With Industry Canada set to auction off highly sought 700 MHz spectrum, the issue of how much spectrum will be set aside for newer entrants looms large. 

Canada recently freed up its 700 MHz spectrum after broadcasters made the digital transition in August. This spectrum is widely considered to be “beachfront property” because 700 MHz transmissions can travel long distances and are very good at penetrating through buildings. The major Canadian carriers view the 700 MHz spectrum as an integral component in their future Long Term Evolution (LTE) networks, while new entrants view it as their chance to seriously compete with the major players. 

Canada’s big three wireless providers (TELUS, Rogers and Bell), as well as newer wireless entrants such as Videotron, Wind and Mobilicity, are anxiously awaiting final auction rules, which are due before the end of the year. In particular, providers are looking at whether Industry Canada will set aside certain portions of the 700 MHz band for new entrants. New entrants have been publicly campaigning to reserve all of the spectrum on the auction block for themselves, arguing that such a reserve will best encourage competition. They also point to unused spectrum already held by the largest providers. 

The big three wireless providers, however, are arguing for an auction without any set-aside for new entrants, noting that a set-aside could jeopardize service for rural customers. Reserving even a minimal amount of bandwidth for new entrants, in their view, could pose a threat to the big three providers. For example, if Industry Canada chooses to divide up the 700 MHz spectrum in the same way that the United States did in its 2008 700 MHz auction, there are only three prime bands available – the Lower B, the Lower C, and the Upper C (the Lower A block allegedly has interference risks and equipment availability problems). As George Cope, President and CEO of Bell argued, “if we have a set aside one of the 3 national wireless carriers will not get the spectrum required to evolve to the next level of technology.” 

An alternate plan would have Industry Canada divide the large Upper C Block (22 MHz) into two blocks, thereby reserving a prime band for the new entrants while keeping three prime bands available for the largest providers. Under that plan, however, the largest providers would have reduced bandwidth for future LTE networks. Other options continue to be discussed, and as mentioned above, final rules are expected before the end of the year. 

Industry Canada’s request for comments regarding the auction structure, as well as the comments received, can be found at: http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf09949.html