Videotron seeks caps in Canada airwave sale

* Proposal would limit incumbents’ purchasing power

* Established wireless companies want open auction

* 700 MHz auction expected in late 2012


TORONTO (Reuters) – Quebecor Inc’s Videotron cable unit wants to be able to buy twice as much low-frequency spectrum as Canada’s three biggest wireless companies in an upcoming airwave auction.

The rules — as yet unwritten — for the valuable 700 MHz spectrum are being vigorously debated by big and small players in Canada’s lucrative but capital-intensive wireless market.

“We propose the use of an in-band spectrum cap,” Videotron Chief Executive Robert Depatie told an industry conference on Wednesday, meaning there would be limits placed on how much spectrum big established players could buy.

Under the Videotron proposal, bidders who already own spectrum in the low-frequency range — meaning the three big national carriers, Rogers Communications, BCE Inc’s Bell Canada unit and Telus — could buy one new block per geographical region.

Industry Canada, the government body that oversees spectrum sales, splits licenses into national and progressively more granular areas.

Those who don’t already own low-frequency spectrum in a particular zone — such as Videotron and other new entrants who bought high-frequency AWS spectrum in 2008 — would be able to buy two blocks.

The 700 MHz spectrum, which is being freed up as television broadcasters switch from analog to digital delivery, is likely to be sold off in late 2012. The low-frequency airwaves are valued for an ability to travel long distances and penetrate thick structures.

Videotron’s proposal assumes the government would sell off the airwaves with frequencies between 698 MHz and 806 MHz in blocks 10 MHz wide.

“The advantages of the Videotron proposal are several. It would not exclude any company from bidding on spectrum, nor would it guarantee that they would succeed. It would not be a set-aside” for new players, Depatie said.

In the 2008 auction, established regional cable companies Videotron and Shaw Communications were allowed to bid on spectrum set aside for new wireless entrants, which the incumbents could not buy — a government rule intended to bolster competition.

Videotron, a unit of Montreal-based media and communications group Quebecor, launched a service in its home province of Quebec late in 2010, while Calgary, Alberta-based Shaw, which also has broadcasting and Internet operations, has delayed its wireless service until 2012.

Three other small firms — Globalive’s Wind Mobile, Mobilicity, and Public Mobile — also bought spectrum in 2008 and offer low-cost service, mostly in urban centers.

Rogers executives have called for no restrictions to be placed on the auction process, while Telus has warned that a bias towards new entrants this time would hamper the rollout of wireless services in rural areas of the country.