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

The immediate beneficiary of eliminating the cap is Telus Mobility, said telecom consultant Mark

Goldberg, president of Mark H. Goldberg & Associates Inc. in Thornhill, Ont.

Telus Mobility, which bought Clearnet in 2000, recently launched a hostile takeover bid for Microcell Telecommunications Inc.

“”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 admitted recently that the Industry Canada decision could ease its 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 Mobility, 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.””

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