Tuesday, July 22, 2008

Thoughts on the wireless spectrum auction

Much as I'd love to believe Industry Minister Jim Prentice's claims that the recent auction of new wireless spectrum is going to revolutionize the industry in Canada by giving consumers more choice for less money, I don't.

Whether you're one of those early adopters willing to pay Rogers' exorbitant rates to get your hands on the iPhone, or just a Luddite shelling out a $7.95 "system access fee" on your no-option phone for no good reason every month, it should be painfully clear that Canadians pay more than almost anyone else in the world to use cellphones.

The CBC's handy iPhone index calculates that Canadians will pay a minimum of $2,572 over three years to use the new iPhone, under Rogers' cheapest plan. That's well over the global average, and almost three times as much as the basic plan's costs in Switzerland, for example.

I think it's great that new entrants like Quebecor, Shaw, and Yak have bought tiny slices and will presumably soon be rolling out service plans in the near future. I have especially high hopes for Yak because they run a GSM network (currently Rogers is the only one, which explains the iPhone exclusivity) and they've been a genuinely cheap alternative in conventional long distance and Internet service.

But the cynic in me finds it hard to believe that Yak, for example, is going to be particularly motivated to undercut the Big Three's prices after they've just dug themselves a $423-million hole just to get in the game in the first place. The whole thing looks like an oligopoly to me.

I'm trying to be optimistic, but we'll see how this plays out.

As for what Ottawa should do with the $4.5-billion windfall, I normally hate the knee-jerk partisan bitching that usually comes out of the opposition no matter who's in charge, but I find myself nodding in agreement with Liberal critic Scott Brison's suggestion that some of the money should be used to bring high-speed Internet to remote northern and rural communities.

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