700 MHz auction is a failure of public policy, says expert

Hoey: “I’m not sure the public wins with this one”. The newly available list of participants for the January auction of 700 MHz of wireless spectrum illustrates the failure of Industry Canada to create a truly competitive environment for Canadians, says one expert.

Eamon Hoey, ‎Managing Partner, Hoey Associates Management Consultants was on BNN’s “The Street” this morning to talk about those companies that made it under the September 17th deadline for the auction. While he didn’t expect a major player like AT&T or Verizon to step to the fore, Hoey says he thinks the list offers no surprises whatsoever.

“You gotta ask yourself after three decades does this just not signal another failure at Industry Canada in terms of public policy,” he said, later adding: “I’m not sure the public wins with this one”.

The list of participants includes the big three, a smattering of regional players such as WIND Mobile, private equity firm Catalyst Capital, which is Mobilicity’s largest creditor, and Birch Hill Partners, which is rumoured to be working on a bid for WIND Mobile with Rogers.

Hoey says that unlike the $4-billion AWS auction that took place in 2008, there isn’t much spectrum available this time, but what available is valuable because it is lower frequency. Higher frequency spectrum, he explains, has less penetration because it can’t get through tall buildings, into elevators and underground parking lots. The 2008 auction was for spectrum in the 1700 to 2100-megahertz frequencies.

Spectrum at 700 MHz is seen as particularly valuable because it allows those deploying it to add spectrum largely without the huge capital outlay of building more cellular towers.

“I don’t think I’m exaggerating when I say 700 is the best spectrum the government has ever made available for wireless services,” Mirko Bibic, chief legal officer at BCE told the Financial Post recently.

Together, Rogers, Telus and BCE control 85% of the currently allocated wireless spectrum. The rest is divvied up between a handful of smaller players, with none holding more than a 3% block.

A statement released this morning from Industry Minister James Moore was at odds with Hoey’s assessment of the auction.

“Well before this summer’s public debate on wireless policy, our Government introduced a number of measures to create more choice in Canada’s wireless market and to defend consumers.” said Moore. “As a result, prices have come down, the number of jobs in the wireless sector has increased and consumers have more choices. This trend will continue as a result of January’s auction.”

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