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Keeping Score of Canada’s Spectrum Auction

Appeared in the Toronto Star on January 29, 2012 as Details of Canada’s upcoming 700MHz auction expected this week

The House of Commons resumes this week with most political attention likely to be focused on the upcoming budget. Around the same time as the budget is tabled, Industry Minister Christian Paradis is expected to unveil Canada’s much-anticipated spectrum auction policy, a decision that will define the competitive landscape for telecom and Internet services for the next decade.

While interest in spectrum auction policy is typically limited to telecom companies and business analysts, all Canadians have a stake in this decision. The available spectrum - known as the 700 MHz spectrum - opens up a host of possibilities for new innovation, competitors, and open Internet access. It is viewed as particularly valuable spectrum since it easily penetrates walls, making it ideal for delivering wireless high-speed Internet services.

Auctioning the spectrum raises a host of critical policy choices. Topping the list is whether the government tinkers with the auction framework to help foster greater marketplace competition. Some of the large incumbents unsurprisingly favour an “open auction” with no bidding limits, but assuming Paradis concludes that some measures are needed, the choice will likely come down to either a spectrum set-aside that reserves some spectrum for new entrants and smaller companies or spectrum caps.

The last spectrum auction included a set-aside, which opened the door to a handful of new competitors such as Globalive, PublicMobile, and Mobilicity. A further set-aside may make sense since this round of new entrants may look to use the spectrum primarily for wireless broadband services, providing a potential alternative to the cable and telecom dominance.

If another set-aside proves too unwieldy, a spectrum cap, which would limit the amount of spectrum any single company could hold, may emerge as the alternative. A spectrum cap might prove effective if combined with two additional conditions.

First, the implementation of a use-it-or-lose it principle that would require all bidders to use the spectrum within a defined period. The use-it-or-lose-it approach would help guard against the hoarding of spectrum, particularly for incumbents who may overbid in the hopes of keeping new competitors out of the market.

Second, safeguards against opportunistic flipping of the spectrum with the prohibition on its sale within the first five years of the auction. The trio of policies - caps, mandatory use, and a block on transfer, may increase the number of successful bidders.

Another critical issue is who should be entitled to bid for the spectrum. The last spectrum auction featured Canadian ownership requirements, thereby limiting potential entrants. Given that Canada is one of the only developed countries that has retained significant telecom foreign ownership restrictions, the auction provides a tailor-made opportunity to eliminate the restrictions by opening the market to all bidders.

The spectrum policy decision will also determine which spectrum is available for auction and which is reserved for alternate purposes. The government has already indicated that it plans to grant some of the spectrum to law enforcement agencies, which intend to create their own emergency wireless network.

Many leading technology companies have recommended allocating some of the spectrum for unlicensed purposes. This spectrum, which would be free to anyone to use without the need for licence or government approval, could yield new services and technologies.

Beyond the technical details of the spectrum auction, the final billion-dollar question is what the government should do with the auction proceeds. While the $4 billion in proceeds from the last auction went into general revenues, this auction represents the best – perhaps only – opportunity to access billions of non-tax dollars for the digital economy.  The money could be used to support broadband initiatives, digital content creation, and digital skills programs.  

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

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Strombo's Soapbox: My Take on Bill C-11

Last night I appeared on George Stroumboulopoulos Tonight with a short "Soapbox" segment to explain mounting concerns over Bill C-11. The program has posted a video version of my comments on some of the digital lock issues in the bill and the demands for SOPA-style amendments.

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"Objective Sanity Check"?: Canada Slips Further in Global Broadband Rankings

Akamai has released its latest State of the Internet Report and it finds that Canada continues to slide in global broadband rankings. Last year, the Akamai report was often favoured by those who took issue with criticisms of Canadian broadband, claiming it offered "an objective sanity check" on comparative broadband speeds. If so, even Akamai now finds Canadian broadband declining when compared to other countries.

Just six months ago, Canada was tied for 9th in average broadband speed. According to the latest report, Canada now sits tied with Hungary for 14th behind countries that include the United Arab Emirates, Romania, the Czech Republic, and Ireland. On the peak connection speed, Canada ranks 19th in the world. The data isn't very impressive on the mobile broadband metrics either. The mobile broadband speed measured carriers around the world including one Canadian carrier. The Canadian carrier ranked 68th worldwide for average broadband speed, below carriers in every region of the world.
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Beware of Surveillance By Design

The video from Ontario Privacy Commissioner Ann Cavoukian's excellent forum on lawful access is now available. Well worth watching.
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CRTC Releases Net Neutrality Complaints Data

The CRTC yesterday released new net neutrality complaints data. The data shows a significant increase in the number of complaints in the last quarter of 2011 when compared with the prior two years. I wrote about the complaints issue in July 2011 based on data obtained under the Access to Information Act.
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European Opposition to ACTA Continues to Mount

European opposition to ACTA continues to mount with Poland's culture minister admitting that it may not be approved by the Polish parliament and the Slovenian ambassador to Japan apologizing for signing ACTA last week.
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Distributel to Offer Unlimited Plans

Distributel, another leading independent ISP, has announced that it plans to offer unlimited plans to customers in Quebec as a consequence of the CRTC capacity based billing decision.
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