Aligning Policy Goals with Policy Outcomes

This recent story in the Financial Post caught my eye, suggesting Industry Canada rejected a proposed spectrum licence transfer (sale) from WIND Mobile to SaskTel prior to the recent AWS3 auction. The decision seems in keeping with 2013’s Framework Relating to Transfers, Divisions and Subordinate Licensing of Spectrum Licences for Commercial Mobile Spectrum, which was (in part) meant to increase competition by preventing spectrum concentration in market leaders. The question is will Industry Canada’s decision actually increase competition?

First, some context. WIND Mobile won the licences in question during 2008’s AWS spectrum auction. They currently operate their cellular networks in BC, Alberta, and Ontario but have not deployed in Saskatchewan — nor built networks in Manitoba, Northern Quebec, Atlantic Canada, the Yukon, North West Territories or Nunavut, also areas they won licences. These areas are all smaller markets and it seems likely that WIND will focus on their current operating markets for the foreseeable future, looking to deploy LTE networks in the areas where they secured AWS3 licences.

WIND’s AWS licences were won as part of a new entrant set-aside. According to the Policy Framework for the Auction for Spectrum Licences for Advanced Wireless Services and other Spectrum in the 2 GHz Range, “licences obtained through the set-aside may not be transferred to companies that do not meet the criteria of a new entrant for a period of 5 years from the date of issuance.” This moratorium on set-aside spectrum has lapsed though — the AWS auction occurred 6.5 years ago. What’s more, SaskTel counted as a “new entrant” in the AWS policy framework.

To be eligible for the set-aside, a new entrant is defined as:
An entity, including affiliates and associated entities, which holds less than 10 percent of the national wireless market based on revenue. 

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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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CSPR & the pending 700MHz auction

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One of the big challenges in updating this site is being so busy between classwork, my ‘day job’, and the work I’m doing with the Canadian Spectrum Policy Research group at Ryerson University. I end up doing a lot of research duties for the principal investigator while also writing for the website. Not that I’m complaining, as it’s some of the more fun and interesting work that I get to do, since my research position is much more focused on my area of studies than most of my coursework.

The most recent update to our site was the page on upcoming 700 MHz auction itself. One of the main tasks of the CSPR project is to help translate the often technical and seemingly arcane information around spectrum policy into something that can be more accessible to the general public. It’s can be a challenge to walk that line between providing enough information and detail to allow interested people to get a more critical understanding of the issues then they find in the media — not to mention the PR war between national incumbents and government.

I think our (my) write up strikes a nice balance, and was encouraged when a (day job) coworker shared that she was able to closely follow along with a radio segment on the auction after having read a draft of the page. Success! I was also glad for the opportunity to sketch out some thoughts under the heading “Potential Auction Results”, as this was my first time to document some of my more industry-specific analysis.

So this post gets to pull double duty. It serves as an update and also links to my Research Associate position with CSPR, which I don’t think I’ve mentioned here.

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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Harold Innis and Canadian Telecom Policy

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The last semester my focus had been a bit split.

I came into the year working on a report for Public Safety Canada through Ryerson’s Privacy & Cybercrime Institute. We were tasked with putting together a comparative analysis of strategies and policies states were undertaking involving both pulic and private sectors. It was quite interesting and while not directly focused on my core research, it was definitely related to Canada’s digital policy and was a great opportunity to help contribute to the policy formation process.

More directly, I have had the opportunity to work on a research project around the 700 MHz spectrum auction. Up until now it had been rather short term but with the research leads SSHRC-funding being approved, the team is looking to formulate a longer term project around the auction process. My role is still to be determined, as my part-time graduate student status may have an impact on hours I can be offered. That said, I’m currently working with the post-doc to put together a paper for submission to an academic journal by the end of the summer.

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Email amongst Friends leads to Musings about Telecoms

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A graphic designer/illustrator friend of mine emailed to ask of my thoughts were regarding the new branding for Sportsnet due to my interest in the Canadian telecom sector. Thought I’d make some additions and edits, and turn my reply into a post.

James brought up it’s positioning vis-à-vis TSN, Canada’s leader in sports broadcasting, and some potential latent Americanization with the red, white[-ish] and blue colour scheme. I wasn’t actually aware of the re-brand being busy with school and not having TV. And as I primarily play attention to the distribution side of things instead of content, my regular news feeds didn’t have anything on it. Googling brought up a Globe & Mail article that stated it was a Hollywood firm that did the new logo but they also did SportsCentre on TSN.

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Fragmented markets, higher costs

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You would be hard pressed to find anyone unwilling to acknowledge telecoms importance in supporting economic, political and social development in both advanced and emerging countries. Shifts to knowledge-based economies and greater global integration of newly industrialized states — even agricultural economies — all benefit from increased broadband (both wired and wireless) penetration and available bandwidth, even if that benefit is currently uneven. The impacts of globalization allows for immense economies of scale that can help drive down infrastructure costs.

With LTE’s emergence as the de facto 4G infrastructure of choice over WiMax, benefits should be able to pass along to consumers but one of the remaining challenges for international travellers will be the variation of frequencies for technologies. Another, related, will be the amount of networks phones will need to support over the next little while. 2G, various 3G technologies and the new LTE-Lite (and eventually LTE-Advanced).

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Spectrum, how ‘scarce’ is it?

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With the ongoing AT&T-T-Mobile proposed merger continuing to attract a lot of attention, I’m using it as a good comparative analysis case study for spectrum politics in Canada. Especially when seen as a proxy for the assumed spectrum crunch coming due to an explosion in the usage of wireless broadband for smartphones and other devices.

The problem is, of course, while there’s definitely evidence of increased data consumption, the spectrum crunch is less clear and straightforward.

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One way to speed up advanced network deployments

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While I haven’t had much chance to start on another book, I’ve been increasing the amount of telecommunications feeds to my information stream. It’s stimulating questions and areas of inquiry for me to be thinking about as I look to start classes in the fall. I’ve requested CC8940 – The Political Economy of Communication and Culture and should be joined by at least one friendly face.

While reading, I came across this story from Engadget, noting Ericsson is testing an LTE-Advanced network achieving mobile 1Gbps downloads in trials.

Not only is Ericsson cranking up the speed, it’s also endeavoring to make the new network more efficient by offering 8×8 MIMO (Multiple-Input, Multiple-Output) functionality, which enables data to be retrieved and sent faster regardless of network congestion.

Of course, these test results are taking advantage of 60MHz available bandwidth, as opposed to the global max of 20MHz and the US standard of 10.

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