TeraGo gets ‘great deal’ on broadband spectrum: Consultant

TeraGo Networks Inc.’s $5-million acquisition of licences to operate broadband services in the 24 GHz spectrum band is a “great deal,” wireless industry consultant Eamon Hoey, a senior partner with Hoey Associates in Toronto, said in an interview. TeraGo announced last week it has agreed to purchase spectrum licences from Mobilexchange Spectrum Inc., covering six large Canadian cities. The company has bought 240 MHz of spectrum each in Montreal, Ottawa and Toronto, and 80 MHz each in Edmonton, Calgary and Vancouver. The company says it plans to use the spectrum for Ethernet services for business, government and cellular backhaul. Hoey said the spectrum’s $5-million price tag was a “great deal” considering the high costs associated with spectrum transactions. He said NextWave Wireless Inc. is currently looking to sell 30 MHz of Canadian spectrum for WiMax services at a price of $46 million. The spectrum was originally purchased for $26.2 million US. In its 2009 annual report, NextWave said it plans to sell its spectrum licences over time and has engaged Canaccord Adams to market its Canadian holdings. NextWave’s Canadian licences are held by the company’s Canadian subsidiary, and cover major cities including Montreal, Ottawa, Edmonton, Quebec and Winnipeg. Hoey noted that the value for spectrum varies according to its frequency, and that different portions of spectrum are better suited to different purposes. The lower the spectrum’s frequency, the further the signal can travel and more efficient it is for broadband use. Signals in higher spectrum ranges, such as WiFi, are more readily absorbed by the air and physical objects. Bryan Boyd, TeraGo president and CEO, said in an interview that the spectrum purchase represented good value for the company, and that it is expected to rise. “ is a resource that is limited, and demand is increasing over time,” he said. Boyd said the backhaul system TeraGo will offer through the newly purchased spectrum will be useful for businesses looking for a back-up system or diversity. “Our services are very-well suited to that because it’s wireless. It’s not dependent on the telephone companies’ copper or fibre infrastructure. So, if you needed two connections, our service plus the incumbent’s, it provides a 100 per cent uptime-type solution.” Boyd said TeraGo’s services will be increasingly attractive in the future as incumbents’ wireless networks become congested. The transaction is subject to Industry Canada approval. Boyd said that while there is no set timetable for the review, he does not expect it to be a “lengthy process.” Adrian Foster, a partner with McLean Foster and Co. in Ottawa, said Canada lacks availability for wireless and wireline broadband, which leads to scarcity. “Canada does not rank at the very top of broadband penetration in the OECD . Recent studies have indicated that we are paying a lot for broadband, especially wireless broadband. We know that broadband is an important contributor to economic growth … I think we need, in a competitive marketplace, a number of choices for broadband, both wireless and wireline,” he said, adding that more choice is needed outside of major urban centres. “There are a lot of commercial enterprises out there in small and medium-sized towns, and in the fringes of large cities, which could really benefit from having broadband.” kfournier@thewirereport.ca

TeraGo gets ‘great deal’ on broadband spectrum: Consultant

News | June 28, 2010

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