MONTREAL—Cellphone users can expect fewer dropped calls in big buildings, service in elevators and better coverage outside cities when wireless carriers build new networks on what’s being called the “beachfront” property of the airwaves.
The federal government is expected to auction off these premium airwaves, called radio spectrum, late next year to wireless carriers.
“If we are looking at it as real estate, this is beachfront property,” analyst Amit Kaminer of the SeaBoard Group said in an interview.
Wireless carriers are already arguing over who should have access to it once the 700-megahertz spectrum is freed up after Canadian TV stations follow their U.S. counterparts and move to all-digital broadcasting.
“Everybody wants that spectrum because it translates to lower cost of deployment, faster roll out, better penetration,” Kaminer said, whose SeaBoard Group supports allocating the spectrum to Canada’s new wireless companies to keep the telecom industry competitive.
Rogers (TSX: RCI.B ), Bell (TSX: BCE ) and Telus (TSX: T ) all say they want open bidding on the radio waves and will use it to build faster, more advanced networks to accommodate increased demand for services like video streaming on smartphones, tablets and laptops.
The big three players don’t believe new wireless firms like Wind Mobile, Mobilicity or Public Mobile should have any preferential treatment like they did in 2008 when Ottawa set aside spectrum for them to launch their businesses.
But Mobilicity and Wind Mobile say new players should be the only ones bidding on the spectrum to let their businesses continue to grow, arguing they have made the cellphone business more competitive.
“All of the new entrants are going to be spectrum-constrained as they start to grow especially with the kind of devices that people use today,” said Mobilicity’s Stewart Lyons.
If Rogers, Bell and Telus are allowed to have an “unrestrained role” in the auction, they would simply outbid the new players, said Lyons, chief operating officer.
Lyons argues Rogers, Bell and Telus haven’t used all the radio waves – over which cell phone signals travel – they already own.
Bell views the auction as an opportunity to better serve rural Canada.
Bell’s Mirko Bibic said the telecom giant wants the spectrum to build its fourth-generation network in both urban and rural areas at the same time.
“So if the rules of the game are set up so that we don’t even have a chance to do that, that would be a crying shame for rural areas,” said Bibic, senior vice-president of regulatory and government affairs at Bell.
Bibic said the three new wireless companies provide an urban-based service and don’t need “special favours.”
PC Magazine analyst Sascha Segan said the U.S. auction for the same portion of the wireless spectrum resulted in major wireless carriers Verizon and AT&T buying most of the space.
“If your goal is to create a comprehensive nationwide 4G network, it was a tremendous success,” said Segan, managing editor for PCMag Mobile in New York.
“If your goal was to increase competition, it was a total failure,” he said. “Here and there, there were some new players who got a small amount of spectrum in individual markets.”
Segan said spectrum should be set aside for smaller players.
“It just comes down to these are smaller companies with less cash on hand and spectrum is expensive.”
Kaminer said the new players need a “fair shot” to keep the same level of competition.
“Now it’s really great to be a wireless consumer shopping for a wireless plan. Three years ago, it wasn’t that way.”
Quebecor (TSX: QBR.B ) and Shaw Communications Inc. (SJR.B) also bought spectrum in the 2008 auction, which netted Ottawa $4.25 billion, to launch their wireless businesses.
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