Say goodbye to Freedom—and bonjour to Videotron?
Canada just completed a critical 5G spectrum auction for airwaves in the C-band—dedicated 5G airwaves that could greatly speed up phones or offer a new option for home internet. And outside the three big players, all of which grabbed new lanes for their information highways, there are two more firms you'll be hearing more about in the next few years.
The auction offered up 200MHz of airwaves with a guarantee that 50MHz would go to carriers outside the Big Three. Most of that got taken by Videotron and Xplornet, with Videotron pledging to expand its cell phone service outside Quebec and Xplornet saying it's focusing on rural broadband.
This navigable map shows many of the areas where Videotron and Xplornet bought spectrum. It does not include all markets, because I didn't have time to find some latitude-longitude pairs in Tableau, but it gives you a good picture.
With 1.5 million wireless customers in Quebec alone, Videotron is the nation's fourth-largest wireless carrier. CEO Pierre Karl Péladeau says flat out that the company intends to now offer wireless service in other provinces: "Our success in Québec has served Quebecers well. Today, we are taking another step towards bringing leading-edge technology and healthy competition to more Canadian consumers."
Rural-focused carrier Xplornet bought the most airwaves outside the Big Three. The company says it will use them to "deliver fast, reliable and affordable unlimited broadband service to rural Canadians." That may be understating its plans. Yeah, Xplornet didn't take any airwaves in Toronto, Montreal, or all of BC. But it bought some in both major Alberta cities; both SK cities; Winnipeg; and midsized Ontario cities like Guelph.
If Xplornet is really focused on "unlimited broadband service," though, it may not use this spectrum to become a big mobile phone player. 3500MHz airwaves can also be used to deliver home internet, and they can be much more efficient when focused point-to-point as an home internet service than when trying to blanket the country with mobile coverage. Xplornet's 50-80MHz of spectrum across Saskatchewan, for instance, could make it a major ISP player.
The single biggest auction winner was Bell, which in tandem with Telus will be able to extend its spectrum leadership into the era of 5G.
"With our strong 3500MHz spectrum position, we're ready to take the country's top-ranked 5G service even further, leveraging the full capabilities of the technology to help bridge the digital divide with enhanced broadband access for more rural and remote communities," Stephen Howe, Bell's Chief Technology Officer, said in a press release.
Shaw opted out of this auction, which means it's not going to have the airwaves for Freedom Mobile to be an independent, fourth national carrier in the era of 5G. The company is currently trying to merge with Rogers, but Videotron has also said it would like Freedom Mobile's assets. (More below on how Shaw could keep offering competitive service, if it wanted to.)
This map shows many, but not quite all, of the spectrum wins in this auction. I grouped Bell and Telus, and Rogers and Videotron, next to each other in similar colors so you can see how much spectrum they'd have if they shared:
Virtual Carriers Become a Wild Card
You need at least 40MHz of spectrum to offer a competitive service, preferably much more. Bell, Telus, and Rogers are all delivering 80-100MHz services right now, and they'll have more after this. A new player with much less spectrum will get stuck in that Wind/Freedom trap of inadequate performance.
The CRTC provided a potential way out in a ruling in April, where it said the big carriers would be required to share their networks in locations where regionals own spectrum. But I couldn't figure out what the CRTC means by "locations where regionals own spectrum," in terms of whether it's market by market or province-wide.
If it's market by market, pretty much only Shaw, Videotron, and Xplornet could offer nationwide wireless service. If it's province-wide, you could see new services from Eastlink, Cogeco, Sogetel, TBaytel, and others; they all bought small amounts of spectrum in this auction. Pure virtual carriers like Mint Mobile are still excluded, unless they create a partnership with one of the spectrum owners.
In any case, this is why you see Videotron buying small amounts of spectrum in places like Toronto and Niagara Falls. There is no way it could have a viable service on 20MHz of spectrum in Toronto. But it could definitely have a viable service if the other carriers are forced to share their networks because Videotron owns spectrum there.
There are other wild cards in the deck. Videotron has a longstanding relationship with Rogers in Quebec, and it has sold spectrum to Rogers before; the two could partner to share spectrum across the rest of Canada, much like Bell and Telus do. That would improve Rogers service as well, and could help Rogers' problem of always being behind Bell in terms of spectrum in eastern Canada. In this auction, Rogers kept up, but it didn't entirely balance the scales.
We'll be driving across Canada in September for our annual Fastest Mobile Networks Canada project, giving you the latest on the nation's 5G performance this fall.