Canada switches gears

Don't fix what's not broken. That old adage was repeated enough times at the annual Canadian Wireless Telecommunications Association convention, two weeks ago in Vancouver, that it could be considered its mantra. Existing operators repeated it in reference to a momentous occasion that will occur in Canada this October-the first license auction in that country.

Industry Canada, our northern neighbor's version of the FCC, decided to try auctioning off licenses in the 24 and 38 GHz spectrum bands. Previously, Industry Canada awarded licenses based on the merit of business plans.

"As players become more sophisticated, the comparative process becomes more difficult. Lobbying becomes more intense, and the likelihood of lawsuits increases," said Jan Skora, director general of the radio and broadcasting regulatory branch of Industry Canada. Money was not the issue in the decision to turn to the auction process, Skora said. "Our politicians are not leaning on us to set and meet targets like in the U.S.," he said. "The key is to get spectrum in the hands of companies that want it and who can roll out quickly."

The auction plan has a number of foes, beginning with existing local multipoint communication service (LMCS) license holders. Although those players owned some of the first LMCS licenses in the world, they still haven't launched.

"We think the auction is premature," said Robert Watson, president and CEO of WIC Connexus. "We haven't had the opportunity to deploy-and that's not for lack of trying."

WIC Connexus has invested time and money into testing equipment, but none has been satisfactory until now. Even equipment vendors would agree with that statement.Before now, products have combined basic functionality with high costs, which results in a marginal business case, said Carlton O'Neal, vice president of marketing and sales for Ensemble Communications. While license owners such as WIC Connexus waited for better products to be developed, they have been paying license fees to Industry Canada.

WIC Connexus probably won't participate in the upcoming auction. It has its work cut out with Toronto and Vancouver among the cities it will launch this year, Watson said.

Even existing PCS players oppose the auction, perhaps in fear of future PCS auctions and more competition. In an auction process, only big companies with deep pockets win, said George Cope, president and CEO of Clearnet Communications. The comparative process was competitive, and auctions would prohibit an independent start-up such as Clearnet from winning a national license, he said. "It's change for the sake of change."

The auction process does have its supporters, though. Their voices were hardly heard at the CWTA convention for obvious reasons-auction supporters weren't at the show because many don't have businesses today. Many companies invested significant time and resources into developing business plans for licenses that they didn't win during previous license award processes. Those companies are anxious for a chance to win licenses in auctions-a process they feel is much fairer.

Wispra plans to take part in the LMCS auction. The company has been offering point-to-point services in the 38 GHz band and applied for licenses in the 25 GHz band before the auction decision was made.

Other players are interested in the auction concept, but not in the proposed format, said John Leon, vice president of marketing and operations at Nortel Networks. "They want the government stepping back," he said. However, they complain that the plan unveiled by Industry Canada is far too restrictive.

354 licenses in 59 service areas

24 GHz band: one 400 MHz license

38 MHz band: one 400 MHz license, four 100 MHz licenses

Licenses have a term of 10 years with high expectaion of renewal.

Auction applications date Aug. 6

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