The wireless auction in Canada has concluded after reaching the 4 billion dollar mark.What this auction is about is that the government is freeing up airwaves that are under its control for other commercial uses; specifically cellular services.These are sold in the form of licenses to the highest bidders.Originally, the government only expected about 1.7 billion dollars on this auction so it has far exceeded their expectations.
The big bidders, Rogers, Tellus and Bell, had 60 percent of the licenses reserved for them with the remaining 40 percent for smaller companies and new entrants to the cellular market.This is supposed to increase competition in the marketplace.But will it?
These smaller companies and supposed new entrants are very unlikely to be able to develop national networks and thus providing more competition.Some already hold local networks in large cities so acquisition of these licenses will only increase their very local market share however, with the big boys taking 60 percent of the licenses, they are poised to be able to overcome any increase by the new carriers.In short the competition could be very short lived.
These smaller carriers have paid exorbitant prices for their licenses, and it is questionable if they will be able to use them to competitive advantage.Let us not forget that companies are in business to make money so it only stands to reason that they will not be able to afford to operate these licenses without significant price increases.This leaves them very few options; one of which is investment by foreign companies.
It is within their ability to sell these licenses so only the ones with the deepest pockets will be able to afford them; Bell, Rogers and Tellus.It leaves one to question whether these companies bought on speculation.
Will the consumer benefit from all of this?In the opinion of this writer, no.There is nothing binding the companies to providing better services or more services that are in line with other countries around the world.Canada will still remain one of the most expensive countries in the world for wireless communications.Only government regulation will change this and that is not in the agenda of this government or the opposition parties.It is in fact agreed that lifting of regulations is necessary but the approaches of the political parties toward this varies from deregulation to lifting of some regulation.
Again, the consumer will pay for the excesses of big business, and the government received 4 billion dollars with no strings attached.Only in Canada you say?Pity.