Rogers spends billions on spectrum, focuses on A, B pairings

OTTAWA — More than half the money raised in the government’s 700 MHz auction of wireless spectrum came from Rogers Communications Inc., which invested heavily in two key blocks in regions across the country. The company, which spent nearly $3.3 billion in the auction, avoided most of the prime C, C1, and C2 blocks of the 700 MHz spectrum to spend heavily on 18 licences for A and B blocks paired together regionally. All told, the company walked away with 22 licences for spectrum blocks across the country. The 700 MHz auction raised $5.27 billion for the government, up from $4.25 billion in the 2008 AWS spectrum auction. Telus Corp. spent $1.14 billion on 30 licences, while BCE Inc. paid $565.7 million for 31 licences, according to documents released by the government. Results for this auction, which began Jan. 14, were released Wednesday. The 700 MHz spectrum is particularly valuable to wireless companies because it carries signals longer distances, requires fewer cell towers and is able to penetrate things such as building walls, elevators and unground parking lots, Industry Minister James Moore noted when announcing the auction results. Greg MacDonald, an analyst with Macquarie Capital, explained that that heavy price paid by Rogers was due the fact it bought so many A and B blocks together in the same regions. “The two blocks together have a premium,” he said in a phone interview. Having these two contiguous blocks of spectrum can allow carriers to use both as a single pipe to the user, potentially doubling the bandwidth, an Industry Canada official said. Of the 14 regions that the country was divided into for this auction, Rogers bought the A and B pairings in nine of them. Bell bought these blocks in pairs in three areas, and Telus did in two. In a release issued after the auction results were out, Rogers said its new spectrum licences will allow it to give customers the “ultimate video experience.” “As Minister Moore said today, the 700MHz spectrum is the highest-quality wireless frequency ever auctioned in Canada,” Rogers CEO Guy Laurence said in the release. “This was a clear strategy for the long-term and our customers won.” Rogers said the spectrum it bought in the 700 MHz auction covers 99.7 per cent of the Canadian population. Bell, which bought four out of seven available blocks in the North, said in a release that the new spectrum will help its bring its national LTE coverage to 98 per cent of the population. "Bell already offers LTE service to 82 per cent of the national population, and this new 700 MHz spectrum will help us take the network further — to towns, rural locations and remote communities across the country including Canada's North,” Wade Oosterman, president of Bell Mobility, said in the release. Telus CEO Darren Entwistle said in a release Wednesday that his company’s purchase of wireless spectrum would take Telus’ LTE coverage of the Canadian population from 80 to 97 per cent largely by advancing this technology to rural areas. “Telus alone has invested more than $2.4 billion in spectrum-related costs since the 2008 AWS auction, and has invested more than $30 billion in technology across the country since 2000,” he said of the money spent in this auction and other efforts to upgrade wireless infrastructure. The government’s 700 MHz spectrum auction was a success in laying the groundwork for a fourth wireless carrier in every part of the country, Moore said at a news conference on Wednesday. “There’s more competition coming,” he said. “I think you'll see a competition for the consumer, a competition which will drive down prices and provide more choices.” He called Canadian consumers “the big winners of today’s wireless spectrum auction.” The government had set rules that limited Canada’s three incumbent carriers —Rogers, Bell and Telus — to just one of the four prime blocks in each region. While the B blocks were considered prime, the A blocks carriers paired them with were not. Quebecor Inc.’s Videotron unit laid the groundwork for a massive expansion of its network outside of Quebec. The company, which had previously, beyond Quebec, only had spectrum in the Toronto area, spent $233.3 million on seven licences to serve all of Alberta and British Columbia, as well as southern and eastern Ontario. Quebecor said in a release after the announcement that its spectrum purchases in Quebec, Ontario, Alberta and B.C. cover 28 million people, or 80 per cent of the Canadian population. "Given the way the auction unfolded, Quebecor Media could not pass up the opportunity to invest in licences of such great intrinsic value in the rest of Canada," Quebecor CEO Robert Dépatie said in the release. "We now have a number of options available to us to maximize the value of our investment.” Moore said the government would prevent further consolidation of spectrum within the existing Canadian market, and major carriers will not be permitted to buy up smaller players such as Mobilicity (owned by Dave Wireless Inc.) and Wind Mobile. “We don't believe in greater consolidation of spectrum among large players,” Moore said. “We want to create an environment where there's more competition. It would be irresponsible for a government to take a position other than that. “ Eastlink, run by Bragg Communications Inc., also made moves that could expand its footprint beyond the Atlantic. It spent $20.3 million on four licences on the East Coast and in northern Ontario. Feenix Wireless Inc., headed by Mobilicity founder John Bitove, spent $284,000 on one spectrum licence in the North. In all, the government sold 97 of the 20-year licences to 8 companies. Moore did not elaborate on the government’s plans for the single unsold licence, a prime block covering Canada’s three territories. — With reporting by Peter Henderson at phenderson@thewirereport.ca and reporting and editing by Derek Abma at dabma@thewirereport.ca CORRECTION: A previous version of this story incorrectly stated that Telus did not purchase spectrum in the North.

Rogers spends billions on spectrum, focuses on A, B pairings

News | February 19, 2014

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us

Rogers spends billions on spectrum, focuses on A, B pairings

News | February 19, 2014

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Related Stories

Freedom plans could drive big three back to subsidies: analysts

Freedom answers to ‘unlimited’, offers $0 phones on select plans

Shaw says patience, not regulation, required to see organic MVNO market

Analysts surprised by Bell’s lack of 600 MHz, incumbent spend

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us