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    Official Auction Announcement - Speaking Points  
    The Honourable Jim Prentice, PC, QC, MP Minister of Industry  
   

Industry Canada

 
    November 28, 2007  
   

Good afternoon, everyone, and thank you for coming.

I would like to take this opportunity to let you all know that we will hold an auction for Advanced Wireless Services (AWS) spectrum starting on May 27, 2008.

Today I am releasing the policy framework for the auction.

Before I give you the details of how the auction will be conducted, let me explain how we developed the policy framework.

The telecommunications industry has certainly grown in the past few years, with wireless services leading the way. The Canadian wireless market is dominated by three companies that provide service across the country and control 95 percent of the market.

The graphic you received shows how much mobile spectrum is already in use, which companies hold that spectrum and what spectrum will be made available in the auction.

That graphic provides some context for the decisions I am announcing today.

Radio spectrum, the airwaves required for all wireless services, is a finite and valuable resource that is used by all Canadians.

It is up to the government to decide how it is to be managed, in order to best meet the growing and diverse needs of Canadians.

Today marks a new milestone for the industry. The government is making 105 megahertz (MHz) of radio spectrum available, suitable for advanced new wireless services, like high-speed Internet and video, and faster access for cellphones and BlackBerrys.

And this is only the fourth time in Canadian history that such a significant amount of mobile spectrum has been made available.

This is an opportunity for existing providers to enhance their service offerings. The amount of spectrum being made available also makes it possible to consider opportunities for new competitors to enter the market. The introduction of new service providers will help to make Canada's wireless market more dynamic, more competitive and more innovative to meet the growing needs of Canadians.

To come to our decision, we conducted extensive consultations and invited input from all Canadians. We received 60 written submissions.

We also considered the advice of the Telecommunications Policy Review Panel. And we looked into how Canadians feel about the pricing and service they are currently receiving.

Cellphone service was launched in Canada in 1985, and today's wireless networks reach about 98 percent of Canadians.

Yet the number of Canadians using cellphones is still the second lowest take-up rate in the OECD (Organisation for Economic Co-operation and Development), despite the fact the wireless industry took root in Canada in the mid-'80s.

Recent price comparisons show that wireless packages in Canada are often more expensive than those in other countries — especially for wireless data and Internet plans.

A study by the SeaBoard Group found that Canadians pay twice as much on average as Americans or Europeans for both unlimited wireless plans and limited wireless data plans.

Based on our extensive and wide-ranging review, our conclusion is that a more competitive wireless market is in the best interest of Canadians.

We could seek to achieve this objective by inviting existing and new players to bid for this new spectrum — and hope for the best. But this approach would ignore the experience of other countries, which wanted to enhance competition.

We have chosen to put in place measures to encourage new entrants into the market, consistent with what other countries have done, and with what Canada has done in the past.

We recognize that wireless has never been a highly regulated industry like traditional telephone service.
The government has never set rates, and its interventions in this industry have been minimal. Today's decision respects this tradition.

And so today, I am here to announce the details of next May's auction as follows.

A significant portion of spectrum — 65 MHz — will be made available to any and all players in the industry to increase their growth potential.

At the same time, I am taking a step to encourage new market entrants by setting aside 40 MHz of spectrum for only new entrants to bid on.

Why not just let the highest bidder win all?

Because spectrum auctions are infrequent and this is an opportunity to enable new market entry. It is an opportunity to encourage service providers to offer better products, services and even prices.

This is in the best interests of Canadian consumers and businesses.

In addition to setting aside spectrum, we are also mandating roaming and tower sharing — but at commercially negotiated rates.

Tower sharing is common in the telecommunications industry today, much the same way telephone poles are shared. To make our goal of more competition achievable, we want to ensure that new entrants have the same opportunities and the same access to networks and infrastructure as existing providers have had in the past and have today: no more and no less.

Today's announcement will not please some players in the industry. But let us not forget that they already control the vast majority of spectrum for mobile services on the market today. These same players will be able to bid for 65 of the 105 MHz being put up for auction, to augment their already considerable holdings.

The spectrum being set aside amounts to less than 14 percent of the total mobile spectrum that will be in use after the auction.

My goal is to create an opportunity for market entry that will allow Canadians to reap the benefits of a wireless industry that is more competitive and more responsive to their needs.

Our stated policy is to rely on market forces to the maximum extent feasible because competition benefits consumers. And consumers benefit most when markets are as competitive as they can be.

In closing, let me summarize.

The auction will begin on May 27 of next year.

A total of 105 MHz will be made available to wireless service providers.

Of that, 65 MHz will be available to all bidders; 40 MHz will be set aside for new entrants.

We are looking for greater competition and further innovation in the industry. At the end of the day, our goals are lower prices, better service and more choice for consumers and business.

I can now take a few questions from the floor.

I shall leave the technical details to Mr. St. Aubin and invite you to direct such questions to him.

 


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