new iPad heats up race for 700MHz in Canada

new iPad heats up race for 700MHz in Canada

The new iPad

The new iPad came with many exciting features, but for Canadian operators it also came with more issues, possibly creating a game changing tussle for 700MHz in Canada.  Yes, the resolution, processor and camera are all amazing, but buried deep in the very exciting LTE wireless part of new iPad was a good reason to fight for 700MHz spectrum.

In the USA there are two versions:

  1. Wi-Fi + 4G for AT&T model: LTE (700, 2100 MHz)3; UMTS/HSPA/HSPA+/DC-HSDPA (850, 900, 1900, 2100 MHz); GSM/EDGE (850, 900, 1800, 1900 MHz)
  2. Wi-Fi + 4G for Verizon model: LTE (700 MHz)3; CDMA EV-DO Rev. A (800,1900 MHz); UMTS/HSPA/HSPA+/DC-HSDPA (850, 900, 1900, 2100 MHz); GSM/EDGE (850, 900, 1800, 1900 MHz)

Three things really stand out:

  • There is no HSPA in AWS, so without launching LTE, the new entrants cannot have iPad subscribers
  • The Verizon model has no LTE in AWS so LTE is ONLY in upper C block of 700MHz (band 13)
  • The AT&T model has LTE in lower B + lower C 700MHz blocks (band 17) and in AWS

700MHz Implications for Canadian New Entrants

Assuming there is no set-aside, the Canadian incumbents will get Lower B, Lower C and Upper C blocks in 700MHz, so new entrants will be relegated to second class 700MHz in Lower A at best.  Even the Upper C block was split into two parts, this will be an issues for new entrants.

700MHz Implications for Incumbents – Bell, Rogers and TELUS

Since all three Canadian operators will be deploying the AT&T version of the iPad, which only has lower B and C blocks in 700MHz, three operators will be bidding for two blocks.    This means that the customers of at least one of the incumbents will disappointed when they can never use their iPad in rural areas on 700MHz.  There are winners and losers, with no middle ground, as switching to the Verizon version would be pointless as it does not have LTE in AWS, making today’s LTE investment redundant for the losing Canadian operator.

So who will win the lower B and lower C blocks of 700MHz?

Historically Rogers has always won the best spectrum.  They have paid more and almost without exception paid whatever it takes to win the best spectrum.  As a result they have always enjoyed a spectrum rich environment and share a similar ecosystem to AT&T.

But in a make or break situation, where Bell and TELUS have more to gain by winning two blocks of continuous spectrum that they could share across chipsets and networks, one has got to believe they will not give in without a fight?  Bell and Rogers have enjoyed significantly lower capital intensity (10% and 11%) recently versus Rogers at 16% even while rolling out LTE.  So they have some extra cash sitting in their back pocket.

We hope that by raising dividends, that none of the incumbents have given back too much when they might need the extra funding in what now looks like a significantly more competitive 700MHz auction, even without special treatment for the new entrants.

The race for 700MHz really has had the heat turned up, by Apple’s new iPad no less. (c) Alphasynb


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BELL CANADA | Bell committed to bringing the latest broadband wireless services to rural Canada

This is a different way of looking at things:  First he says if Bell cannot compete on a fair basis for spectrum, that they will be forced to concentrate their resources on urban to compete.  Then in the next sentence he says they have the resources to bring the best of global wireless to every region in Canada.  Surely if the new entrants could only afford to compete in urban, Bell would benefit from no competition in rural and thus concentrate resources there?  BELL CANADA | Bell committed to bringing the latest broadband wireless services to rural Canada.

Update:  We have added a piece on wholesale wireless networks.  Maybe the best way around the rural issue is to share networks and halve the build costs?

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