What is the wireless spectrum?
All wireless signals travel over a radio frequency. For example, radio station 93.9 FM is broadcasting at 93.9 megahertz — and no two stations can use the same wavelength at the same time, according to American technology website CNET.
Mobile phones work in the same way, with no two providers allowed to use the same spectrum (or frequency) in the same market.
Canada began its 700 megahertz spectrum auction on Tuesday. The last government auction for wireless spectrum, in 2008, raised $4.3 billion and ushered in new players: Wind Mobile, Mobilicity, Public Mobile, Videotron and Eastlink.
Since then, Mobilicity has been put up for sale and Public Mobile has been sold to Telus.
Why are these frequencies so valuable?
Experts say the 700 megahertz waves up for auction are particularly valuable because they allow cellphone signals to travel longer distances and penetrate buildings and tunnels where calls are often dropped.
The signal also requires fewer cellphone towers to provide coverage in rural areas.
What are the benefits to consumers?
“By itself, the spectrum auction ought to be a fairly good thing,” IDC Canada’s Lawrence Surtees told CityNews.
Not only could more spectrum extend the reach of new generation wireless networks, it’s also required for higher broadband services like video, Surtees said.
It will also will help meet consumers’ growing smartphone and tablet use.
While the auction will come with caps to ensure the spectrum is divided up among four or more carriers and licences will cover smaller geographic areas — a move designed to allow smaller carriers serving rural Canada and smaller cities to participate — Surtees said that many of the newcomers gained enough spectrum in the last auction to be truly national players.
The government has repeatedly said its goal is to ensure there is a fourth national player in every region of the country to give consumers more choice. Small start-ups, such as Wind Mobile and the indebted Mobilicity, have struggled to attract customers.
What are the drawbacks for consumers?
Canada’s big three carriers have about 25-million customers between them and dominate the market, making it difficult for new players of any size to attract customers.
An auction wouldn’t result in an automatic windfall for consumers, Surtees warned, and the way things are playing out because of other policy decisions by Ottawa, [the auction] may in fact be at odds with the desire for greater competition
“It’s hard to know if consumers will see a lower bill,” Surtees said.
Whether a company has less or more spectrum is not the issue, the issue is going to be the plans. There may not be a provider who can compete nationally, he said.
“If the market ends up back in a cozy tri-opoly, we won’t see the level of competition attracting consumers with better plans,” Surtees said.
In some ways, the Canadian wireless is very competitive, but price-wise, or with data plans, Canada is not as competitive as the number of players in the market would suggest, he said.
“You’d be hard-pressed to find another country with as many wireless players as Canada…but they’re all chasing the same 34-million people.”
With files from Canadian Business