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A Shaw Communications sign at the company's headquarters in Calgary.Jeff McIntosh/The Canadian Press

Ottawa hopes to continue its support for challengers to Canada's Big Three cellular carriers by reserving a swath of airwaves for smaller players in an upcoming auction of wireless airwaves.

In a consultation document released Friday, the department of Innovation, Science and Economic Development (ISED) proposed "setting aside" 30 megahertz of spectrum in the 600-MHz frequency band for wireless operators with less than 10 per cent of the national market share. All bidders would be able to vie for licences covering the other 40 MHz.

That structure, which is similar to what the federal government did in previous auctions over the past decade, would benefit players such as Shaw Communications Inc.'s Freedom Mobile and Quebecor Inc.'s Videotron Ltd. They would be able to bid on reserved airwaves without competition from the dominant national carriers Rogers Communications Inc., BCE Inc. and Telus Corp.

Airwaves in the 600-MHz frequency are considered "low-band" spectrum, which is prized for its ability to travel long distances and penetrate into buildings.

Both Shaw and Quebecor have far less low-band spectrum than the three incumbents, which first acquired their own valuable airwaves for free in the 1980s when the industry was just getting started (they have since paid for spectrum in subsequent auctions and have paid ongoing licence fees).

Shaw only recently acquired a clutch of low-band spectrum licences from Quebecor in a $430-million deal that included spectrum in the 700-MHz band covering British Columbia, Alberta and Southern Ontario.

Although Quebecor does have some low-band spectrum, Videotron's CEO Manon Brouillette publicly campaigned for a set-aside in the upcoming auction in a speech at the Canadian Telecom Summit in Toronto in 2016.

In the consultation document Friday, ISED wrote the 600 MHz auction "presents a key opportunity to further support the competitiveness of the newer service providers by ensuring that they will have an opportunity to acquire additional low-band spectrum to effectively compete with the services offered by the more established wireless service providers."

If finalized as proposed, the rules could also favour Atlantic Canada carrier Eastlink and fellow regional players Tbaytel and SaskTel.

Though it was previously largely silent on telecom policy, in recent months the Liberal government has made clear it wants to support competition and choice in the industry, indicating its concern over high prices for wireless and Internet services. Innovation minister Navdeep Bains ordered the Canadian Radio-television and Telecommunications Commission to reconsider the "WiFi-first" model in which small players need access to the dominant carriers' networks.

The government's proposal for the auction framework is not surprising, RBC analyst Drew McReynolds said Friday, noting that "the proposed set-aside was the more likely outcome and thus likely largely priced into the stocks."

However, he added that Ottawa's continued support of companies that invest in building their own wireless networks is "directionally positive for the Canadian wireless sector over all." (The set-aside rules as proposed would only apply to "facilities-based" providers who are actually selling commercial services to the public in the area where they wish to bid on a licence.)

The government has proposed starting bids that total $1.5-billion for the airwaves and has opened the consultation up for comment until Oct. 2.

The 600 MHz process also involves re-purposing airwaves currently used by broadcasters. As a result of issues related to cross-border interference, Canada agreed to co-ordinate its policy with the U.S., which conducted an auction in two phases in 2016 and earlier this year. The Canadian auction is not expected until 2018 or even later.

Follow Christine Dobby on Twitter: @christinedobbyOpens in a new window

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