Wireless spectrum auction closed; Quebecor and Globalive come in as new players (1)
WirelessNorth, which tracked the national wireless auctions for the past months, sums up the result of the auctions, which were setup by Industry Canada to provide additionnal bandwidths to new and existing wireless companies.
The 3 existing telecommunication companies, namely Bell Canada, Rogers and Telus won additional frequencies in most provinces. Rogers Wireless alone brought to the table $999 million, in an auction that was planned previously to gather in total just $1.5 billion. If you had any doubts about the profitability of this industry, the auctions just confirmed that it’s a cash cow for the existing carriers.
For consumers, the most important fact to remember from these auctions is the arrival of 2 new companies, Globalive and Quebecor. Globalive managed to get frequencies in all Canadian provinces, except Quebec, while the media group Quebecor is now covering all Quebec, plus South-Eastern Ontario. Since previous reports from these companies confirmed that they will both use the GSM standard, they could (at least in theory) offer a nation-wide wireless access to their customers through a partnership. Of course, this will also mean lower prices for consumers, due to increased competition. Quebecor especially is known for this business strategy when they acquired Videotron and then slashed prices, reviving the cable in Quebec. I expect (well I hope) the same thing to happen; with much lower plans offered to consumers, which will then boost mobile usage, with new user behaviours & mobile applications.
So what’s next? Each bidder has 30 days to pay the auctionned spectrums; and the federal government will also see through each bidder’s structrure, which has to be at least 47% Canadian-owned. Each new carrier will then have to compete (or partner) to get key locations to install their antennas; followed by the roll out. This is estimated to cost $500 million, taking at least 1 year. (which means if you were waiting for a 2nd carrier to get an iPhone, you will have to wait for at least the 2nd half of 2009)
Let’s hope data rate prices will go down. 500M$ is a lot of money for Quebecor. They spent half of what Rogers did but only got less than 1/3 of the licenses. The way I see it, they paid big bucks. On the other side, Quebec is a large market and they might win many hearts by being the only true Quebecois carrier. They might also be able to offer hefty discount to people who bundle everything together. Something Telus might not be able to do…
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