Auctions are the latest development in over 100 years of administering radio frequencies: a complex governance process which encompasses international agreements (the International Telecommunication Union), supranational accords (the three global regions set by the ITU, between members of the European Union), and national governments. The international transition to digital television has been prompted by digital transmission’s more economic use of spectrum that has allowed for valuable broadcast-quality frequencies (the digital dividend) to be leased by governments via auction. The 2008 spectrum auction of 700 MHz frequencies in the U.S. generated more than $19 billion dollars for the U.S. federal government.
After decades of spectrum being allocated in Canada via a comparative review process (a system dismissed a “beauty contests” by detractors), auctions are now promoted as a more transparent and efficient method of spectrum distribution. In 2002, Industry Canada revised the 1992 Spectrum Policy Framework for Canada to reflect the change of attitude concerning spectrum auctions:
” …the Department has adopted a number of changes in spectrum policy and management. One specific example is the Department’s adoption of the option of using auctions as a means of determining who should be selected among multiple competing applicants for radio licences where there is not sufficient spectrum to meet projected demand” (Industry Canada, June 2002, p. 2).
The Advanced Wireless Services (AWS) spectrum auction held in Canada in 2008 raised $4.8 billion dollars for the Canadian treasury. To open the doors to new competition in the wireless market, in the AWS auction the government set aside 40% of the available spectrum for companies having less than 10% of the national wireless market based on revenue; and mandated tower sharing and roaming. New carriers such as Mobilicity, Wind, and Public Mobile were able to purchase spectrum and launch new services as a result of this factor in the auction design that prevented incumbent carriers from bidding on all frequencies. Another method of encouraging new competition is via spectrum caps, which limit the amount of spectrum licences that any one company can acquire.
On November 30, 2010, Industry Canada launched a consultation for Canada’s digital dividend: the 700 MHz Band. The superior propagation characteristics of the (sub-1GHz) 700MHz spectrum was seen as critical by carriers to meet rising wireless data demands from wide-scale adoption of smartphones. Industry Canada announced that the available licences will be for 20 years; therefore, the results of the auction will prove foundational for Canadian communications well into the 21st Century. New entrants advocated for another spectrum set aside (of varying sizes) similar to the 2008 AWS auction; whereas, incumbents argued that these new entrants were no longer new and such a set aside posed an unfair advantage. Beyond traditional telecommunications providers, others submitted comments supporting options for set-asides for alternative uses, such as for healthcare services or access to public services.
In March 2012, Industry Canada released the policy and technical framework for 700 MHz band, and outlined steps for the future of the 2500 MHz band. With part of the 700 MHz band (Public Safety Broadband or PSBB) reserved to support wireless broadband services for emergency first responders, the amount of spectrum up left for auction was less than the 2008 AWS auction, with a total of 68MHz available in paired and unpaired spectrum. The 700 MHz auction was held in early 2014. For both the 700 MHz and 2500 MHz auctions, Industry Canada is applying spectrum caps to restrict the amount of spectrum one company can obtain.
Not all Canadian spectrum is being assigned via auction. The assignment of television and radio licences is still done via comparative review conducted by the CRTC, and a first-come-first-served system is still used by Industry Canada for many private and government radio services.