I attended the Canadian Telecom Summit 2011 this week. This show is always a great read on the pulse of Canadian Telecom, attracting leaders and top thinkers from across the industry, who welcome a chance to tell their story to a high level audience of industry, government and media.
The theme that rose to the top this year was wireless spectrum. How boring is that, you ask? Actually it’s a huge topic that dominated this year’s conference with speeches of passion, pride, fervour and outrage.
The fact is that we, the businesses and consumers of the country are gobbling mobile data at a rate that’s accelerating with no end in sight. The people we rely on to keep delivering faster wireless connections are starting to sweat because there’s only so much radio spectrum out there and its on its way to being fully deployed. Canadian operators need more of a scarce and expensive resource and that’s where the debate begins. Someone (government) will need to arbitrate who gets the privilege of bidding for the next blocks of spectrum. The way that auction is structured will ultimately affect us all.
Let’s take a look at how we got here. Mark Henderson is CEO of Ericsson Canada and chairman of the Canadian Wireless Telecom Association. He did a good job at the conference explaining what’s driving such massive growth in wireless data. The average smartphone, he says, generates ten times the volume of wireless traffic as a conventional mobile phone. A wireless PC or tablet, in turn generates ten times the traffic of a smartphone. A lot of people now have smartphones and plenty are moving up to tablets. Each of them is, according to Henderson, now consuming one-hundred times the wireless capacity that they were a few years ago with their voice-only devices. Uh-oh. Every tablet that gets sold is pushing us closer to the edge.
This is one of those problems where the answer seems to be sitting in front of us: Wireless operators need more spectrum. That’s the easy part of the answer. The hard part is that spectrum is a scarce and carefully regulated resource and the amount of it wanted by all the wireless operators is more than what’s physically available. So how to allocate a scarce resource fairly? That was the theme that kept grabbing headlines from this show, as operators made their cases for various methods of allocating the next available block of spectrum.
In a nutshell, the incumbent wireless operators (Bell, Rogers and Telus) made the case that after years of building, investing and growing their wireless networks, they are reaching capacity and need “fair and open” access to the next available blocks of spectrum. ‘Allow us to bid openly for spectrum’ they said, and we will continue to deliver service innovation and faster speeds to Canadians in all regions, including the rural areas where financials returns take much longer. Newer wireless players at the conference, including Globalive (Wind Mobile) and Videotron argued a different case that favoured auction devices such as “caps” (limits on the bidding of certain participants) and “set-asides” (spectrum blocks that are not available to certain bidders) . Set-asides worked in the 2008 auctions, they maintained, and would ensure smaller players had access to spectrum in this auction if they were used again.
Two sets of industry players, both arguing heatedly that their proposals yielded the desired “level playing field”. That’s what made this conference exciting.
The good news it that we have a brand new federal industry minister in Ottawa (Christian Paradis, who attended the conference) who has promised to make spectrum auctions an urgent priority. He pledged at the show to continue the work of his predecessor (former industry minister Tony Clement) at crafting an auction framework that will be fair to all market participants; both large incumbent wireless operators and the newer wireless entrants, including cable companies. The start of a beautiful friendship perhaps? We hope so.