* Government sets Nov. 19 to start 700 MHz spectrum auction
* Puts floor on opening bids totaling C$897 million
* Expands roaming, cell tower sharing rules
* No immediate plans to lift foreign limits on big telcos
By Randall Palmer and Alastair Sharp
OTTAWA/TORONTO, March 7 (Reuters) - The Canadian governmentsaid on Thursday it would start the process of auctioning moreprime wireless spectrum on Nov. 19 and announced other stepsdesigned to stimulate competition and reduce high roamingcharges.
In selling carriers the rights to use the additionalfrequencies for wireless service, Ottawa aims to assure at leastfour competitors serve each region of the country. To accomplishthat, it will limit the three dominant carriers, BCE Inc's Bell, Rogers Communications Inc and Telus Corp, to three of four prime blocks in each area.
"Our government's priority is to provide greater wirelesscoverage at lower rates for consumers," Industry MinisterChristian Paradis said in a statement.
Canada's wireless market, which has some of the highestroaming charges in the world, is dominated by Bell, Rogers andTelus, which together command a 90 percent share.
The government sought to weaken their dominance in a 2008auction of airwaves in which it set aside some spectrum for newentrants. Among the upstarts that emerged are Wind Mobile, acarrier in the process of being acquired by Amsterdam-basedVimpelCom Ltd, and closely-held Mobilicity and PublicMobile.
In another measure to promote competition, Ottawa isindefinitely extending a requirement that wireless carriersprovide roaming on their network to rivals, and expanding thatrequirement to all carriers. When introduced in 2008, theroaming requirement, designed to make upstarts more attractiveto customers, applied only to them, and for five years.
But Ottawa stopped short of requiring that networks provideso-called "seamless" roaming, a major win for the Big Three,according to Desjardins analyst Maher Yaghi.
The policy still allows calls to be dropped when a customerstrays out of the coverage area, but gives the customer theright to reconnect on the roaming network.
LOWER BILLS
Canadians have paid among the highest roaming rates in theworld, according to an OECD report from May 2011, and thehighest average bills, according to a September 2010 report fromBank of America Merrill Lynch.
That said, there is some evidence to suggest that thegovernment's overall initiative is succeeding.
Since the 2008 auction, wireless prices for consumers havefallen by 10 percent, Industry Minister Christian Paradis saidin announcing the latest wireless initiative.
Iain Grant, the managing director of telecom consultancySeaboard Group, said the upstart providers had shaken up theindustry and forced the established companies to lower rates.
"In urban centers, they have done an excellent job. Theentire rate structure has in effect been set by Mobilicity andPublic Mobile and Wind," he said, referring to three entrantsthat have offered cut-price talk-and-text deals centered in themost populous cities.
The established providers have defended the rates theycharge, countering that both voice and data usage are higherthan average in Canada and that per-minute or per-megabytecomparisons paint an accurate picture.
VALUABLE SPECTRUM
The latest spectrum to be auctioned is highly valued for itsability to penetrate buildings and travel long distances, and iscompatible with a new mobile broadband technology known aslong-term evolution. LTE is already being introduced into U.S.markets after an auction of the same spectrum four years ago.
Paradis would not say how much revenue he hoped to raisefrom the auction but said he expected there to be stronginvestor interest.
"There is no certainty with this. We put a floor with whichwe are comfortable," he said at a news conference. "We expectthere will be interesting competition."
Ottawa set minimum opening bids totaling C$897 million ($870million) for the auction, with initial applications due June 11.The 2008 spectrum brought in C$4.25 billion.
Analysts expect each of the three main players to pay atleast C$500 million to secure more airwaves. Limited resourcesmay stop some of the newer carriers from bidding aggressively.
In another step that could loosen the Big Three's grip,Paradis said the government would review its policy on thetransfer of spectrum licenses.
That could lead Ottawa to take a more aggressive stance onproposed transfers, and it could veto Rogers' planned purchaseof airwaves owned by Shaw Communications Inc. Shaw bought set-aside spectrum in the 2008auction before scraping plans to build a wireless network.
WHEREVER THEY MAY ROAM
The new rules also step up the pressure on carriers toincrease sharing of antenna towers and sites, and reduce thetime it takes to negotiate such deals.
Municipalities are eager to limit the proliferation ofcellular towers, while incumbent operators that own existingtowers can be slow to reach commercial agreements to share themwith the new entrants or one another.
There are seven blocks available in the wireless spectrumauction, but bidders will likely covet four aligned withspectrum bought by AT&T and Verizon Wireless in the UnitedStates. Verizon is a venture of Verizon Communications Inc and Vodafone Group Plc.
Those carriers hold more sway with device manufacturers andcan push to ensure future smartphones and tablet computers workon those specific frequencies.
The government has said BCE, Telus and Rogers can onlyobtain one of these prime blocks each, leaving the new entrantsand regional cable operators such as Quebecor Inc andShaw to compete for the fourth.
Last March, Paradis reduced foreign investment restrictionson small carriers that have a market share of 10 percent orless. He said on Thursday it was premature to talk aboutexpanding this to the larger companies.
"What we understand is that we would have to hold publicconsultations. We're not there yet," he said. "What we sent hereis a clear signal that we want to have more competition in thetelecom sector."
Shares of BCE, Rogers and Telus slipped between 0.4 percentand 1.7 percent by midday on the Toronto Stock Exchange. Shawwas also down 1.1 percent, while Quebecor gained 0.6 percent.
Vodafone (VOD)
