U.S. spectrum moves deserve attention

By Peter Nowak, CBCNews.ca

It's an exciting time for those following news on wireless spectrum -- and let's face it, who isn't eating up this sexy topic? But seriously, the North American wireless industry is on the cusp of major change and there are new developments almost daily. The latest is that AT&T, the largest U.S. telecommunications company, is buying a large chunk of wireless airwave licences from a company called Aloha Partners, which seems to specialize in... well... owning spectrum. The $2.5 billion U.S. acquisition of the spectrum, in the 700 megahertz range, will allow AT&T to expand its reach in many of the biggest U.S. cities.

The deal is important to Canadians for a number of reasons. The 700 MHz range is currently used in the United States for analog television broadcasting, which is being shut down in 2009. The U.S. Federal Communications Commission is going to auction off those airwaves next year, to be repurposed for wireless services such as mobile phones and internet access. Many industry observers are expecting a fierce auction given that some non-traditional players -- most notably Google -- have expressed dissatisfaction with the wireless status quo and signalled an intention to bid.

Canada too is shutting down its analog television broadcasting, in 2011. No announcement has yet been made as to what will happen with the airwaves that will be cleared up, but it's a pretty safe bet Canada will follow the U.S. lead and eventually have a similar auction. First up, however, is a different auction to be held next year. Industry Canada is currently mulling over what the rules should be in an auction of airwaves in the 2 gigahertz range, to be held early next year. Minister of Industry Jim Prentice is expected to announce those rules either this month or next.

There is controversy over this pending auction. Would-be players say Canada's wireless industry is not competitive, so spectrum should be set aside for newcomers. The existing players say the auction should be free and open to the highest bidder. The problem with that argument is that the auction can't truly be free and open, as foreign players -- such as AT&T or Google -- are barred by ownership restrictions from getting involved in a meaningful way. These companies, however, could get in on an auction as a minority partner of a Canadian firm. One of the would-be players, Winnipeg-based MTS Allstream, for one, has admitted to talking to potential foreign partners on just such a course of action. Given AT&T's demonstrated appetite for spectrum in the United States, its well-documented desire to expand its Canadian business, and the fact that it has urged the Canadian government to ease foreign ownership restrictions, it wouldn't be too surprising if AT&T were to make a serious play in any Canadian spectrum auction. In any event, it's pretty much a no brainer that any spectrum developments south of the border warrant close attention here.