Rogers
announced that it has reached an "option to purchase" agreement with
Shaw for the wireless spectrum purchased by Shaw in the AWS (Advanced Wireless
Services) band. The statement was part of a number of agreements announced on
Monday, 14 Jan 2013 by Rogers but the only one having a direct impact on the
Algoma District.
In
2008, Shaw spent close to $190 million dollars to purchase wireless spectrum in
the area from SSM to Vancouver Island. Included in this amount was $1.25
million for spectrum in the SSM and Thunder Bay areas.
In
the fall of 2011, Shaw decided not to proceed with plans to develop a traditional
cellular network but opted instead to build a Wi-Fi based network with cellular hardware
access capability fully integrated with its cable network. This made the AWS wireless spectrum they held
redundant to their needs.
Under
the terms of the 2008 spectrum auction, the major incumbent network operators
i.e. Bell, Rogers and Telus are prohibited from purchase spectrum from the new
entrants such as Shaw until 2014. No mention was made of "options to
purchase." Regardless, the Rogers/Shaw sale will need approval from the Competition
Bureau and Industry Canada. The CRTC is not involved in this decision.
Rogers
paid Shaw $50 million dollars upfront for the option to purchase. Since Shaw
paid $190 million originally, and is rumoured to have spent close to a billion
dollars overall in the development of a wireless strategy, it is reasonable to speculate
that if the regulators approve the sale, Shaw will try to recoup as much of their
expenditure as possible and Rogers will end up paying many times more than the
$50 million agreed to for the option.
What
Rogers would do with the spectrum in the Algoma District is open to conjecture.
There does not appear to be spectrum shortage per se in the District but there
is a congestion issue with the existing sites. More cells need to be added to
ease this congestion. How the major
vendors providing the cell and backbone infrastructure in the District - Bell, Rogers
and Tbaytel - achieve this is up to them.
One
of the consequences which the regulators will have to consider when making
their decision is the impact it will have on the other new entrants in the
marketplace. Will companies such as Mobilicity, Public or Wind be able to sell
all or part of their spectrum to an incumbent if the Shaw sale is approved? These companies have spectrum in the north, but I am not aware of any plans to activate their own hardware based service in the area.
In
my estimation third parties will launch some sort of legal or regulatory appeal
of the process and any preliminary decisions the regulators may arrive at.
Stay
tuned; I am sure there will more to follow.
