Factbox: Canada's 2014 spectrum auction and why it matters


Rules on the auction of new bandwidth for Canada's wireless telecoms market favor new entrants into a market dominated by three carriers: Rogers Communications Inc, BCE Inc and Telus Corp.

Here are some facts about the January 2014 auction of 700 megahertz spectrum, and why it matters:

Continue Reading Below

- The 700 MHz spectrum is coveted for its ability to travel farther than certain other airwaves, thereby requiring fewer towers for rural coverage. It can penetrate buildings, reducing dropped calls.

- Seven blocks are available in the auction, which is expected to raise billions of dollars for the Canadian government. But bidders most covet four blocks aligned with U.S. airwaves used by AT&T Inc and Verizon Wireless, given the number of high-end devices designed for the much larger U.S. market.

- The bidding deadline is September 17, and the auction starts on January 14 next year. Parties cannot talk with one another after submitting initial bids, so they must agree on any takeovers or network sharing deals before then.

- BCE, Telus and Rogers may each only bid for one of the four prime blocks. Each participant can bid for two blocks in total. But small players such as Wind Mobile, Mobilicity and Public Mobile, regional providers such as Quebecor's Videotron, or a large new entrant like Verizon, may bid for up to two of the four prime blocks apiece.

- The government has indicated it will not approve any attempt by the big three to acquire a smaller rival. It will not let the big firms buy spectrum from small players when a moratorium on spectrum transfer ends next year if that would result in "undue concentration" of airwaves in any one market.

- The big three say the rules give Verizon an unfair chance to acquire the new entrants at fire sale prices. Telus says that if Verizon buys both Wind and Mobilicity and scoops up two blocks of prime spectrum, it would own almost as much spectrum in Canada as Telus has accumulated over three decades.

- Supporters of an open market say a newcomer needs access to roughly the same amount of spectrum to compete against existing players. They also note that while the incumbents are crying foul, much of the initial spectrum they accumulated was virtually gifted to them by the government, allowing them to become the powerhouses they are today.

(Reporting by Euan Rocha and Alastair Sharp; Editing by Doina Chiacu)