End is in sight on spectrum auction
The end is in sight for the government's auction of wireless airwaves, a sale of licences that is expected to result in new cellphone operators next year and raise at least $3.5 billion for public coffers.
The auction moved into its third and final phase on Wednesday, meaning that participants must now use all of the eligibility points they applied for with Industry Canada before the sale began on May 27. Participants can no longer strategically hold back bidding as they could in earlier phases of the auction, where they weren't required to use all of their eligibility points. They must now go all out in their bidding.
As a result, bids slowed down on Wednesday — the 49th round of the auction brought in an increase of only $12 million from the previous round, with only 66 of the 292 licences receiving new bids.
Industry analysts said the end of the auction is in sight.
"We're starting to hone in on the final number," said telecommunications consultant Mark Goldberg, who is hopeful the auction ends before the Canadian Telecommunications Summit — which he is organizing — begins next week. If the auction were to conclude, the summit will be abuzz over who the new cellphone providers will be.
"Wouldn't that be great?" Goldberg said.
The auction was expected to last between three and four weeks, while many financial analysts expected it to raise between $1 billion and $1.5 billion, an amount handily surpassed during the first week of bidding.
Bids have broken down into regional divisions, as many analysts expected.
Before the auction began, the government announced that 40 per cent of the airwaves up for sale would be reserved for new entrants in order to spur lower prices in what it said was an uncompetitive market. Canada's wireless incumbents, Rogers Communications Inc., Bell Canada Inc. and Telus Corp. have not been allowed to bid on this portion of the spectrum, but have been free to do so on the rest.
Halifax-based Bragg Communications, which runs Maritimes cable provider Eastlink, led potential new entrants on Wednesday, wrapping up the day with high bids on 30 licences. Bragg limited most of its bidding to Eastern Canada, although the company did end the day holding high bids on some Ontario licences, including Barrie, Guelph, London, Windsor and Sudbury.
Montreal-based Quebecor Inc. was second with 20 high bids, mostly in Quebec and Eastern Ontario. The company also ended Wednesday holding the high bid on the one Toronto licence reserved for new entrants, which is placed in round 46. The move puzzled analysts because Quebecor has previously withdrawn two bids for the Toronto licence.
"What they may be trying to do is raise the price for Toronto for rivals," said Lawrence Surtees, principal analyst of telecommunications research for consultancy IDC Canada.
Toronto-based Globalive Wireless was third amount new entrants, ending the 49th round holding high bids on licences broadly distributed around the country. Calgary-based Shaw Communications Inc. was fourth with 16 high bids, mostly in Western Canada.
The nation's incumbents — Rogers, Bell and Telus — ended the day with 51, 48 and 58 high bids respectively.