Skip to main content
Complete Olympic Games coverage at your fingertips
Your inside track on the Olympic Games
Enjoy unlimited digital access
per week for 24 weeks
Complete Olympic Games coverage at your fingertips
Your inside track onthe Olympics Games
per week
for 24 weeks
// //

Critics of the existing process for allocating wireless spectrum say it includes policy loopholes that allow some companies to speculate on spectrum, resulting in lost government revenue and a valuable public resource sitting unused at a time when wireless airwaves are in high demand.

Sean Kilpatrick/The Canadian Press

In 2008, after a competitive auction that lasted 331 rounds, Quebecor Media Inc.’s Videotron Ltd. shelled out $96.4-million for the exclusive rights to a block of wireless airwaves in Toronto, outside of its home market of Quebec.

But the telecom never built a wireless network in Canada’s most populous city, and in June, 2017, it sold the unused licences to Rogers Communications Inc. for $184.2-million, netting an $87.8-million profit. A month later, Videotron earned an even larger windfall – $243.1-million – by selling a handful of spectrum licences to Western Canadian telecom Shaw Communications Inc.

Videotron is far from the only wireless carrier to profit from selling licences to airwaves on the electromagnetic spectrum, a range of frequencies that carries gamma rays on the high end and radio signals on the low end.

Story continues below advertisement

The Montreal-based telecom and others who’ve done the same aren’t breaking any rules. Videotron says its business plans changed and it did not acquire the spectrum with the intention of selling it. But critics say the practice exposes loopholes in Ottawa’s policy that allow some companies to make easy money by speculating on spectrum, resulting in lost government revenue and a scarce and valuable public resource sitting fallow at a time when wireless airwaves are in high demand.

“How many investments can you make where you will double your money or triple your money in five years?” says Gregory Taylor, a spectrum expert and associate professor at the University of Calgary. “This shouldn’t be allowed to happen. The public is getting fleeced here.”

He said allowing companies to “flip” spectrum by selling it at a profit is only one of several problems with the federal government’s spectrum policy that also leaves rural Canadians at a disadvantage when it comes to wireless and broadband service.

Ottawa repurposing more wireless spectrum to use for 5G technology

Ottawa’s spectrum policy for new carriers has failed

As Canadian telecoms prepare to spend billions on the airwaves, they’ll need to deliver fifth-generation wireless services in a highly anticipated auction that kicks off on Tuesday, Prof. Taylor and others in the industry are calling on Ottawa to make deployment requirements more stringent, step up enforcement and be more transparent with the public when companies do break the rules.

Canada’s three largest telecoms – Rogers, Telus and BCE Inc. – are expected to shell out a combined $2.8-billion, according to a report by TD Securities, for airwaves in the 3,500 MHz range. The mid-band spectrum is considered beachfront property for 5G services, which are expected to power new technologies such as smart cities and driverless cars, because it is able to carry larger volumes of data over long distances.

With two more 5G spectrum auctions on the horizon – more mid-band radio waves are expected to be auctioned in early 2023, while a sale of the much higher-frequency millimetre band is slated for 2024 – experts say Ottawa needs to adjust its policy so the natural resource gets deployed fairly and efficiently.

Pulling money out of the air

As advances in mobile phone technology have revolutionized how we communicate, the invisible, publicly owned radio waves used to transmit wireless data have become increasingly valuable – and the policies that govern them, increasingly contentious.

Story continues below advertisement

Until the 1990s, governments typically awarded spectrum by evaluating written submissions outlining how a company planned to use the airwaves, a process known as a beauty contest. But as demand for the resource grew, many countries started selling the airwaves through lucrative auctions that helped them balance their budgets without increasing taxes, Prof. Taylor said. “Governments realized that they could literally pull money out of the air.”

Canada’s spectrum regulator, a federal ministry now called Innovation, Science and Economic Development Canada, or ISED, started selling licences to the highest bidder around the turn of the century, after years of giving them away to existing players. In an effort to encourage new competitors to enter the wireless market, the Conservative government introduced what’s known as a “spectrum set-aside” during the 2008 auction of mid-band AWS-1 (advanced wireless services) airwaves, limiting bidding on almost half of the available airwaves to players with less than 10-per-cent market share.

Canada’s three biggest wireless carriers have opposed spectrum set-asides, arguing the policy leads to a scarcity of airwaves in the non-set-aside blocks and results in elevated prices that get passed down to consumers. During the 2019 auction of 600 MHz spectrum, for instance, Canada’s national wireless carriers paid an average of $1.89 per megahertz-pop – roughly twice the 93 cents per MHz-pop that U.S. carriers paid for the same airwaves, according to a press release issued by Telus. (The measurement “per MHZ-pop” refers to the price paid relative to a megahertz of bandwidth for each person in the area that a licence covers.)

Proponents of set-asides, meanwhile, argue that the policy has benefited regional carriers such as Shaw’s Freedom Mobile, Videotron and Bragg Communications Inc.’s Eastlink, which have been credited with driving increased price competition. A Competition Bureau analysis found that wireless prices are 35 per cent to 40 per cent lower in markets where regional competitors have reached a market share above 5.5 per cent.

Ottawa has rules aimed at preventing spectrum flipping and encouraging companies to put their spectrum to use in a timely fashion. Most licences come with conditions that require carriers to cover a certain percentage of the population within a specific timeframe, and companies that buy set-aside spectrum are typically barred from selling it to one of the national carriers for the first five years of the licence term. (Licence terms tend to cover a period of 10 or 20 years.)

“The rules strike a balance between deterring speculators (those with no intention of deploying) from gaining access to spectrum, and enabling the transfer of spectrum to entities that are positioned to use it,” Hans Parmar, a spokesperson for ISED, said in an e-mail.

Story continues below advertisement

But critics charge that deployment conditions are too lenient and inadequately enforced. “You need to cover a certain area of the population, but if you put one base station up in an area, you can technically say it’s served,” says Scott Holmes, president of the Canadian Association of Wireless Internet Service Providers, or CanWISP. (A base station is a radio transceiver that serves as the hub of a wireless network.)

CanWISP represents smaller internet providers that use fixed-wireless technology to extend fibre-optic connections into rural areas, and their chief complaint, said Mr. Holmes, is a lack of available spectrum. “When licence holders get access to spectrum and don’t deploy it, it doesn’t help anybody,” he said.

Strategy shifts

Companies that buy spectrum and later sell it at a higher price often cite a change in their business strategy. Earlier this year, Quebecor chief executive officer Pierre Karl Péladeau told a House of Commons standing committee that Videotron was planning to launch a national wireless network when it purchased set-aside spectrum licences in Toronto in 2008.

But for a variety of reasons, including how much the telecom spent during the auction, it wound up scrapping its national ambitions. “At the beginning, the purpose was to build a network. Unfortunately, we were not able to do so,” Mr. Péladeau said.

Novus, a Vancouver telecom backed by real estate developer Terry Hui, nearly quadrupled its investment over five years by selling spectrum licences for British Columbia and Alberta to Telus Corp. for $67-million in 2013.

The company had been planning to launch a mobile brand when it purchased the spectrum in 2008, said Chris Marett, Novus’s co-president and chief financial officer. But equipment costs were too high, there were no handsets available at the time that used the type of spectrum that Novus had acquired, and the company struggled to secure tower-sharing agreements with larger telecoms. “After five years of trying, we felt that the obstacles were too hard to overcome,” Mr. Marett said in an e-mail.

Story continues below advertisement

Shaw, which struck a deal this year to be acquired by Rogers for $26-billion including debt, also sold its airwaves because of a shift in its business strategy. In 2013, after scrapping its on-again, off-again plans to launch wireless services, Shaw sold 18 licences to Rogers for $350-million – nearly twice the $189.5-million it bought them for in 2008. “Shaw did invest in a network and incurred significant losses as a result of our decision to discontinue our wireless network strategy,” Chethan Lakshman, Shaw’s vice-president of external affairs, said in an e-mail.

Use it or lose it

While Shaw tried to build a wireless network, some companies buy spectrum and never do anything with it at all. Brian Masse, the innovation, science and economic development critic for the New Democrats, argues that Ottawa has been too soft on telecoms that fail to meet their spectrum deployment obligations. “You can’t be a squatter. You’ve got to use it or lose it,” said Mr. Masse, who believes that airwaves that are sitting fallow should be quickly reauctioned so that they can be put to use.

When government officials find that a telecom has failed to meet the conditions of its licence, they work with the company to come up with a plan, said Mr. Parmar at ISED. “Generally, this involves the licensee either deploying to meet its licence conditions within a timeframe approved by ISED or returning the licence to ISED,” he said. “Revocation is a last resort and few licences have been revoked over the last five years.”

Mr. Masse would like that process to be more transparent, arguing it’s problematic for government officials to decide behind closed doors how much extra time companies should be given. “It’s a public asset; it’s just like our water or our land,” he said. In many cases, companies, particularly private ones, aren’t required to disclose how much they make on spectrum flips.

Meanwhile, some experts are also calling for deployment requirements to be based on geographic coverage as opposed to population metrics. Currently, carriers can meet their obligations to cover a certain percentage of the population in their licence area by putting up towers in only the most densely populated areas, said Prof. Taylor at the University of Calgary. “This perpetuates the rural rollout problem,” he said. While roughly 84 per cent of Canadians have access to unlimited high-speed internet, that figure falls to about 46 per cent in rural communities, according to data from the Canadian Radio-television and Telecommunications Commission.

Some countries have taken a different approach. Germany’s spectrum regulator, for instance, required all operators who bought 800 MHz spectrum to provide coverage in rural areas first, before rolling out to more lucrative urban markets.

Story continues below advertisement

“If you want to work against market forces, because market forces will not provide [coverage] in rural areas, then you need to make deployment conditions with some real teeth,” Prof. Taylor said. “We have yet to do that.”

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies