Initial bids submitted in auction of unassigned 2300/3500 MHz frequencies

The bids are in for unassigned 2300 MHz and 3500 MHz licences and a battle between the three largest national wireless operators is shaping up in many parts of the country. Cable companies, ISPs and telcos are also set to lock horns in a number of locations across the country. This week, Industry Canada published the bids and with a substantial number of them being contested between two or more parties, the process now moves into a simultaneous multiple round auction to be conducted over the Internet. The dates for the auction have yet to be decided, but will be announced in the near future. Interest in acquiring 2300/3500 MHz licences is higher than the first time Industry Canada auctioned licences in these bands as this time six companies placed deposits of more than $1 million with Bell Canada depositing a whopping $7,177,875. Cogeco Cable Inc. and Mipps Inc. also appear to be interested in acquiring a substantial number of licences since they placed deposits of $769,625 and $844,625 respectively. In the previous auction of these frequencies, rarely were there more than two bidders for a single property throughout the entire six-day auction. But this time around, there are some licences that have generated what can only be described as incredible interest. For example, the several licences in Quebec received three bids, with Cowansville seeing five bids and the Trois-Rivères property getting six. In Ontario, interest is equally high, particularly in the southern part of the province where serving areas such as Cobourg, Peterborough and Lindsay received up to seven bids. Even in the eastern part of the province, the Brockville and Kingston properties received five and six bids respectively. One of the real battle in this auction will be among the country’s three national wireless operators as each of them tries to fill out its licence portfolio, that is unless Tele-Mobile Company (operating under the Telus Mobility moniker) decides to retreat from its substantial deposit of more than $2.5 million. Telus Mobility in the last auction fooled most industry observers with the impression that it was going to bid on a national swath of licences, only to bow out of contention for properties in the major centres while securing bandwidth for its Quebec operations. For Rogers Wireless Inc., the auction provides the company an opportunity to shore up spectrum holdings across the country as its sister cable company prepares to eventually enter the voice communications market. While the company will rely on its cable plant infrastructure for Voice over IP (VoIP) in the major centres of its cable TV serving area, the wireless bandwidth will allow the company to compete against the incumbent telcos in its non-cable TV regions by offering a triple play bundle of broadband Internet, VoIP and mobile wireless services. Bell and Rogers will duke it out over several licences in Atlantic Canada with the battle spilling over into portions of Quebec. Telus Mobility enters the fray in the Quebec market, bidding on a number of smaller licences and on a lucrative D-band Montreal licence. The three wireless carriers renew their rivalry in Ontario with several licences receiving bids from all three. But the country’s most populated province sees Telus Mobility pursue a number of licences in the southern portion of the province, including Guelph/Kitchener, Kincardine, Niagara-St. Catharines, and others. The three companies return to their fighting ways after essentially jumping over Saskatchewan and Manitoba. Interesting battles will take place not only among wireless operators, but Cogeco appears bent on acquiring additional spectrum in its serving regions. As is the case with Rogers Wireless’ cable affiliate, Cogeco is eyeing a potential entry into the telephony market and this bandwidth is well suited for such applications and services. But Cogeco will also try to acquire additional bandwidth so that it can offer high-speed Internet services to an expanded footprint. Existing service providers such as Distributel Spectrum Inc. are likely looking to expand service coverage footprints through spectrum acquisition. Having deposited nearly $2.5 million, the company is likely to be aggressive in trying to acquire a substantial number of licences in Quebec and Ontario. An analysis of its bids demonstrates that the company is not only interested in licences with smaller populations, but also larger urban areas. Distributel placed bids on properties in western Quebec and eastern Ontario including licences for Quebec City, Montreal and Ottawa regions. But the company isn’t shying away from lucrative southern Ontario, and has bid on the G-band Toronto licence. It is also interesting to note that wireless cable companies are going to battle for spectrum, as well. UBS Wireless Services Inc., an affiliate of Unique Broadband Systems Inc., best known as the owner of Look Communications Inc., and YourLink Inc., an ISP that recently purchased Image Wireless Communications Inc. from the Skinner family in Saskatchewan (RoW, April 21/04), are each looking for greater bandwidth resources. The two wireless cablecos need additional spectrum to offer high-speed Internet access because they don’t have enough bandwidth to offer their TV related services. UBS bid on the 2300 MHz W-band in each of Toronto, Montreal, Ottawa, Guelph-Kitchener and London/Woodstock/St. Thomas worth more than $1.3 million in total. YourLink, a subsidiary of wireless and broadcast equipment maker VCom Inc., opened with bids in southern Ontario taking on much larger players in Cobourg, Peterborough, Lindsay and Minden for example. The company continued westward across the rest of the country, excluding Alberta and British Columbia where its parent company already holds a substantial number of licences acquired in the previous 2300/3500 MHz licences. One as-yet-to-be-named company, 4253311 Canada Inc., represented by Kirsten Embree of Fraser Milner Casgrain, appears set on acquiring a national swath of licences. It’s unclear at this point what the company plans to do with the spectrum, but it is likely broadband Internet service with a possible VoIP offering could be in the books for this numbered company. According to beneficial ownership documents filed with Industry Canada, the company is controlled by WCS North Inc. and CWCS Partners III LLC, each holding 50% in 4253311 Canada. Rajendra Singh, Neera Singh, Samir Raj Singh and Hersh Raj Singh are the four shareholders of WCS. CWCS is controlled by Columbia Capital III LLC. Other than James Fleming, R. Philip Herget II and Harry Hopper III, no other individual owns more than 10% of Columbia Capital. Rajendra Singh and Neera Singh are former directors of Telecom Ventures LLC, and Rajendra is a former director of Boston Communications Group. The company lists Embree, Hal Perkins and Matt Newton as directors. Newton is a partner in Columbia Capital and currently a director of Adjoined Consulting, Affinity Internet, MindSHIFT Technologies, and WCS Wireless. He has been actively involved with Columbia’s investments in NMP (acquired by Commerce One), Pihana Pacific (purchased by Equinix), Relera and WNP Communications (purchased by XO Communications) and others. Perkins is another former director of Telecom Ventures. Many companies, including major players, walked away with licences after the residual auction’s first phase. Bell Canada, Rogers Wireless, 4253311 Canada, Mipps, Cogeco, Distributel, and others secured bandwidth in the first phase. Interestingly, however, Telus Mobility was only able to secure a single licence (Louiseville QC) in phase one. Wispra Inc., which had initially expressed interest in participating in this auction, did not put down a deposit. Be sure to check back to Report on Wireless to find out further details on Industry Canada’s auction.

Initial bids submitted in auction of unassigned 2300/3500 MHz frequencies

News | September 22, 2004

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