Still unclear on 700MHz outcomes.

I’m currently in the process of finalizing my Major Research Project proposal, so I kinda wish that the 700MHz spectrum auction had finished sometime next week (or the week after!). I’d much rather be analyzing the results and reading others analysis of outcomes than finding some additional sources to support my methodological approach — though I’ll be happy to also tackle a bunch of readings that are contributing to my literature review. 

But seeing as carriers and government officials weren’t working on my schedule, I’ll just throw out some quick thoughts.

I think Vidéotron is perhaps the clear financial winner. They picked up prime spectrum in major Canadian markets and did it in a very fiscally advantageous manner. Peter Nowak has a good overview of some of the broad options to Vidéotron and attributes the ability to pick up the licences on the cheap due to lack of auction competition other than the Big 3. Mark Goldberg highlights that in 2008, Vidéotron spent $555M to acquire AWS spectrum primarily in Quebec, on a 10 year license. In  2014, they spent just $233M for a 20 year license in Quebec, Southern and Eastern Ontario, Alberta and British Columbia — 60% less.

That 60% is an interesting number as it’s also about the difference between the total opening price ($143m) of their licences won and final price. In fact, other than Feenix’s single licence for the YK & NWT, Vidéotron had to pay the lowest cost above opening bid prices. Compare that to say Rogers, who saw a nearly 10x spread between opening prices ($314m) and final price tag ($3.3b). From a network technology perspective, Rogers may have gotten the optimal blocks available to have their own 10MHz contiguous sub-1GHz channels across most of Canada, yet it came at a steep cost.

This leads to the part that confuses me the most. With a network sharing agreement in place for their HSPA+ rollout — and expectations that they’ll continue for 700MHz network — why did TELUS and Bell not snatch up all the C1 & C2 blocks? TELUS saw a 400%+ increase between opening and final bid prices and spent $1.1b to secure them; clearly they were willing to spend for what they wanted. Does this mean that focusing on access to AT&T’s device ecosystem was more important than an ability to provide 10MHz contiguous channels in lower frequency technology? Was it done to prevent Rogers from pairing up with other carriers and having an opportunity for 15MHz channel? Based on the spreads and aggregate prices paid, it wasn’t Vidéotron and other regional carriers preventing TELUS and Bell from owning the ‘Verizon blocks’.

What was TELUS’ thinking on this? Is it that chipsets and devices are supporting more and more bands? The latest iPhone supports both Band 13 (Verizon) and Band 17 (AT&T) for 700MHz LTE. The Galaxy doesn’t do it in one phone yet but clearly chipmakers can do it, perhaps in the new model. Does this mean sunsetting of TELUS’ CDMA network may be poised to be accelerated?

Their network partner-in-crime, Bell purchased nearly the same amount of paired and unpaired spectrum (248MHz vs 254MHz) but only spent about half as much ($565m). They also had a lot less competition for their desired blocks, only needing to spend about 180% over initial bid prices. So Bell got the spectrum they wanted, at half the cost of TELUS.

The last piece anecdote is that Bell and TELUS picked up all the upaired D & E blocks. This suggests they’ll be focusing on LTE multicast that Verzion has been experimenting with — which adds to my confusion around why TELUS didn’t go after C1. As further details come out in the next few months over specific licence costs and carrier plans for network build outs, it’ll be interesting to see where this takes us for Canadian telecom and communications policy.