Tuesday, July 8, 2008

Cell License Auction is Just About Over, a Little More Competion Coming

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The auction for radio frequency licenses for Canada's new cell phone carriers is drawing to a close. It is starting to look like there will be only one potential new national carrier coming and half a dozen regional carriers. The only company that has a hope to become the next national cell carrier is a company called Globalive Communications, which is better known as Yak, a provider of discount long distance service. The current leaders for regional licenses are Shaw Communication in Western Canada, Quebecor in Quebec and Bragg Communications in Atlantic Canada.

Now that there is an idea of who the new cell phone carriers will be, now the next question is going to be is which cell technology will they use GSM or CDMA? For a new cell phone provider to go GSM would be the smart bet. For Globalive or any of the new regional carriers it would be easier to make one roaming agreement with Rogers than four agreements with Bell, Telus, MTS, and Sasktel. Even for Globalive who intends on making a national network, a roaming agreement will be needed because during the build out in the first couple of years Globalive will only have towers if the major cities with smaller communities won't have coverage without a roaming agreement with an existing provider.

There is another prize in 2010 for any new cell providers if they choose to use GSM the international roaming fees from the Vancouver Winter Olympics. If any new Canadian providers can make roaming agreements with foreign cell phone companies they will take what is expected to be a win fall away from Rogers.

Phones using Google's Android operating system for smart phones about to hit the market in the next year will also weigh heavily on the minds of the operators of any new cell phone carrier. In the United States it is expected that one of the underdog cell providers like T-Mobile or SprintNextel will be the first to offer the Google Android smart phone. If Google makes an exclusive agreement with ether T-Mobile or SprintNextel similar to the exclusive agreement that Apple made with AT&T for the iPhone could help sway any new cell carrier on this side of the border to ether GSM or CDMA. If an exclusive agreement is made with T-Mobile which is a GSM carrier then one or more of the upstart carriers will more likely go GSM. If an exclusive agreement between Google and SprintNextel a CDMA carrier comes then it will be likely that at least one of the new carriers will use CDMA.

If there is one downside of the conclusion of the Wireless telephony auction is the number of regional carriers that could come to the market. That would mean the return of roaming fees for subscribers when travelling outside of the home region. With the emergence of Telus as a national carrier in 2000, and Bell swollowing up Aliant in the past couple of years meant less competition regionally but at the very least roaming fees just about became a thing of the past. Only subscribers of MTS and Sasktel pay roaming fees when travelling outside of Manitoba and Saskatchewan respectively and Bell subscribers pay roaming fees when travelling to Manitoba and Saskatchewan. Subscribers to any to the new regional cell carriers will re-learn what a shocking experience opening the cell bill will be because of roaming fees. The next couple of years will be both an exiting time and a scary time to be a cell phone subscriber in Canada.

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