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Telecoms bid for coveted piece of Canada's 700 megahertz wireless spectrum

OTTAWA - Bidding for a coveted piece of Canada's wireless market starts today.

Experts say the 700 megahertz waves up for auction are particularly valuable because they allow cellphone signals to travel longer distances and penetrate buildings and tunnels where calls are often dropped.

The signal also requires fewer cellphone towers to provide coverage in rural areas.

Ten players are in the game, including Canada's big three telecom companies: Bell (TSX:BCE), Rogers (TSX:RCI.B) and Telus (TSX:T).

Among regional bidders are Quebecor's Videotron (TSX:QBR.B) in Quebec, MTS Inc. (TSX:MBT) in Manitoba, Saskatchewan Telecommunications and Bragg Communications, which operates EastLink in Atlantic Canada. But Wind Mobile's parent, Globalive Communications, pulled out Monday due to a lack of funds.

Meanwhile, it's expected to be weeks before Industry Canada discloses who won licences and how much they paid for them.

The previous auction in 2008 for different spectrum raised $4.3 billion and ushered in a host of new players.

But experts say lack of new competition means this auction won't likely raise as much money as expected, even though it's a more valuable piece of spectrum.

Hopes for foreign competitors to shake up the industry were dashed last September when U.S. giant Verizon dropped the idea of expanding into Canada.

The federal Conservatives say they want a fourth national player in every region of the country to give consumers more choice and to help lower fees.

Wind Mobile wanted to fill that slot, but its majority owner, Russian telecom VimpelCom, decided not to fund its participation in the auction.

Wind, which is up for sale, has more than 650,000 subscribers and operates in Ontario, Alberta and British Columbia.

Another of the smaller players, Mobilicity, is also struggling financially and also up for sale.

Verizon was reportedly considering buying both Wind and Mobilicity last year before dropping its interest in Canada.

The Tories have made some consumer-friendly promises, including legislative changes so big wireless providers will have to renegotiate roaming rates they charge small rivals for using their networks.

It would stop them from charging smaller players more than they charge their own customers for domestic roaming, which is applied when customers use cellphones outside their provider's coverage area.

Rogers, Bell and Telus have large national networks and smaller providers have to negotiate agreements with them to give their customers service when they travel.

The Canadian Press


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