Smaller players to seek spectrum for mobile, fixed wireless services

Rural Internet service provider Corridor Communications Inc. will attempt to make the jump into mobile wireless if it can secure wireless airwaves during Industry Canada’s 700 MHz spectrum auction in January, the company’s chief executive said. “What we are trying to do with 700 MHz is beyond fixed wireless,” Amir Bigloo, CEO of the Calgary-based company, said in a telephone interview. “Essentially that spectrum is for mobile.” CCI, through a numbered subsidiary, is among three small telecom companies that will take part in the Industry Canada spectrum auction scheduled to start in January, along with Victoria-based Vecima Networks Inc. and Vancouver-based Novus Entertainment Inc., according to a list of auction applicants posted on the department’s website Monday. The 700 MHz spectrum that will be auctioned off is considered particularly useful for mobile services due to its ability to carry wireless signals across long distances and penetrate buildings and other obstructions. Jointly owned by a coalition of national gas and electricity co-operatives, as well as two Alberta municipalities, CCI currently offers fixed wireless Internet service and telephone services in about 70 rural Alberta communities and caters to oil and gas companies as well as rural households. It uses the provincially owned “SuperNet” fibre network to carry signals across long distances, and its own last-mile infrastructure to connect it to individual households and businesses that subscribe. Bigloo said he expects all of the companies that have applied to take part in the auction are seeking to roll out their own mobile services. While the 700 MHz airwaves could be used to support a fixed wireless network, he said, the “premium” spectrum is “ideal for mobile.” “You can assume that all 15 are interested in doing ,” he said of the 15 companies that have applied to take part in the auction. Corridor could offer mobile Internet devices such as Internet sticks. Bigloo declined to comment on whether Corridor would attempt to acquire spectrum in Alberta or other parts of the country, citing Industry Canada rules that prohibit companies from discussing their bidding intentions. He said Corridor, which received funding from Industry Canada’s Broadband Canada funding for eight projects from 2008 to 2012, has hired PricewaterhouseCoopers to help the company locate and raise funding in advance of the auction. “It’s beyond just the spectrum auction. There is money needed for the infrastructure and everything else,” he said. Like Corridor in Alberta, Novus currently offers residential and business Internet telephone services in the Vancouver area, as well as TV services, according to its website. The company, which spent $17.9 million to acquire 10 MHz of little-used G Block spectrum in British Columbia and Alberta during a 2008 Industry Canada spectrum auction, has since sold those licences to incumbent wireless carrier Telus Corp. in a deal earlier this year. Stephan Meyer, director of technology at Nordicity and a former CRTC manager of network policy, said Novus could use any spectrum it acquires in the 700 MHz spectrum auction to support a fixed wireless service, and would most likely focus on the British Columbia markets. He said the company’s experience in the 2008 auction would help inform its bidding strategy in the 700 MHz auction, if it has the financial backing to support its application. “It’s not their first time to the show … so I think they are a credible bidder,” he said. “If they’ve got the financing and they have a plan, it’s credible that they could get something in B.C., at least to support their business plans.” He added that the company could also try to again acquire Alberta spectrum in the hopes of becoming a regional player, and could one day become a mobile service provider. “It all depends on what their business strategies are,” he said. Canaccord Genuity analyst Dvai Ghose said Novus could also view 700 MHz licences as a potential investment, and speculated that the company seeks to acquire some of the coveted spectrum in order to later flip it to an existing mobile provider, much like it did with its G Block spectrum. He said Novus could potentially use 700 MHz spectrum to support a fixed wireless service, though he noted that there is other spectrum available for those purposes that would probably be cheaper to acquire. “I assume they’re there for investment purposes,” he said in a telephone interview. Meyer said Vecima, which manufactures wireless Internet delivery products and other wireless products, could use any 700 MHz spectrum it acquires to support its FleetLynx service, which allows companies to “monitor the productivity of their mobile staff through real-time event management,” according to the company’s website. Vecima, he said, would most likely be interested in acquiring spectrum in the so-called D and E Blocks of 700 MHz spectrum, which are designed to support one-way communications, such as data transmissions, instead of two-way communications like voice conversations. Industry Canada has “general deployment requirements” for companies that win 700 MHz spectrum, which require the spectrum to be “put to use” within 10 years. The rules say services that use the spectrum must cover as much as 50 per cent of a province’s population in that time in most regions, and as little as 20 per cent in the North. Jean-Francois Mezei, a telecom consultant with Montreal firm Vaxination Informatique, said any company that wants to offer fixed wireless or mobile services using 700 MHz should pay careful attention to the kinds of equipment they would need to launch those services, and whether that equipment is available for the specific spectrum blocks they will be targeting in the auction. He noted that there is a limited selection of fixed wireless products that are designed to carry signals over the spectrum, which is mostly used for mobile services and over-the-air broadcasting. Many mobile Internet “rocket sticks” are configured to work with 700 MHz spectrum, he said, though not typically with the little-used D and E Blocks. “It all has to do with what equipment is available and in what band,” he said in a telephone interview. “These guys now are going to bid and make plans based on what they get. If they bid on these , it’s because they’re confident that they can get equipment for it.” Mark Goldberg, a consultant at Mark H. Goldberg and Associates, said smaller providers could face difficulties acquiring spectrum because Industry Canada’s spectrum licence areas cover entire provinces as oppsed to their specific service areas. The small providers, he said, could run into trouble trying to outbid larger players that want the spectrum to service an entire province and who would have a better business case for spending more to acquire that spectrum. “To the extent that a fixed rural broadband play is seeking spectrum, it’s just not going to be able to compete with someone who is buying that same block of spectrum but targeting the 95 per cent of the population that lives in an urban setting,” he said. Goldberg said the smaller providers could license some of the spectrum more cheaply if they aren’t targeting one or more of the four “prime” blocks available in each province during the auction, which are of more interest to deep-pocketed incumbent providers, Telus, BCE Inc. and Rogers Communications Inc. due to the popular mobile devices designed to work on them. “I think there’s more spectrum being auctioned than there is demand for that spectrum,” he said of the non-prime D and E Blocks, which don’t currently support mobile services. “It depends on what the business plan is, but I doubt there’s going to be a lot of competition for that spectrum." —With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Smaller players to seek spectrum for mobile, fixed wireless services

News | September 25, 2013

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Smaller players to seek spectrum for mobile, fixed wireless services

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