Canadian auction gets moving: New companies take the lead

As of midday Thursday, Canadian telecom firms had pledged more than $12.8 billion in Canada's first spectrum auction, which puts licenses in the 24 and 38 GHz bands on the block. The top bidder, calling itself 3645908 Canada Inc., was a company backed by Dolphin Communications Fund and Parallel Fund, two New York-based investment firms. A close second was 3537951 Canada Ltd., a company supported by Bechtel Enterprises. The big names, such as AT&T Canada, trailed far behind, putting up less than a quarter of the amount invested by each of the leaders.

The auction allowed all types of companies to participate. "It's a mix of new players and some large players," said Joe Santella, senior manager of strategic market development for Nortel Networks. He expects the auction to last for 45 to 50 days. Industry Canada, the country's version of the FCC, determines the increments that participants can bid, thus controlling the pace of the auction. "It keeps it fair for everyone," Santella said.

Industry Canada has divided the licenses so that six companies could compete in any market. "That seems unlikely," said Lis Angus, vice president of Angus Telemanagement Group. All the licenses, especially in remote markets, probably won't sell. In addition, she suspects that some bidders intend to sell the licenses shortly after the close of the auction.

"My guess is, when the auction is done, we'll see some negotiations," Angus added.

License winners won't have much competition when they reach the market. Maxlink, the current owner of nationwide local multipoint communication services licenses, blames poor technology for the reason it hasn't introduced services yet. Current auction participants hope to roll out services quickly after the auction.

"A lot of them are quite anxious to get going to get a jump on Maxlink," said Roger Poirier, president and CEO of the Canadian Wireless Telecommunications Association.