Inukshuk expected to use Vecima spectrum for national LTE services

The Inukshuk Wireless Partnership is expected to use the spectrum it is purchasing from Vecima Networks Inc. to deploy national next-generation LTE wireless services. “They need that territory to be able to call themselves a national carrier for LTE services,” Michael Rozender, head of telecom consultancy Rozender Consultants International, said in an interview. This month, Victoria-based network equipment maker Vecima announced that its subsidiary, YourLink Inc., had entered an agreement to sell its 2.5 to 2.6 GHz spectrum—about 7.5 per cent of Vecima’s entire spectrum portfolio—to the Inukshuk partnership for $14 million. Inukshuk, a wireless partnership between Rogers Communications Inc. and Bell Canada Enterprises Inc., provides wireless broadband services across Canada, focusing on rural and remote areas. Inukshuk didn’t respond to a request for an interview, but Rozender said the partnership is probably looking to move away from the pre-WiMax wireless technology it now uses to provide broadband services, and adopt LTE. The Vecima spectrum would support that migration. “They will start looking at it for LTE, because they must have LTE go across the country and they do not have all the spectrum licences they need right now,” Rozender said. Ian Munro, an independent consultant specializing in spectrum, pointed out that through the sale Inukshuk will probably have to give back some of its spectrum to the government in accordance with Industry Canada’s broadband radio services (BRS) rules. That clawback rule gives Inukshuk more incentive to purchase spectrum where it can, he said. Rozender said Vecima is being careful about its returns on spectrum sales. “They made the point that, unless they got the price they wanted, they would hold onto it because it’s an appreciating asset,” Rozender said, referring a Vecima release about the sale. At the same time, Inukshuk was smart to buy the spectrum. “If I had $14 million in my pocket, I wouldn’t skip a heartbeat to buy it,” he said, adding that spectrum in the 2.5 GHz range is valuable around the world. In the U.S., the spectrum range is used it for WiMax and LTE. “It’s an asset that will grow in value,” he said. But Inukshuk probably won’t be using the spectrum anytime soon, Rozender added. “They will sit on it for a while. They have not announced, from what I’ve seen, any distinct plans to use it or take advantage of it.” Rogers and Bell are testing LTE technology with Ericsson Canada, and Bell has said it is ahead of Rogers in the tests. Rogers says its technology will support mobile data speeds of up to 150 Mbps. Rozender said the Bell and Rogers Inukshuk partnership makes strange bedfellows because they are large, vertically integrated companies that compete in almost every respect. “How much longer is this Bell-Rogers Inukshuk initiative going to go?” he said. “They have not been aggressively promoting this thing. I have two clients that would love to know what the future holds, and they are very frustrated trying to find out ... what the story is.” Alan Brick, Vecima’s investment relations officer, said in an interview that the company is under a non-disclosure agreement about the spectrum sale. But he said revenue from the deal (providing it is approved by regulators) will help fund equipment upgrades in other parts of Vecima’s network, enabling the company to serve more customers and offer higher-bandwidth services through YourLink. YourLink provides video and broadband Internet access to about 19,000 customers through digital wireless services in Saskatchewan and small cable TV systems in rural British Columbia. “Because we’re transitioning the service-provision side of YourLink onto the new spectrum, we’ll be able to use new equipment that we manufacture in order to deliver those services,” Brick said. Asked whether Vecima’s entire spectrum portfolio could be put up for sale, Brick said the company could sell more. “There are certain pieces that we may be able to use for an expansion of YourLink, for example,” he said. “We may be able to sell pieces of spectrum bundled with our wireless equipment. It could provide an incentive to certain customers. Or we could go ahead and sell more spectrum on its own. We are looking to sell most of that asset that can’t be used to trial and showcase our products.” news@thewirereport.ca

Inukshuk expected to use Vecima spectrum for national LTE services

News | November 29, 2010

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