Ottawa postpones auction of spectrum by six months, says delay due to COVID

Ottawa postpones auction of spectrum by six months, says delay due to COVID

OTTAWA — The federal government will delay a planned auction of 3,500-megahertz wireless spectrum by six months, a move that could affect how the Canadian telecom industry rolls out fifth-generation network services.

The December auction, announced earlier this year by Industry Minister Navdeep Bains, will be delayed to June 2021 ”to allow the telecommunications industry to maintain its focus on providing essential services to Canadians during the COVID-19 pandemic,” the ministry announced Friday.

National and regional carriers collectively spend billions of dollars at auction to obtain licences for the spectrum they use for wireless service. The 5G-compatible licences will allow more voice, video and data to be shared between smartphones or with other devices.

While reporting quarterly financial results last month, wireless companies said the prolonged disruption of the pandemic is having a tremendous negative impact on the sales of some types of products, including smartphones, requiring them to suspend their overall financial estimates for 2020 and re-assess their spending priorities.

Even so, many executives said they intended to move forward with their 2020 capital spending plans, including spectrum.

“A number of providers have raised concerns, and the government is implementing measures to address them,” a spokesperson for Bains said in an email.

“We continue to support progress toward the next generation of connectivity all the while ensuring that our networks remain strong and resilient in the face of global pandemic challenges and realities.”

In the most recent auction, the government raised $3.47 billion for dozens of 600 MHz spectrum licences.

Rogers Communications spent $1.72 billion, about half the total raised last year, after winning 52 licences in competitive bidding against its rival carriers.

“Our networks are the backbone of so much of our economy and as we continue to roll out Canada’s first 5G network, driving innovation and productivity, we look forward to accessing 3,500 MHz spectrum as soon as it is available,” Rogers said in an emailed statement.

Telus Corp., which spent $931.2 million for 12 licences as the second-biggest spender in the 600 megahertz auction, said Friday that it has long been ready to make the crucial investment in 3,500 MHz spectrum and network infrastructure required for 5G networks.

“While we would like to see the auction proceed as soon as possible, we appreciate the government’s recognition of facilities-based carriers for keeping Canadians connected at all times, even during the pandemic,” a Telus spokesperson said in an emailed statement.

And Freedom Mobile, which spent nearly $492 million for 11 licences in its territories as the third-highest spender, said it supports the decision to provide the industry and government to prepare for the 3,500 MHz auction.

“A well-run auction process will ensure that Canadians and the Canadian economy will benefit from strong competition in wireless and 5G for years to come,” a Shaw spokesperson said.

Unexpectedly, Bell Canada didn’t purchase any of the 600 megahertz licences last year. It said at the time it had sufficient spectrum to fill its immediate needs, although it looked forward to participating in the 3,500 MHz auction.

The 3,500-megahertz band of spectrum will be important because carriers are using it as a building block for their 5G networks. More equipment for carriers and smartphone hardware is expected to work with that frequency band.

Mid-range bands like 3,500 MHz are useful in both urban and rural areas because they have the ability to travel considerable distances and pass through buildings.

Innovation, Science and Economic Development Canada said Friday it will continue to monitor COVID-19’s impact on the telecom industry and that it remains open to further changes to the timelines for spectrum auctions if necessary.

It also announced a consultation starting in August on plans for auctioning 3,800 MHz spectrum, another mid-range band of frequencies.

— by David Paddon in Toronto.

This report by The Canadian Press was first published June 5, 2020.

Companies in this story: (TSX:BCE,TSX:RCI.B,TSX:T, TSX:SJR.B, TSX:QBR.B)

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