Skip to main content

Ottawa kicks off a public auction for valuable cellular airwaves on Tuesday, with Canada’s Big Three wireless carriers and regional operators such as Freedom Mobile and Videotron all vying to win licences across the country.

This auction is important because the airwaves up for grabs are in the 600-megahertz frequency band, which are expected to be used in the rollout of 5G or next-generation wireless networks.

What’s at stake?

Telecoms use the invisible radio waves known as spectrum to carry communications signals. Governments around the world are responsible for managing spectrum as a public resource and designate different frequency bands for a variety of uses, including broadcast television and radio, public safety and military use – as well as wireless networks that deliver cellular signals and, in some cases, home internet.

Story continues below advertisement

The Canadian government periodically holds public auctions for spectrum – it has held four major auctions since 2008 – that award the right to use the airwaves to the winning bidders in various regions. Ottawa charges annual licence fees for continued use.

The 5G networks are expected to offer faster speeds with less lag time, carry more data and connect more devices. To do this, they will use a mix of traditional cell towers as well as smaller cell sites placed closer together, and carriers will need a mix of different spectrum frequencies to provide the increase in coverage and data capacity.

Low-frequency spectrum – such as the 600-MHz spectrum available in this auction – offers coverage over long distances and penetration into buildings. Higher frequency airwaves, which the government says it plans to auction off in 2020 and 2021, will help support faster speeds and carry more information.

Who’s bidding?

A dozen companies have signed up to bid, including the incumbent national carriers that control about 90 per cent of Canada’s wireless market: Rogers Communications Inc., BCE Inc. and Telus Corp.

In an effort to encourage more competition in the industry, the government has structured the auction rules to benefit smaller players by setting aside more than 40 per cent of the airwaves for bidders other than the three dominant companies. A similar strategy has been used in the past, starting with a 2008 auction that saw the entry of a trio of startups, Wind Mobile (now known as Freedom Mobile and owned by Shaw Communications Inc.), Mobilicity (which struggled financially and was eventually acquired by Rogers) and Public Mobile (bought by Telus).

The dream of a fourth national carrier didn’t pan out, but there is some evidence that strong regional players are contributing to a more competitive marketplace, charging lower prices themselves and forcing the Big Three to offer better deals (for example, by selling larger monthly data buckets and limiting monthly overage charges). Innovation Minister Navdeep Bains has cited a recent price-comparison report, which showed certain types of cellphone plans cost less in provinces with strong competitors, as justification for the government including a “set aside” in this spectrum auction.

The major regional players bidding in the auction are Freedom (which operates in British Columbia, Alberta and Ontario), Quebecor Inc.-owned Videotron (Quebec and the city of Ottawa), Eastlink (Atlantic Canada) and SaskTel (Saskatchewan). Smaller regional operators are also bidding, including TBayTel (which serves Thunder Bay, Ont.) and northern wireless providers SSi Micro and Ice Wireless.

Story continues below advertisement

Xplornet Communications Inc., which launched a wireless operation in Manitoba last year after acquiring spectrum and about 20,000 subscribers as part of BCE’s $3.1-billion deal to acquire Manitoba Telecom Services Inc. in 2017, is also registered to bid. The final bidder is Novus Entertainment, which has a small fibre-optic internet and TV business in Vancouver and has participated in past auctions.

One notable name missing from the bidders list is cable operator Cogeco Communications Inc., which has said it wants to get into the wireless business and purchased some spectrum licences on the secondary market over the past year. The company operates in many suburban areas in Ontario and Quebec and said it decided against bidding in this auction because the geographic areas the licences cover are too large.

How does the auction work?

The auction will follow a “combinatorial clock” format, which allows for bidding on packages of licences, rather than competing for each one individually, with the goal of ensuring continuous coverage. Such auctions can last for multiple rounds with no firm end date. Previous Canadian auctions using a similar format lasted four to five weeks.

The rules bar any of the players from discussing the auction with each other or commenting on it publicly. They also stipulate that a winning bidder pays the amount of the next-highest bid (as long as that is greater than or equal to the opening bid amounts set by the government). Financial analysts have predicted this year’s auction could bring in about $2.5-billion to $3-billion.

In 16 geographic regions across the country, there are seven blocks of “paired” spectrum (meaning one section of airwaves is used for downloads and the other for uploads) up for grabs, with three reserved for small players and four left for the incumbents to bid on. Winners of set-aside licences are barred from selling them to an incumbent for at least five years.

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
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 feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

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 letters@globeandmail.com. 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 letters@globeandmail.com. 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

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter