Feds see enough cell phone rivalry to end spectrum cap

The government’s decision to cancel its policy limiting the amount of radio spectrum cellular telephone companies can hold may spawn more industry consolidation, an industry analyst said.

Industry Canada originally designed 1995’s

spectrum restrictions to generate innovation and prevent a single player from dominating the mobile-service business.

The government said Canada now has close to 14 million cell-phone subscribers and a modern wireless infrastructure capable of delivering a wide range of voice, data and media services. In 1995, Industry Canada said cell phone users numbered about two million and were evenly divided between the only providers, Bell Mobility and Rogers Mobility.

“”We now look at the market, and we see that it’s nine years later, the market is well established. So a policy such as a general spectrum cap is no longer required,”” said Pat Carrey, policy adviser in Industry Canada’s telecom policy branch in Ottawa.

During this nine-year period, two entrants emerged on the scene — Clearnet (now Telus Mobility) and Microcell Telecommunications Inc. in the year the cap became effective, and WNI Networks Inc. in 2001, said Carrey. Although WNI acquired some spectrum in rural areas, it failed to raise the capital to bid in major markets, he said.

Consultations by Industry Canada focusing on both the mobile spectrum cap policy and a proposal to make additional spectrum available to the wireless industry began almost a year ago and concluded in March.

Many industry stakeholders suggested the spectrum cap be lifted, and Industry Canada make additional spectrum resources available for use by the wireless industry in the near future.

The immediate beneficiary of eliminating the cap is Telus, said telecom consultant Mark Goldberg, president of Mark H. Goldberg & Associates Inc. in Thornhill, Ont.

“”One of the challenges for Telus in its acquisition proposal for Microcell is that in certain (geographical) areas, they would have exceeded the spectrum cap”” permitted bandwidth licensees, Goldberg said.

“”In effect, what the spectrum cap regulations were doing was harming shareholders and permitting the other players to possibly get a windfall victory out of a consolidation.””

Had the policies continued, Goldberg said debate would have focused on which rivals would acquire the spectrum, and whether Telus would be forced to dispose of it at fire-sale prices.

Telus in a public statement earlier this week admitted that the Industry Canada decision could eaes it’s hostile bid for Microcell.

When asked whether lifting the cap will lead to monopolies by consolidated players, Goldberg replied: “”No single player will end up with more than half of the business even with some consolidation.””

As it stands, the industry has three other competitors besides Microcell: Bell Mobility, Telus and Rogers —— each with roughly 30 per cent of the market, Goldberg explained.

For Bell Mobilty, the cap’s disappearance means it can buy more spectrum in Ontario and Quebec, the only regions where it has reached a limit, said Almis Ledas, Toronto-based vice-president of corporate development for the carrier.

Ledas said Bell Mobility has sufficient spectrum for the next three years and may even have enough to meet its needs for the balance of the decade, depending on the volume of spectrum-intensive applications that arise.

“”In the next 12 months or the next 24 months, it’s not going to cause anybody to operate differently,”” Ledas said. “”But it allows all of the networks to optimize their use of spectrum going forward in a way that doesn’t have this arbitrary limitation.””

In the short term, Ledas noticed the decision “”bumped the Microcell share price up a bit”” because an incumbent purchasing the company would be able to keep its entire cache of spectrum.

Meanwhile, the Competition Bureau and the CRTC will still keep close watch of mergers and acquisitions in the mobile-phone market, which is now mature enough to be governed by competition law, said Goldberg.

Also on the federal government’s agenda is to offer telecom companies additional spectrum, such as advanced wireless services on 1710 GHz and 2110 GHz bands, as well as a 2500 GHz band, Carrey explained.

Comment: [email protected]

Would you recommend this article?

Share

Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.


Jim Love, Chief Content Officer, IT World Canada

Featured Download

Featured Story

How the CTO can Maintain Cloud Momentum Across the Enterprise

Embracing cloud is easy for some individuals. But embedding widespread cloud adoption at the enterprise level is...

Related Tech News

Get ITBusiness Delivered

Our experienced team of journalists brings you engaging content targeted to IT professionals and line-of-business executives delivered directly to your inbox.

Featured Tech Jobs