In deciding to establish a set-aside of licenses, thus creating an opportunity for market entry with the 2008 AWS-1 auction, Industry Canada noted that it could “guarantee neither new entry nor success of eventual entrants”. This understatement of fact proved out in the aftermath of the 2008 auction and a full seven years later, a major chapter in the story has come to a close.
On one hand, Industry Canada’s policy was a clear success.
While not having yet built-out in all areas of the country, now not-so-new competitors fight it out daily with the incumbents. Three out of the ten prospective entrant bidders that participated in the auction are in service: Videotron in Quebec, Eastlink in Atlantic Canada and Wind in Ontario, Alberta and BC.
So the set aside policy worked. And with the sale of Mobilicity to Rogers, in addition to the Shaw licenses going to Rogers, plus licenses swaps and transfers to Wind, the position of Wind as the main fourth carrier west of Quebec has been solidified.
On the other hand, this success also came with what could have been some unnecessary pain.
The relatively large set aside of 40 MHz was divided into three licenses, and the PCS G Block was also included in the auction, enough to encourage more than one entrant. In fact there could actually have been four new licensees in every market. In most of the country, the licenses were split amongst two or three prospective entrants.
This patchwork of spectrum licenses and bidders did not result in the single national “champion” that Industry Canada was looking for.
The various entrant “pieces” have now been for the most part fit into the national puzzle: Mobilicity to Rogers, along with Shaw’s licenses – as announced June 24, 2015 – following earlier transactions that saw Public Mobile and Novus go to TELUS. So absent a few small leftovers, a major chapter in the story that started with the 2008 auction has come to a close.
Industry Canada’s set aside mechanism was and remains highly controversial, with some arguing that it was an unnecessary intrusion into market forces, while others recognizing that licenses are a barrier to entry that only the auction mechanism can address. What remains is that it is highly unlikely that there would be a fourth carrier anywhere in Canada if the set aside mechanism had not facilitated it. None of the entrants now in service had mobile operations in 2008.
A good footnote in the book of Canadian spectrum licensing history, but also an important consideration for the US Incentive Auction, planned for 2016, where a reserve of licenses is planned for carriers and bidders, in this case, with little or no spectrum holdings below 1 GHz, and where the amount of reserved spectrum is one of the most controversial elements the FCC is dealing with.