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Report On Business Rogers-Mobilicity deal shakes up spectrum landscape, rewards Wind

A Wind Mobile store located on Toronto’s Queen Street West is shown on July 3, 2014.

Fred Lum/The Globe and Mail

While Mobilicity has finally found a buyer – selling to Rogers Communications Inc. for $465-million after more than two years in legal and financial limbo – Wind Mobile Corp. will also benefit from the deal through a significant increase in its spectrum holdings.

The Mobilicity deal is the catalyst for a series of spectrum transfers revealed Wednesday that will redistribute the airwaves in a much sought-after frequency band.

Rogers announced its deal to buy Mobilicity Wednesday morning and shortly after that the Ontario Superior Court judge who was supervising the small carrier's creditor protection proceedings gave the transaction his stamp of approval.

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Industry Canada, which must approve any transfers of licences for spectrum – the airwaves used to build cellular networks – has already approved the deal, which will also see Rogers pay $100-million to complete an option to purchase spectrum licences from Shaw Communications Inc. that have been unused since the Calgary-based company bought them in 2008.

Rogers and Shaw struck a broader deal that included the option in 2013 but have to date been unable to win government approval for the spectrum transfer until now.

In an announcement Wednesday afternoon, Industry Canada detailed the spectrum transfers, saying Wind will acquire 26 new licences for spectrum as a result of the transactions – 16 licences from the Shaw spectrum and 10 licences from Mobilicity.

Rogers will keep two of the licences from Shaw and acquire some of Wind's current spectrum. The advantage to Rogers is that as a result of the arrangement, it will gain more contiguous spectrum. That means the blocks of airwaves are located right next to each other and make it easier to deliver more bandwidth and faster speeds.

For Wind, gaining the new licences will make it possible for the company to begin to deploy LTE (long-term evolution or fourth-generation) service while it previously only had enough spectrum to operate a 3G network. The spectrum at issue in the all the transactions is all in the AWS-1 (advanced wireless services) frequency band.

"This new spectrum acquisition means Wind Mobile now has a 20-megahertz AWS-1 corridor from Victoria to Ottawa," Wind chief executive officer Alek Krstajic said in a statement. "This will significantly improve our network performance from Ontario to the Pacific, enabling us to deploy new technology and accelerate the development of our LTE network and other services."

Industry Canada said the transfers would not result in an excessive concentration of spectrum in one company's hands and would put certain unused spectrum to use. It also noted that Mobilicity's customers would continue to have service as a result of the transactions.

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"The approval of these spectrum licence transfers is a win for Canadian consumers. A new wireless competitor has secured valuable spectrum it needs, and high-quality spectrum that went unused for almost a decade will now be deployed for the betterment of all Canadians," Industry Minister James Moore said in a statement.

"Our government has one goal: to take deliberate, concrete steps to create more choice, lower prices and better wireless service for Canadians and their families. Today's approval of these licence transfers delivers on this objective," he added.

Yet, the transactions were already facing criticism Wednesday afternoon, with consumer advocacy group OpenMedia.ca, stating in a release it was "extremely disappointed in the deal's approval, as the government had promised it would not approve any spectrum transfers that decrease competition in the wireless market."

"After blocking two attempts by one of the Big Three to buy Mobilicity citing concerns about competition, the Conservatives have now signed off on greater concentration and less choice for consumers. The Minister needs to come clean on what deal he made to approve this takeover and how it will impact consumers who already pay some of the highest cellphone prices in the world," said NDP consumer protection critic Andrew Cash.

The transactions still require approval from the Competition Bureau. Bill Aziz, chief restructuring officer for Mobilicity, said he anticipated they would receive that approval shortly.

Who holds what

Drag the bar to see how AWS-1 spectrum holdings have changed with the Mobilicity deal. Drag right for before the deal and drag left for after. (Source: Industry Canada)

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after
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