Bell wins no licences in Canada’s first auction for 5G-enabling spectrum

George Cope, President and CEO of BCE Inc., speaks during the 2017 annual general shareholders meeting in Ottawa in April 2017
George Cope, President and CEO of BCE Inc., speaks during the 2017 annual general shareholders meeting in Ottawa in April 2017 Photo: Justin Tang/CP

Bell won no licences in Canada’s first auction for 5G-enabling wireless networks.

Canada’s telecoms intend to use this spectrum, which was for the 600 megahertz bandwidth, to roll out their 5G networks. The government set aside 43 per cent of the spectrum for small companies looking to compete with the major carriers, with the hope of increasing competition and driving down prices.

Rogers was awarded 52 of the 104 licences in spectrum auction. Telus came in second place with 12 licences.

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Bell was one of 12 qualified applicants registered to bid, but by far the biggest player to be shut out. In a press release, the company said it “decided not to acquire” spectrum.

“600 MHz is not required for Bell to deliver broadband 4G and 5G services,” reads the release. “Similar to Bell, the company’s main U.S. peers chose not to own any 600 MHz spectrum in their markets.”

The company did not respond to questions about whether it bid in the auction.

Rogers won all the blocks available to Big Three carriers in southern and northern Ontario, in northern Quebec, and in Manitoba, Atlantic Canada, Nunavut, the Yukon and the Northwest Territories. In all, the company won licences covering 35 million Canadians.

“This spectrum is vital to the deployment of 5G in Canada and we are well positioned to bring the very best of 5G to Canadians,” said Joe Natale, Rogers president and CEO. “We went into this auction with a clear, disciplined plan and seized this opportunity for the benefit of our customers and shareholders.”

The government raised $3.47 billion in the auction, beating analysts’ predictions of between $2.5 billion and $3 billion. Licence winners get to keep their allocations for 20-year terms. Winners of set-aside licences can’t sell them to incumbents for at least five years.

The 600 MHz band is the first of three designed for 5G, set to be auctioned over the next two years. Bell and Telus have a network-sharing agreement. However, while Rogers was awarded licences across the country, the 12 that Telus acquired do not include any in Manitoba, Atlantic Canada or the territories.

Telus objected to the cost of the auction and the fact that the Big Three could only bid in the open category while smaller players—including the wireless brands of major cable companies—could bid in both categories. While it didn’t name those companies, Shaw owns Freedom and Quebecor owns Vidéotron. Rogers and Telus won all of the licences available in the open category.

“The average price per MHz-pop paid by the national carriers in the open auction was $1.08 higher on average than what was paid by those in the set aside, which equates to an approximate subsidy of $1.1 billion by Canadian taxpayers,” said Darren Entwistle, president and CEO of Telus.

Telus paid the most for its spectrum at $2.35 per MHz per unit of population, compared to $1.71 for Rogers. The regional carriers paid far less, with prices ranging from $0.99 for Vidéotron and Xplornet to $0.34 for Iristel.

“Through the auction, regional providers more than doubled their share of low-band spectrum, strengthening their ability to offer competitive services to Canadians,” said Innovation, Science and Economic Development in a press release. “In addition to improving competition, the results of this auction will support the deployment of current and next-generation technologies.”

Freedom Mobile, the wireless brand of Calgary-based Shaw Communications, was the big winner among the smaller firms. It got 11 licences, covering a combined 22 million people.

Freedom’s new spectrum is in eastern and southern Ontario, in western Quebec, in Alberta and in British Columbia. In all of those regions, its current network is concentrated around the big cities. Brad Shaw, CEO of Shaw, said the spectrum will “vastly improve” current LTE service and serve as a key element of the company’s 5G strategy.

“We have made significant investments to improve the wireless experience for Canadians, becoming a true alternative to the incumbents, with a differentiated value proposition,” said Shaw.

Iristel, which won seven licences covering Newfoundland and all the territories, described its victory as a chance to take on the Big Three.

“We can now offer the benefits of real competition to consumers and businesses in Newfoundland and Labrador and give them relief from the Big Three wireless oligarchs,” said Samer Bishay, president and CEO of Iristel. “This is an important step toward more choices, lower prices and higher quality cell phone services for Newfoundlanders, Labradorians and those in remote areas of Canada’s North, including Quebec.”

In addition to Bell, the telecom Eastlink, which operates in Atlantic Canada, and B.C.-based Novus Entertainment won no licences.

Vidéotron acquired 10 licences, covering much of Quebec and eastern Ontario, including the Ottawa area. The company said the licences will increase its low-frequency assets by 300 per cent in most of Quebec.

“Thanks to sensible auction rules that allowed for a fair division of spectrum between incumbents and regional carriers, we are now able to reaffirm our determination to be a tech builder, one that is fully equipped to break new ground in order to better serve its customers,” said Pierre Karl Péladeau, CEO of Vidéotron parent company Quebecor.

Xplornet, which launched a wireless service in Manitoba in 2018, won four licences, including one covering 1.3 million people in the province. Bell became the province’s biggest carrier when it bought Manitoba Telecom Services, a Crown corporation, for $3.9 billion in 2016.