While announcing the results of 700 MHz spectrum auction earlier this week, Industry Minister James Moore called Canadians big winners.
Let’s see if we are really the winners?
The 700 MHz spectrum is the highest-quality wireless frequency ever auctioned in Canada. This spectrum travels longer distances, requires fewer cell towers and penetrates through building walls, elevators, and even through to underground parking lots. A recent report from networking experts has also predicted that the mobile data traffic is expected to explode 11 fold by 2018. The new wireless licenses will provide better service for us Canadians who love to stay connected and are very heavy data users.
The wireless spectrum auction has generated $5.27 billion, the highest return ever for a wireless auction in Canada. This revenue will go directly to the Consolidated Revenue Fund and so as per Mr. Moore Ottawa will have more money to spend on some other services that are important for Canadians.
The new auction results have also shown that industry Canada is committed to increasing competition in Canadian wireless industry. At least 4 players got a pie of spectrum in all provinces which means more competition. Quebec based Vidéotron is expected to become a 4th major player as it got licenses for Ontario, BC and Alberta as well.
But some analysts are raising a valid question. Where from this $5.27 billion come to telcos? Of course from the consumers’ pockets. Rogers spent more than $3.2 billion on the spectrum. Looking at financial statements, Rogers Wireless generated a profit of $3.16 billion in 2013 which means it spent a profit of more than one year on this spectrum. And it seems they will not be able to afford to reduce the wireless prices any time soon. This also reinforces the point we mentioned in our Blog last year – “Your Cell Phone Bill is not going to go down any time soon”.
The new auction will of course have better wireless coverage and service for Canadians, has also generated some money for government and may also increase competition with at least 4 players in all provinces, but as we said last year, it’s not going to reduce our cellphone bills anytime soon.