Saturday, December 1, 2007

Buying electromagnetic spectrum

Anyone interested in speculating on our global wireless futures would do well to note that wireless spectrum auctioned in the United States affects everyone. Let the games begin!

On home turf, things got exciting this Wednesday when Minister of Industry Jim Prentice announced a May 2008 spectrum auction where 40% of the available 2 GHz spectrum will be set aside for new players, and existing carriers (Bell, Telus, Rogers) will have to rent out their cell tower networks so that newcomers can offer roaming services while they build their own networks. (And if they fail to do so at reasonable rates, the government will send the matter to arbitration.)

The government says: "At the end of the day, our goals are lower prices, better service and more choice for consumers and businesses. That is why we are setting aside a portion of radio spectrum exclusively for new entrants into the wireless market."

The Globe&Mail's Report on Business article led with "Cellphone giants lose stranglehold" and as one might imagine, the Big Three were none too impressed. Telus had wanted the government to sell all the spectrum to the highest bidder, and Bell called the decision "one of the most regulatory and intrusive spectrum auctions in Canada." But the writer concluded that while it may be "contrary to pure free market principles [it is] in keeping with the Conservative government's populist approach and its focus on consumers."

Apparently, of all the OECD countries we're second-last before Mexico in terms of mobile phone penetration and popular opinion is that a lack of competition in the wireless arena has allowed for unchecked pricing, which in turn has stifled the industry. For example, Michael Geist estimated that the iPhone could cost $300 a month here. Clearly something needs to give, but I'm not up on my economics. When things like this happen, I have to go talk to my capitalist friends and try to suss out what it means.

For my part, I would have liked to see the government make sure that I can use any phone I want, running any software I want, on any network I want. (Yikes. Does that make me some freaky free-market type?)

And while we're dedicating spectrum - where's the space for non-profits? Or even the health system? (Phew. I think I'm safe!)

In any case, a good diagram of the known electromagnetic spectrum and different countries' management and licensing categories would make it much easier for citizens to understand what it is that someone would want to pay $4.6 billion for--and why they should care if someone does.

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