What is happening?
Since then, on Tuesday, at 10 o'clock, Otava has sold the wireless spectrum in the spectrum of 600 megahertz, to a dozen companies applying for rights to use sound waves over the next 20 years. The bidders are the main wireless companies like Bell, Rogers and Telus, along with nine other smaller companies, all of which are listed on the Industrial Canada website.
A name substantially absent from the list is Cogeco Inc. from Montreal, who says he will not be on the run, but claims he is still interested in extending his wireless service.
What is the spectrum?
The spectrum is a term used to describe electromagnetic waves traveling at a certain wavelength. The spectrum is an invisible signal that allows wireless service providers to transmit data over long distances to mobile phones and other devices connected to the Internet. AM and FM radio travel over a certain part of the wireless range. So are television signals. The grubbing group on Tuesday is in the range of 600 megakhertz.
Check out this video explorer for more information on which range is and how it works:
Why are companies competing for it?
A quality wireless network works on a number of different bands, so your device can always receive a signal if one of the spectrum lanes is temporarily unavailable where you are – in a remote rural area, or a few feet below the ground in a parking garage in the city center example.
The safe network has a good mix of low and high megahertz, because, generally speaking, the smaller the number, the better it is to travel long distances and hard-to-reach places. The higher the number, the better it is to move large amounts of data. The relatively low-frequency spectrum in the 600 megahertz band is useful for filling the existing network gaps. With more and more devices connected to the Internet, networks need more and more spectrum to keep that data flowing, no matter where you are.
How does the auction work?
On Tuesday, starting at 10 am, the companies involved in the auction will apply for the rights to use seven blocks of spectrum, in 16 different areas across the country – a total of 112 different blocks. The bids will be anonymous and will work on what is called the "combinatorial clock" format. You can read more about the complicated rules here, but the essence is that it ensures that winning bidders pay more than the bidders from the second place would pay, but nothing more than that. It also ensures that companies receive more blocks from the spectrum to ensure they have a sufficiently large network.
Like the previous one, the auction is set as far as possible to ensure that current operating staff does not cover the full range. In this case, three of the seven spectrum blocks for reaching each market are reserved for new players – which means Bell, Rogers and Telus can not buy them. This is done to encourage other companies to offer services to compete with them. The rules also predict that those newcomers can not turn around and sell their spectrum to the Big Three, at least for the first five years.
There are also minimal bids in each block, also for grabbing. The minimum bid for the Nunavut and Yukon service block, for example, is $ 48,000. But a block of the same range in the south of Ontario will cost at least $ 85,302,000 – as the winning bidder could use that spectrum to sell services to many more people, which would return their investment.
When will we know who wins?
Probably not for a while. To avoid the gaming system – having companies that do not like the bids, just to increase the price for a rival – Ottawa will remain completely silent about how the process takes place up to five days after the end of the bidding.
Analyst Vince Valentini in TD Bank, in a research note last month, expects the process may take a month or two.
In keeping with the slow pace, he also does not expect a fever offer, as some of the big companies are likely to save their money for a higher band range that descends along the line.
So, why should I care?
Well, your wireless service is likely to improve after bidders begin to use their new range. This means that if you are already a wireless client, you should expect less coverage of dead zones and drops of calls, even when companies offer even faster 5G networks. And theoretically, it could give you more options for companies to choose from. A similar auction in 2008 led to the birth of companies such as Wind, Public Mobile and Mobilicity.
But do not expect the account on your cell phone to go down – at least in the short term.
Analysts say telecommunications companies are likely to spend at least $ 2 billion in this auction, and costs like this do not usually encourage them to turn around and cut their prices.
"It takes some time to use this spectrum," says Laura Tribe, CEO of OpenMedia, focused on consumers, but says prices are likely to go a long time.
The tribe lists recent stories about current players who are increasing the prices of large-scale data plans that started at the end of 2017. Companies justified these moves when they were reported because they said they invested and updated their infrastructure to give customers better service.
"This is a really clear example of what it looks like," said the tribe.
She says the auction can be good news for consumers if they manage to get the spectrum into the hands of new companies that can really shake the industry.
But Vincent Valentini of TD says he does not expect new names to be amplified in a big way.
A 2014an auction in which companies spent an average of $ 2.32 per megahertz pop industry metrics referring to the amount of bandwidth passes one person in a coverage area in a spectrum license – raised more than $ 5 billion. The next year, in 2015, the auction of the so-called AWS-3 spectrum, in which Rogers did not even buy, raised $ 2.1 billion or an average of $ 1.49 per megahertz pop.
Valentine does not expect a man's price for this series to go up. "We will be shocked and disappointed if someone wished this 600 spectrum to the point of paying 3 or more per megahertz pop," he said. "And we see very low chances of new entrants trying to disrupt bidding outside their current wireless footsteps."