Shares of the country's major wireless communications companies retreated Thursday, a day after the federal government set new rules for the auction of radio airwaves meant to spur competition in the sector.

Rogers B 3-month TSX chart

Rogers Communications Class B shares fell more than eight per cent, dropping $3.79 to $41.71 on the TSX. Shares of Telus dropped $2.29 — more than four per cent — to $46.62. BCE, which is in the midst of being taken over, was down 52 cents at $39.20.

BMO cut its rating on Rogers to "market perform" from "outperform," while Bear Stearns reduced its rating to "peer perform" from "outperform." BMO also cut its price target on Telus to $52 from $60, but retained its "market perform" rating.

The new rules will see 40 per cent of the spectrum reserved for new entrants, with the remainder open to all bidders, including Canada's big three providers — Rogers, Bell and Telus.

Industry Minister Jim Prentice gave potential newcomers, including Quebecor, MTS Allstream, Shaw and Eastlink, virtually everything they asked for.

Telus 3-month TSX chart

MTS gained 47 cents to reach $44.47, while Quebecor Class B rose $1.46 to hit $38.52. Shaw was up 56 cents at $24.57. Eastlink is privately held.

Prentice said he agreed with the arguments of the upstarts — that prices are too high and the wireless industry needs more competition.

"Our goal at the end of the day is lower prices, better services, and more choices," he said during a news conference.

The wireless spectrum auction is slated to begin May 27, 2008, and is expected to last several weeks. Industry Canada expects new players will start up by the end of next year, at the earliest.