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July 22, 2008

According to some of the latest reports, Canada's wireless spectrum auction that closed Monday appears to have been a success.

After 331 rounds of bidding over the past forty days, many industry observers are expecting a new competitive wireless market for Canada as a whole.

Wireless bidders pushed the value of the available 292 licences across Canada to an unexpected $4.254 billion.

Industry Canada’s hopes for more competition leading to lower prices, innovative services and wider cellular adoption seems almost assured, now that the auction is over.

Depending on whether there are mergers or alliances among the new entrants once the ministry certifies the final results, there could be at least 3 new, strong regional players built around three cable companies: Shaw Communications in Western Canada, Quebecor's Videotron in Quebec and, to a lesser degree, Bragg Communications' Eastlink in the Maritimes.

Additionally, Globalive Wireless could challenge incumbents like Bell, Rogers and Telus by becoming a new national provider, although it has a significant gap in coverage by lacking presence in the populous Montreal market.

The cable companies' strength is in the fact that Shaw, Quebecor and Bragg can sell and bundle phones through existing operations. As for Toronto-based dial-around provider Globalive, best known for its Yak Communications brand, it will try to leverage the one million customers across the country it says buy its Internet, VoIP and long-distance services.

In a news release Bragg co-CEO Lee Bragg said the company hopes to be selling wireless beginning in 2009.

"EastLink will be looking to launch next generation services that will allow customers to integrate their mobile phone with their home entertainment services. This will ensure our customers have access to the best and most advanced technology options available."

However, before the licences are handed out to any single wireless operator, the Canadian government has to certify that bidders with outside backing have met foreign ownership limits before the auction results are finalized. Bidders have to submit ownership documents within a maximum of ten business days.

Among those needing clarification is a group led by Montreal financial house Novacap that includes U.S. venture capital companies and holds some $52 million in high bids. This group has already said that after the auction ends its Canadian backers will change. More news are expected from Novacap, however.

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Source: Industry Canada.