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June 25, 2008

Overall, bidding topped $4 billion in Canada's wireless spectrum auction that began June 23.

Wireless carriers and operators in Industry Canada's spectrum auction have bid $4.01 billion for the licensing rights of airwaves that mobile networks need to operate.

The auction demonstrates the importance of the mobile phone market and the belief that there's a lot of money to be made despite Canada's spread-out population.

It's a highly risky game simply because each participant has a different strategy going on. Wireless industry analysts had originally estimated the bidding would go as high as $2 billion for the 105-megahertz band of spectrum. Also, some even believed it might have been winding down when bids reached about $3.5 billion.

Mark Levy, senior vice-president of Strategic Consulting Inc. said "I suspect more participants are willing to let this go on for more than a few weeks than originally intended to lock in their bids for what will probably be a very lucrative business for at least a decade or more."

The wireless spectrum auction means even more competition from other players for the three established carriers: Rogers Communications, Telus Communications and BCE's Bell Mobility.

Dominant cellphone company Rogers had bid $874.6 million for 47 licences, according to Industry Canada. For its part, Telus had bid less then $791 million for 53 licences.

Quebecor, which owns regional cable company Videotron and that has so far relied on Rogers to provide the network for its wireless service, had bid $582.5 million for 17 licences.

Bell Mobility, currently Canada's second-largest cellphone company in terms of subscribers, had bid $708.2 million for 48 licences.

Toronto-based Globalive Wireless had bid $431.9 million for 34 licences. It owns the Yak long-distance and Internet access business.

Telecommunications analyst Mark Goldberg said bidding would continue until it starts to eat into a reasonable return on investment for participants. Goldberg said the new players, who can bid on any of the spectrum, are helping drive up prices for most of the wireless spectrum.

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Source: Strategic Consulting Inc.