Wind Mobile and Public Mobile – two of Canada's smallest cellphone companies – are threatening to sit out the next federal auction of radio waves needed to expand their wireless networks if space isn't set aside for new players like themselves.
"We're not suicidal," Wind Mobile's Anthony Lacavera said Monday.
"We're not going to go out and try to bid on something we have zero chance of winning."
Mr. Lacavera said that smaller cellphone companies like his own simply will be outbid by established players like Rogers , Bell and Telus , which won't help competition in the wireless industry.
Wind Mobile needs the new radio frequencies to build a faster, more advanced wireless network that uses long-term evolution (LTE) technology and handles the latest smartphones, he said from Toronto.
Federal Industry Minister Christian Paradis is expected in the coming weeks to announce rules for the auction of the 700-megahertz band, known as the "beach front property" of the airwaves for its reach.
This spectrum has the ability to allow cellphone calls in elevators, deep in underground parking lots in big cities and in basements and attics in suburban areas. It also provides better and more affordable coverage in rural Canada because fewer cellphone towers are needed to provide coverage.
Bruce Kirby, vice-president of strategy and business for Public Mobile, says if the newer cellphone companies can't successfully win new radio spectrum against their larger competitors, they won't be able to expand into rural Canada.
"If the rules are structured in a way that you can't reasonably compete and have a fair chance of winning spectrum, it's not worth spending the money to go into it," Mr. Kirby said.
"What we won't be able to do is build rural areas. You will end up being constrained in terms of the size of the market that you can effectively address."
The auction isn't expected until late this year or 2013, given the time it will take for the government to organize the auction and for wireless companies to get ready and secure financing.
Rogers has said it's opposed to any radio waves being set aside for the new players to upgrade and expand their wireless networks. Telus has proposed spectrum caps for the next auction.
Industry Canada may also deal with restrictions on foreign ownership of telecom companies at the same time that it sets out rules for the auction.
In 2010, the Conservative government pledged to open up foreign ownership in the telecom industry.
Ottawa has already outlined three options on easing foreign ownership restrictions – removing all restrictions, increasing the limit of foreign investment above the current direct and indirect investment total of 46.7 per cent to 49 per cent, or allow non-Canadians to own 100 per cent of telecom companies that have a 10-per-cent market share or less.