Winner’s Curse: If you buy it, they still may not support it.

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[Update: The Nexus 6, which supports Band 12, was launched in Canada November 26th. Rogers did not secure spectrum in the AWS-3 Auction in early 2015.]

Winner’s Curse: A phenomenon that may occur in common value auctions, where the winner will tend to overpay due to incomplete information.

I was planning on writing a short blurb about Rogers and winner’s curse/buyer’s remorse when Industry Canada initially announced the AWS-3 auction. I got into a Twitter conversation about AWS-3, with the thinking that the high cost of Rogers’ 700MHz spectrum would cause them to be uncompetitive against a TELUS-Bell effort to gain the non-set aside block. JF noted that Rogers would still be bidding to drive up their competitors’ costs. It’s a strategic move I agree will be likely, but felt just further reinforced my original observation.

Rogers wouldn’t hesitate to add to their industry-leading spectrum holdings, if it could be acquired at a good price. But with the significant capital outlay for their 700MHz spectrum — some might say, overpaying — Rogers would need to be extra wary of the risks of inflating auction prices beyond what value could be reasonably extracted, not wanting to ‘accidentally’ win over-priced spectrum. Europe’s experience with the winner’s curse surrounding 3G licence costs is a major contributing factor to lagging in LTE investment, something that wireless executives haven’t addressed at all during the recent CRTC wireless wholesale roaming proceedings.

I also noted that this situation would, in fact, be the worst of both worlds. Rogers would be increasing TELUS’ or Bell’s (and, thus, consumer) costs, while likely still not maximizing government revenues.

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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.

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Summer 2012 Reading

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I’ve often been known to say I know more about cellphones then 95% of people, but compared to that 5%, I don’t know much. So one of my primary goals this past summer was to improve my technical knowledge of mobile communication network architectures and technologies. I really enjoy reading Martin Sauter’s blog WirelessMoves — even when it gets a little over my head — so I decided to purchase his book.

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Post-CTS12

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Just wrapped up the 2012 Canadian Telecom Summit, really glad I was able to go. Being able to access the student pricing was great, so getting one of the Orion Network-sponsored scholarships from Mark Goldberg was much appreciated!

OpenText’s Tom Jenkins reminded me of Cornelia Woll’s book, when he made the argument that industry needed to work with government but to also to lead them in policy formation. So like Woll, but opposite. The other big picture presentation that was quite engaging, delivered by Malcolm Frank of Cognizant, discussed implications of the Future of Work. Of course, the Regulatory Blockbuster panel lived up to its reputation and while the Wireless Spectrum: Paying for Air panel wasn’t as strong, I found some of the comments by Dean Brenner, VP Government Affairs for Qualcomm, to be illuminating regarding some technical issues.

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