensure that the most desirable frequency blocks go to companies who need them and are willing to use them.” A spectrum cap would limit each bidder to a set amount of spectrum to ensure that a number of parties get access. In a follow-up interview, Dépatie told The Wire Report that the incumbent companies have mismanaged the use of their own spectrum by hoarding blocks. “We have incumbents currently that have 175-plus megahertz of spectrum, and they’re not using it,” Dépatie said. “They have earned a lot of spectrum and they haven’t used it yet. Do they really need 80, 90, 100, 175 MHz of spectrum when you really only need 50 or 60?” Ken Engelhart, Rogers Communications Inc.’s senior vice-president of regulatory affairs, said in an interview that carriers will face a data crunch if they cannot acquire more spectrum to accommodate faster wireless networks. “This hoarding argument is just nonsense,” Engelhart said. “The FCC has said that carriers are going to need 500 MHz more spectrum because of growing broadband demands.” Michael Hennessy, Telus Corp.’s senior vice-president of regulatory affairs, added that carriers will commonly sit on spectrum for two or three years before they develop a strategy for making use of it. “The only hoarders of spectrum are possibly the government,” Hennessy said. But some critics have called on the government to return to using spectrum caps to address "spectrum hoarding." Industry Canada removed its 1995 spectrum cap policy in 2004. Jean Brazeau, senior vice-president of regulatory affairs with Shaw Communications Inc., said that Canada’s wireless incumbents have more spectrum than any of their American cousins. “If you look at Rogers, Telus and Bell, all of them have more spectrum than all of the U.S. carriers have,” Brazeau said. Brazeau said it is important to ensure more competition in the wireless sector. “I certainly agree that spectrum caps would be one good solution to ensure that outcome,” he said. Dépatie said the 700 MHz band, which will be freed up when Canada makes the transition from analogue to digital over-the-air television broadcasting on Aug. 31, 2011, will be useful for providing broadband Internet access in rural areas. Experts say they expect the band to be auctioned off sometime in 2012. Industry Canada commonly considers tools like spectrum caps during the consultations leading up auctions. “Wireless will be the next main mode that is used to connect Canadians,” Dépatie said during his keynote address. “We are an urban society in a country with vast tracts of land and thin populations. Wireless, especially at low frequency, is ideally suited to meet this challenge.” Dépatie told The Wire Report that LTE, the next generation of wireless technology, can provide adequate broadband speeds in rural regions. “Nothing will replace a wired fibre optic network. I’m a firm believer in that,” Dépatie said. “But if I can offer to rural customers 4, 5, 6, or 7 Mbps, which I believe LTE can offer, that will change at least the current situation they’re facing.” On May 21, Dépatie wrote a letter to the CRTC criticizing Bell Canada’s plans to use deferral account funds to expand its HSPA+ broadband Internet service in rural parts of Ontario and Quebec. Deferral accounts consist of funds collected from urban phone customers during the last price cap period, 2002 to 2006. Bell initially planned to use the money to fund wireline DSL broadband to 112 communities, but decided in February 2010 to use its HSPA+ wireless technology to serve those areas. Videotron’s letter portrayed Bell’s decision to use HSPA+ instead of DSL Internet as a “bait and switch” maneuver that would “distort” the wireless marketplace in Quebec. Mirko Bibic, Bell’s senior vice-president of regulatory and government affairs, told The Wire Report that he is happy to hear that Dépatie believes LTE is a valuable solution to provide rural broadband Internet. “If Videotron believes that LTE will be a valid substitute to wireline broadband, then clearly HSPA+ and 3G is today. You can’t say somehow that 3G isn’t and 4G will be,” Bibic said. “If agrees that wireless is a substitute, that’s fantastic, and if he agrees that wireless is the option for rural areas, that’s fantastic, because it’s exactly what we’re saying.” Critics have maintained that wireless Internet access cannot be a substitute for a wired connection because of its bandwidth limits and the higher costs of transferring data. “The reality is it’s far more expensive to deliver a 90 GB of data download over a wireless network each month to a subscriber compared to 90 GB on a fixed wireline cable or telephony link,” Edward Antecol, vice-president of regulatory affairs and carrier services with Globalive Communications Corp., said during a conference panel Tuesday called “The Regulatory Blockbuster.” Engelhart said on the panel that half of Rogers’ customers download fewer than 6 GB a month and that, for them, a wireless solution is sufficient. “You’re going to get lots of people who are using the wireless network and cutting the cord, because they don’t download a ton of movies and they want the benefits of portability,” Engelhart said. “For huge parts of the country, wireless broadband is the only broadband you can get, and it works really well.” jmigneault@thewirereport.ca

Videotron’s Dépatie calls for spectrum cap for 700 MHz auction

News | June 8, 2010

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