CIPPIC has signed on to a letter sent by the Public Interest Advocacy Centre to Industry Canada in protest of an announced spectrum transfer that demonstrates the broken nature of Canada's spectrum policy approach. Shaws Last week, Shaw announced its intention to provide Rogers the option to purchase its entire stock of AWS spectrum holdings as part of a comprehensive deal that involves a number of broadcast holdings. While the overall deal is salted to go through soon, Rogers will be prevented from exercising its spectrum purchasing option until 2014. The reason for this is that Shaw's $189 million worth of spectrum, acquired during the 2008 AWS spectrum auction, is subject to set-aside limitations aimed at preserving bands of spectrum for new market entrants. The imposition of this set-aside was animated by the need to instil some competition into Canada's highly concentrated mobile wireless market -- a market which, at the time, was exclusively controlled by three providers: TELUS, Bell and Rogers. It was this set-aside that led to the creation of new entrants such as Mobilicity and WIND by reserving a significant chunk of spectrum for new entrants. Absent such restrictions, the concern is that incumbents will pay well above market value for spectrum solely for the purpose of locking competitors out by denying them access to the lifeblood of any wireless network -- spectrum. The set-aside not only shielded spectrum blocks from incumbent bidding during the 2008 auction itself, but also prevented those bands from reverting to any incumbent for five years following the auction.

Four years later and change, however, the benefits of the AWS set-aside have yet to be fully realized. New market entrants have, with great difficulty, managed to eak out 2% market share in a mobile landscape that remains largely in the hands of incumbents. Meanwhile, the 20 Mhz spectrum band throughout all of British Columbia and Alberta, 10 Mhz throughout all of Manitoba, and 150 Mhz of additional localized spectrum blocks mostly in Alberta, B.C. and northern Ontario which Shaw leveraged its non-incumbent status to purchase has sat idle since the AWS auction. Meaning it did nothing to alleviate Canada's competitive problems. Now it seems clear it never will, as Rogers will purchase it back into the incumbent fold (likely at a windfall to Shaw as the value of such spectrum seems to have increased since the time of the auction). Canadians would have benefited far more from this spectrum had it been designated 'open'. To make matters worse, there will be neither 'use it or lose it' obligations nor open spectrum allocations in the upcoming 700 Mhz spectrum auction, meaning history may well repeat itself. Further, the lack of an explicit set-aside means new entrants will be hard-pressed to gain access to any of the most lucrative of the 700 Mhz blocks or to nation-wide frequency bands. With the 2014 AWS set-aside expiration looming and limited prospect for significant expansion of new entrant holdings, there is a tangible risk that more of the AWS spectrum will follow Shaw's lead and make its way back to the incumbent fold. If Industry Canada wishes to preserve the underlying objective of the initial set-aside, it needs to block this transfer.