Canada Auctions 700MHz spectrum

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Canada has recently auctioned its 700MHz spectrum band, formerly used by TV networks to distribute analog TV signals over the air. This was an inefficient use of the spectrum, as the analog compression used was far less efficient than the complex mathematical multiplexing that occurs in today’s wireless standards.

Just a few weeks ago, Canada reclaimed, or re-farmed, the 700MHz bands for use in the ever-growing demand for mobile wireless Internet connectivity, in the hopes of introducing more competition, better prices and better service to Canadians.

What’s new?

If you’re familiar with the way the spectrum works, you’ll know that wavelengths have different frequencies, measured in megahertz (MHz). In short, the 700MHz band carries signals very well over long distances and penetrates buildings, making it well suited for the needs of high-speed wireless standards such as LTE. The result is better coverage for rural areas, which have always found it challenging to obtain high speed broadband connections, and better coverage in buildings, especially those made of concrete.

Another advantage, not necessarily tied to the 700MHz band but more with 4G technologies, is that frequencies are used more efficiently. With standards like LTE, engineers got more creative with data compression algorithms, which means that more people can be connected simultaneously. Once Voice over LTE is introduced, this will also ease the congestion on towers running older standards like 3G HSPA, thus improving service.

Introducing more competition

Another goal for the 700MHz wireless auction was to give yet another shot in the arm to competition in the Canadian mobile space. While the AWS auction in 2008 did allow players like Mobilicity and WIND to spring up nationally and Videotron to do the same regionally in Quebec, it certainly hasn’t turned out as well as the government would hope.

The participants in the 700MHz auction were different this time around, with WIND and Mobilicity being notably absent from the auction and Videotron having a very strong showing getting Spectrum in Quebec, Alberta, British Colombia and, naturally, their home province Quebec. This has led to speculation that the struggling carriers WIND and Mobilicity could be absorbed by Videotron, creating a strong 4th national carrier. While this is all speculative, it does introduce interesting scenarios that Canadians outside of Quebec haven’t been accustomed to.

For one, Videotron, like WIND and Mobilicity, has explored the idea of “Unlimited Data” plans, which the incumbent Rogers, Bell and TELUS have abolished years ago with the emergence of their 3G HSPA networks. While it comes at a stiff price of $80, and isn’t truly unlimited because speeds get throttled after a certain data cap is hit, we can see many power user still preferring this option over tiered data plans. This is without mentioning competitive packages 6GB/$60 plans that aren’t just reserved for existing customers like on the Big 3.

One final aspect that the 700MHz auction does is to level the playing field when it comes to wireless standards. For many years, the Big 3 have touted large LTE networks, while WIND, Mobilicity and Videotron have been limited to HSPA. With their big win in the 700MHz auction, Videotron can now be more competitive with their very own LTE network.

Compatibility with our neighbors to the south

The last important factor in the 700MHz auction is that we are now more in sync with the the US. While both countries have had LTE for a similar amount of time, we’ve haven’t really been on the same page in terms of compatible bands.

The 700MHz auction changes that as Rogers is now aligned with AT&T—unsurprising given their history—and Videotron now has compatible bands with Verizon. What this could potentially lead to more roaming partnerships, handset compatibility for pay-as-you-go options for both Canadians and Americans, as well as the opportunity for bulk purchases.

Handset compatibility

While roaming might not be interesting due to high roaming charges, swapping your personal SIM for a pay-as-you-go local SIM may now become more of a possibility. While this was sometimes possible in the past, the fact that Canada now has carriers that can deploy on the 700MHz band makes this all the more possible.

Bulk purchases

Bulk purchases might be the most interesting prospect of all. We’ve often seen phones go to certain carriers as “carrier exclusives”. While this is unlikely to change in the short term, we believe that the increased purchasing power that Canadian carriers will gain by co-purchasing with an American partner will interest everyone involved: (1) US carriers can have Canadian carriers take on some of the cost of bulk handset purchases, (2) Canadian carriers don’t need specific models to be tuned to their networks, (3) OEMs will sell more handsets with little change in the manufacturing process, and finally (4) customers will have more choices in handsets.

Conclusion

Overall, the 700MHz auction is a win for all Canadians. Wireless carriers get the opportunity to build out their network on some the best spectrum available, Canadians get more choice in plans, service and handsets. Furthermore, increased competition should spur innovation and advancements for Canada as a whole. While it might be a few years before we see these changes take effect rest, you can rest assured that the potential of mobile tech looks more promising in Canada.