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Industry Minister Tony Clement announced the government will auction two blocks of radio frequency spectrum once potential bidders have the available cash and foreign funding issues are clarified. (Trevor Hagan/THE CANADIAN PRESS)
Industry Minister Tony Clement announced the government will auction two blocks of radio frequency spectrum once potential bidders have the available cash and foreign funding issues are clarified. (Trevor Hagan/THE CANADIAN PRESS)

Government to auction off radio frequency blocks Add to ...

Canada will auction two blocks of radio frequency spectrum once potential bidders have the available cash and foreign funding issues are clarified, the federal industry minister said on Friday.

Tony Clement did not give a time frame for the auctions but said he had met with the chief executives of the major telecom companies in recent months and consultations would continue, especially regarding their ability to raise funds.

"We know that 700 megahertz is going to be available as people switch to digital TV," Clement told reporters. "And we know that the 2500 megahertz is also going to be available, so I have instructed my department to get ready and to start the process rolling."

Industry Canada has said it could auction the 700 megahertz auction by the end of 2012.

Most Canadian television is due to switch from analogue to digital delivery by August 2011. The 700 megahertz airwaves are considered valuable as they can cover long distances and more easily penetrate obstacles such as thick walls and buildings.

The 2500 megahertz frequency allows for more speed and capacity but less easily penetrates buildings.

"Even those won't be enough; we're going to need more spectrum on top of that," said Duncan Stewart, the head of technology, media and telecom research at Deloitte Canada.

"Our demand for spectrum is going to chart very similarly to looking at the world's demand for oil circa 1930," he said.

Global mobile data traffic is forecast to double every year from 2009 to 2014, according to network equipment maker Cisco Systems Inc., as more and more devices allow for video-streaming and other data-heavy applications.

FOREIGN CASH

Canada raised $4.25-billion in a 2008 auction of wireless spectrum between 1710 and 2155 MHz in which it set aside blocks for new wireless companies in a bid to increase competition.

One of those was Globalive, which used a loan guarantee of up to $800-million from Cairo-based operator Orascom Telecom to buy spectrum and launch Wind Mobile.

The regulator, cheered by some established telecom companies, ruled that foreign funding breached rules limiting non-Canadian ownership, but the government overturned that ruling and is considering options to legislate a further opening up of the sector to foreign investors.

Clement suggested the issue would need to be resolved ahead of the new auctions.

"The two are not really divorced, because people have to know what access to capital they're going to have before they can bid in an auction," he said.

Long criticized as overly restrictive and out of date, Canada's Telecommunications Act caps foreign ownership at 20 per cent of a company's voting shares. Restrictions on direct and indirect control are 46.7 per cent.

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