Why are There Spectrum Auctions in Canada?

You may have heard about spectrum auctions in Canada in the last couple of years. During these auctions, telecommunications companies such as Bell, Rogers, Telus and Videotron place bids to acquire some precious radio frequencies. You may also have wondered why such auctions are taking place. Today, we will explain to you why there are spectrum auctions in Canada.

Spectrum Management Allows the Government of Canada to Control the Allocation of Radio Frequencies

Radio frequencies are not infinite and a lot of companies covet them. This is why spectrum management is essential. The Canadian government has trusted Industry Canada with the country’s spectrum management.

Canada, like many other countries such as Germany and the United States, has chosen the auction format to allocate the radio frequencies necessary for various telecommunication purposes such as radio and cell phone communication.

The Auction Model Brings Other Benefits Besides Spectrum Management

By using an auction model, the government ensures that the companies that bid on the radio frequencies that become available are legit companies and that they are put to good use. It also allows Industry Canada to keep firm control on how radio frequencies are distributed by doing effective spectrum management.

However, there are other benefits to using this model. First, the auction winners’ bids bring new money for the government that it can use to finance its programs. Another benefit is that it gives better services to Canadian consumers. Indeed, new spectrums allow existing telecommunication companies to expand their service offerings and new competitors enter the market. The bottom line is that Canadians end up paying less for better services.

Are There any Downsides to the Spectrum Auction System?

The spectrum auction system currently in place in Canada, while not perfect, usually generates positive results for the government and for Canadians. However, some people say that it favors big corporations. Indeed, spectrum bids are very expensive and big players like Rogers and Bell do have an advantage over smaller companies with the huge amount of money they can afford to throw at Industry Canada to win auctions. While it’s not impossible for smaller companies to acquire new radio frequencies, it certainly is harder for them.

In the end, we could compare the auction system and capitalism. Just like capitalism, it isn’t a perfect system but it generally works well and there are no better alternatives for the moment.

This concludes this article on why there are spectrum actions in Canada. We hope that you learned a thing or two while reading it!

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