The Canadian government raised more than $5.3 billion this month by auctioning spectrum licences to major national telecom companies. In addition to the established incumbents — Rogers, Bell and Telus — the auction opened the possibility for a fourth nationwide carrier to enter the market. The freshly allocated spectrum should strengthen networks, improve data throughput and, over time, help drive down consumer wireless costs.
Mobile phone prices in Canada rank among the highest globally. A Wall Communications report from 2013 placed Canada near the top in telecom costs, alongside countries such as Japan and the United States. The Global Wireless Matrix report noted that average revenue per user (ARPU) in Canada is substantially higher than in many other markets: ARPU for 2012 was roughly USD 60, compared with about USD 51 in the United States and roughly USD 28 in the United Kingdom.
Given these comparatively high consumer expenses, the newly auctioned spectrum could deliver better coverage at lower prices. More bandwidth gives carriers the capacity to provide faster, more efficient data transfer and to support higher-quality services for customers.
Like other advanced economies, Canada is seeing dramatic growth in mobile data consumption. A Spectrum Demand Study by Red Mobile Consulting projected that data’s share of overall traffic would climb steeply over a short period. The study found data made up around 50% of total traffic in 2010 and expected this proportion to surge to about 95% by 2015. In absolute terms, overall traffic was forecast to rise from approximately 4 petabytes in 2010 to roughly 75 petabytes by 2015.
Rising data use is only one major challenge for Canadian telecom operators. While a significant portion of growth is driven by consumer media such as video and gaming, mobile traffic increases are also shifting business-critical activities onto mobile devices. For example, industry analysis cited in discussions about electronic signature APIs suggests that more than half of business contracts signed electronically could be signed on mobile devices by 2020. That trend represents a fundamental shift in how sensitive corporate information is accessed, handled and transmitted.
As smartphones evolve and more confidential data moves to mobile, security becomes a central concern for carriers and customers alike. A Norton security report highlighted that the average loss from smartphone-related security incidents in Canada rose to $383 in 2013, more than double the 2012 figure of $169. Surveys indicate a large share of Canadians use work phones for personal activities, increasing exposure to threats. Those risks prompted federal scrutiny and led to restrictions on some foreign wireless suppliers in Canada to reduce potential security vulnerabilities.
Canada therefore faces two interrelated challenges: soaring demand for mobile data and growing mobile security risks. Addressing the first requires policies and investment that expand network infrastructure and capacity. Addressing the second demands careful regulation and technical safeguards to protect critical information. Finding the right balance is difficult but necessary; policy must expand access and performance without compromising security. The February spectrum auctions are a step toward striking that balance by increasing network capacity while creating a framework for future regulatory and security decisions.