{"id":174388,"date":"2021-10-19T10:31:36","date_gmt":"2021-10-19T14:31:36","guid":{"rendered":"https:\/\/irpp-policy-options.local\/issues\/how-canadas-wireless-spectrum-policy-drives-up-mobile-rates\/"},"modified":"2025-04-14T03:24:46","modified_gmt":"2025-04-14T07:24:46","slug":"how-canadas-wireless-spectrum-policy-drives-up-mobile-rates","status":"publish","type":"issues","link":"https:\/\/potestlaunch.irpp.org\/fr\/2021\/10\/how-canadas-wireless-spectrum-policy-drives-up-mobile-rates\/","title":{"rendered":"How Canada\u2019s wireless spectrum policy drives up mobile rates"},"content":{"rendered":"

The federal government\u2019s recent auction of much-needed electromagnetic spectrum<\/a>, the airwaves through which mobile communications flow, has once again resulted in very high prices for the three national carriers \u2013 Bell, Rogers and TELUS. These high prices translate into higher costs for the carriers and, therefore, elevated consumer prices for mobile service.<\/p>\n

These high prices for consumers and carriers are the direct result of the government\u2019s decision to allocate much less of the wireless spectrum for new mobile services than have most other countries, and to withhold a substantial amount from the three national carriers, setting it aside for less efficient use by smaller regional carriers.<\/p>\n

Because of similar government policies in earlier auctions, Canada\u2019s three national carriers have had to charge their subscribers an average of $74 per year \u2013 equal to 9.4 per cent of the average bill \u2013 just to cover the cost of acquiring these spectrum rights, which are long-term investments that must earn a return for their shareholders. The prices paid in July\u2019s auction could add another 3.1 percentage points to the average bill, or $25 per subscriber per year, raising the total cost per subscriber to almost $100 per year.<\/p>\n

The electromagnetic spectrum<\/strong><\/p>\n

An enormous variety of wireless communications is transmitted through the electromagnetic spectrum at different frequencies. Early wireless telegraphy, radio broadcasting, television broadcasting, and remote control of devices such as garage-door openers, Wi-Fi and satellite broadcasting are just a few examples. National governments co-ordinate the allocation of broad swaths of spectrum (\u201cfrequency bands\u201d) through the International Telecommunications Union<\/a> to minimize interference problems, and to allow the manufacture of equipment \u2013 television sets, mobile phones, Wi-Fi routers \u2013 that can operate around the world on the same frequencies.<\/p>\n

Individual governments then decide how much of each frequency band to allocate for various uses and how to allocate it among competing users, such as mobile telecommunications carriers. The most common method for allocating the frequencies for mobile communications is a government-managed auction.<\/p>\n

The auction<\/strong><\/p>\n

This year\u2019s mobile spectrum auction once again used \u201cset-asides\u201d \u2013 the practice of reserving a set amount for smaller mobile carriers \u2013 with predictable results: the three national carriers paid an average price that was 3.5 times that paid by the smaller, regional carriers. This was exacerbated by the government\u2019s decision to allocate too little spectrum for the auction. The auction provided only 50 to 62 per cent of the spectrum the GSMA, the international industry association, recommended<\/a> \u00a0countries allocate per national carrier for the new, advanced 5G services. (5G is the fifth generation of mobile technology that offers speeds up to 100 times faster than most current services and facilitates a vast new set of applications, particularly in vehicles, appliances and other devices.) Many countries, including China, Japan, Austria, Finland and Germany, have auctioned at least twice as much spectrum as Canada<\/a> has for new mobile services.<\/p>\n

The result of the Canadian government\u2019s failure to provide enough spectrum for its national carriers is obvious: much higher prices. In the recent auction, the three national carriers paid an average of US$2.61 for one unit of capacity per capita (a MHz\/pop in industry parlance). By contrast, carriers in most other developed countries have paid only a fraction of this amount (see figure 1). In many European countries, auctions of similar spectrum have resulted in prices of less than US$0.20 per capita for a unit of spectrum capacity, because they have freed more of it for mobile services and have not set aside large portions for smaller carriers. Thus, the national wireless carriers in Canada are forced to pay more than 15 times the prices paid by carriers in Germany, France or the United Kingdom.<\/p>\n