Industry Canada has been on a tear recently, auctioning mobile spectrum licenses at a pace never seen before. Three major auction processes have been completed in the space of only 15 months – 700 MHz in February 2014, AWS-3 in March 2015 and 2500 MHz Broadband Radio Service (BRS) in May 2015.
The 2500 MHz auction (results released on May 12, 2015) raised $755 million (CDN) from nine bidders that bought 96% of the MHz-pops on offer. This was well below the $2.1 billion from the AWS-3 process and the $5.3 billion of the 700 MHz auction. Of course, not all spectrum is created equal and 2500 MHz is seen as less “beachfront” property than other bands due to its less attractive propagation characteristics. So the average price of $0.29 per MHz-pop looks like a bargain compared to other bands, but expensive compared to other auctions of the same band.
The auction included a limit of 40 MHz of capacity per bidder, including existing license holdings. Rogers and Bell, two of the Canadian Big3, already hold licenses and have deployed 2500 MHz technology across Canada. Thus in many of the largest markets Rogers and Bell could not bid at all, and in others could only bid on one 20 MHz license each. They acquired licenses for $53 million combined or $0.11 per MHz-pop.
In stark contrast to past auctions Rogers and Bell accounted for only 7% of total auction proceeds. In the 700 MHz auction, they together accounted for 73% of the proceeds.
With Rogers and Bell significantly limited in their ability to bid, this left the auction dynamic to the third leg of the Big3, TELUS, along with regional players and new entrants. To keep up with Rogers and Bell, TELUS in the 2500 MHz auction, with no existing licenses, acquired the maximum allowed, 40 MHz, nationwide for $479 million or $0.36 per MHz-pop.
The other winners:
- Bragg Communications (Eastlink) acquired licenses for $4.8 million adding to its impressive arsenal of licenses covering Atlantic Canada, as well as parts of Northern Ontario. In these areas Bragg holds license in AWS-1, AWS-3, 700 MHz and now 2500 MHz. Covering Grande Prairie, Alberta its 2500 MHz license complements an AWS-1 license acquired in 2008. Eastlink has not yet deployed mobile outside of Atlantic Canada.
- Rural-Alberta based ISP Corridor Communications acquired 13 licenses for $2.3 million or $0.55 per MHz-pop, including rural Alberta as well as much of Eastern and Southwestern Ontario (outside of major markets).
- MTS won two licenses covering its operating territory in Manitoba and paid $2.2 million or $0.09 per MHz-pop.
- Municipally-owned TBayTel scored its first mobile spectrum auction win since the 2001 PCS auction winning 2500 MHz licenses covering Thunder Bay and Sault Ste. Marie, Ontario.
- Videotron paid $187 million, about $0.42 per MHz-pop, for 18 licenses covering its existing operating territory (Quebec) where it uses AWS-1 and where it also has 700 MHz and AWS-3 licenses. It also won in Toronto and Ottawa (where it has AWS-1 and 700 MHz licenses), Calgary, Edmonton and Vancouver (where it has 700 MHz licenses). Although Videotron currently only operates in Quebec, it has a suite of licenses to support deployment in much of the rest of Canada.
- Xplornet was the only bidder to come away with unpaired spectrum blocks, acquiring 41 unpaired licenses and only 1 paired, for $25.4 million or $0.116 per MHz-pop. Xplornet already covered much of the country with unpaired 2500 MHz spectrum acquired from Bell Canada in 2014.
Sasktel, which has been a feisty player in other auctions defending fortress Saskatchewan could not participate in the 2500 MHz auction since it already is at the 40 MHz cap in Saskatchewan.
Territories-based SSI Micro was a qualified bidder but won no licenses. The spectrum cap did not apply in the Territories, and Bell and TELUS acquired all five paired licenses. SSI, however, already has a 40 MHz swath of 2500 MHz paired spectrum, as well as unpaired licenses, covering Northwest Territories and Nunavut.
The biggest surprise in the auction results was the absence of Wind Canada, which was a major beneficiary of Industry Canada’s largess when it awarded AWS-3 licenses. In that process, which severely limited participation, Wind paid only the reserve price of 10 cents per MHz-pop for 30 MHz covering 18M pops in Southern Ontario, Alberta and BC. In the US AWS-3 auction, smaller bidders paid over 10 x as much for similar spectrum.
Wind Canada was a qualified bidder for the 2500 MHz auction, so the “story” on their participation will have to await Industry Canada’s release of the detailed bidding results.