An American Solution to an American Problem
18 Pages Posted: 30 Mar 2012 Last revised: 19 Jul 2017
Date Written: March 29, 2012
In March 2012, Industry Canada announced the policy and framework for the auction of the 700 MHz spectrum, Canada’s digital dividend resulting from the 2011 transition to digital television. This seminal event in Canadian telecom has been more than a decade in the making. The Canadian approach has been criticised by some spectrum auction advocates as too tentative (Cave & Foster, 2010). The movement toward auctioning of radio frequencies is a governance process that has gained momentum worldwide; however, its early growth in Canada was challenged by high level spectrum administrators. This paper examines the evolution of Canada’s approach to spectrum auctions in the pivotal period between 1992 and 2002 - a decade which saw Canada’s official position on spectrum auctions take a dramatic change. In 2002, the 1992 Spectrum Policy Framework for Canada was revised to explicitly accept the use of auctioning as a tool of spectrum assignment – a position not supported by the 1992 document.
The provocative title for this paper is taken from the 1997 study, Inappropriateness of Spectrum Auctioning in a Canadian Context, written by Max Melnyk, former Chief of Spectrum Policy at Industry Canada. It is indicative of the essential debate at the highest levels of the Canadian bureaucracy concerning the applicability of spectrum auctions in Canada. This paper looks beyond the obvious government desire for revenue and examines the complex essential arguments for and against spectrum auctions in a Canadian context.
“An American Solution...” sheds light on the institutional, political and industrial power dynamics which preceded the acceptance of spectrum auctions in Canada. At its core, the objective is to illuminate the essence of the debate between the administrative and auction approaches to spectrum assignment. It also addresses important questions of national sovereignty amid the complicated international layers of spectrum management. Though the case study is Canadian, the implications of this research will prove useful for the many countries currently making the change from an administrative model to the market-based auctioning of spectrum rights.
This research draws on extensive interviews with important industry and government figures who shaped Canadian spectrum policy from 1992-2002, as well as archival research on the primary documents submitted to the Department of Communications and, after 1993, Industry Canada. Preliminary research demonstrates a marked difference in the institutional cultures of the Department of Communications and Industry Canada that may have contributed to Canada’s initial hesitance to use auctioning.
Key questions for this study include: Did the change in spectrum oversight from the Department of Communications to Industry Canada in 1993 contribute to the more favourable approach to auctions in Canada? What are the unique challenges faced by Canadian spectrum management?
This paper offers unique and timely research that will contribute to the conference theme area on defining and allocating scarce resources, including spectrum. This research was partially inspired by the 2010 TPRC panel “The Rise of the Wireless Industry” which examined the formative years of the American wireless industry. “An American Solution...” fills a void in Canadian telecommunications research, which has thus far seen little historical-based work. This paper will examine the debate surrounding the constitutive decisions that led to the current administrative approach to wireless communications in Canada and outline broader implications for other countries transitioning to spectrum auction regimes.
Keywords: Spectum, Policy, Auction, Canada, TPRC
JEL Classification: L5
Suggested Citation: Suggested Citation