Each week millions of Canadians buy lottery tickets as they "imagine the freedom" of hitting it big.  My weekly technology law column (Toronto Star version, homepage version) notes that while the federal government may not have won the lottery, it has certainly hit the jackpot with the wireless spectrum auction that is now in its final stages. The auction was expected to yield roughly $1.5 billion for the federal treasury, yet it may now top $4 billion as the bids have far exceeded initial estimates.  That represents a huge windfall for the federal government as an extra $2.5 billion does not come around every day.

The surplus revenues do more than just conclusively rebut the claims of the big three wireless providers (Bell, Rogers, Telus) who aggressively lobbied against a "set aside" that reserved some spectrum for new entrants on the grounds that it would reduce auction revenues.  As telecom consultant Mark Goldberg noted earlier this month, the auction's success also raises the important question of what to do with the money.  

The immediate response from Ottawa is likely to be that the 2008 Federal Budget earmarked the spectrum auction proceeds to debt reduction.  However, that promise was made when $1.5 billion was expected to be on the table.  With nearly triple that amount at stake, the government could fulfill its commitment to allocate the expected revenues to debt reduction and simultaneously use the surplus proceeds for purposes more directly connected to the issues of wireless, the Internet, and communications in Canada.

At least three possibilities come immediately to mind. 

Read more ›