TORONTO: The Canadian government raised 2.1 billion Canadian dollars ($1.7 billion) in a wireless-spectrum auction aimed at fostering greater competition and bringing down prices for mobile services in the country.
Auction proceeds, to be received over a 20-year period, will help bolster the government’s coffers as it aims to balance its fiscal 2015-2016 budget despite the economic fallout from a 50%-plus drop in crude oil prices since last summer.
Still, the amount raised falls well short of the C$5.3 billion the government raised in its last auction of wireless spectrum just over a year ago.
In the latest auction, Canada’s wireless service providers bid on AWS-3 spectrum to take advantage of the airwaves’ capacity to transmit large amounts of wireless data at a time when consumers rely increasingly on their smartphones, tablets and other mobile devices for communication and entertainment.
But restrictions imposed by the government on certain bidders reduced the potential windfall from the sale process. The government set aside 60% of the offered spectrum for bids from new entrants to help ensure these operators could acquire enough to challenge the country’s incumbent providers— BCE Inc., Rogers Communications Inc. and Telus Corp.
The government claims its efforts to generate more competition are already working, noting wireless prices have come down on average 22% since a 2008 auction when it also allocated a certain amount of spectrum for new entrants.
Still, BCE, Rogers and Telus continue to dominate the market. One of Canada’s main wireless startups, Mobilicity, is operating under bankruptcy protection and pulled out of the latest auction at the last minute.
The move by Mobilicity helped another startup, Wind Mobile, acquire spectrum in British Columbia, Alberta and Ontario at prices well below analysts’ expectations. Still, it will take time for the startup to further build out its network using the newly acquired airwaves.
