The head of the nation’s largest telecom company is calling on the federal government to review the way it allocates wireless spectrum in the wake of a record-breaking bidding war for a key frequency to power next-generation 5G networks that netted the feds $8.9 billion.

In an interview Thursday, BCE Inc. President and Chief Executive Officer Mirko Bibic said that the steep prices paid by incumbent telecom carriers under the framework of the 3,500 MHz auction could undermine the federal Liberals’ pledge to drive down wireless bills by 25 per cent by 2023.

“I think, actually, government’s got to take a long, hard look at this. You can’t on the one hand keep driving, from a public policy perspective, keep asking for prices to be lower, and lower and lower, which actually is a laudable goal; but at the same time, [they] designed an auction that’s going to make that very, very difficult,” he said.

BCE – the parent company of BNN Bloomberg through its Bell Media division – spent almost $2.1 billion in the auction to acquire 271 of the licences available, bringing its total share of the 3,500 MHz market to 37 per cent. 

Some 3,500 MHz spectrum had been previously allocated in an earlier auction, well before 5G technology has been envisioned, let alone been identified as needing spectrum at that range.

While Rogers Communications Inc. – BCE’s main national telecom rival – was the big spender in the auction, paying $3.3 billion to scoop up 325 licences, Bibic took umbrage with how Quebecor Inc. was treated under the rules, which he said tilted the tables for the Quebec-focused telecom provider. 

“The way [the government] designed the auction actually ended up being an implied subsidy of $4 billion for regional wireless players. That’s $4 billion that Canadian taxpayers basically subsidized to regional players, and some of these regional players are dominant in their own right: you just have to think of the Quebec wireless player that picked up a lot of set-aside spectrum,” he said.

“The way the auction was designed basically handed $2.3 billion in taxpayer money to Quebecor based on the differential between the prices the national players paid and the prices that they paid for the same spectrum.”

Under those set-aside rules, up to 50 MHz of spectrum was earmarked for telecom providers outside the Big Three of BCE, Rogers and Telus Communications Inc. in a bid to contribute to the competitive environment. Through its Vidéotron division, Quebecor, which was eligible for those set-asides, picked up 294 blocks for almost $830 million, representing a fraction of the cost paid by BCE and Rogers. 

Those blocks were not just in Quebecor’s home province, with more than half of the investment made in four non-core provinces: Ontario, Manitoba, Alberta and British Columbia. 

BCE’s Bibic said that a thorough rethink is in order if supposed regional players are given preferential access to spectrum nation-wide, based on the spirit of the rules and the limited availability of spectrum capable of connecting next-generation devices. 

“If you have restricted supply, and then within that restricted supply you’ve set up a framework that is designed to restrict the supply even further by giving preferential access to that spectrum to only certain players like the regional players, you are going to get the tension that you saw and the prices that you saw.”