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The Spectrum Surplus

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Each week millions of Canadians buy lottery tickets as they "imagine the freedom" of hitting it big.  While the federal government may not have won the lottery, it has certainly hit the jackpot with the wireless spectrum auction that is now in its final stages. The auction was expected to yield roughly $1.5 billion for the federal treasury, yet it may now top $4 billion as the bids have far exceeded initial estimates.  That represents a huge windfall for the federal government as an extra $2.5 billion does not come around every day.

The surplus revenues do more than just conclusively rebut the claims of the big three wireless providers (Bell, Rogers, Telus) who aggressively lobbied against a "set aside" that reserved some spectrum for new entrants on the grounds that it would reduce auction revenues.  As telecom consultant Mark Goldberg noted earlier this month, the auction's success also raises the important question of what to do with the money.  

The immediate response from Ottawa is likely to be that the 2008 Federal Budget earmarked the spectrum auction proceeds to debt reduction.  However, that promise was made when $1.5 billion was expected to be on the table.  With nearly triple that amount at stake, the government could fulfill its commitment to allocate the expected revenues to debt reduction and simultaneously use the surplus proceeds for purposes more directly connected to the issues of wireless, the Internet, and communications in Canada.

At least three possibilities come immediately to mind.  First, several important Internet legislative initiatives have languished due in part to a lack of funding.  For example, the much-delayed anti-spam bill would likely require money to support enforcement.  Similarly, the mandatory security breach disclosure legislation, which would require organizations to inform Canadians if their personal information has been put at risk, may need dollars to support public education and enforcement.  While these bills don't require billions, using a small chunk of the auction proceeds to get them off the ground would be money well spent.

Second, the government could use the money to support innovative community wireless access plans.  These plans attracted considerable attention several years ago as municipalities rushed to establish wireless Internet access in their downtown and business cores.   While some initiatives have failed, successful models have begun to emerge.  Last year, the City of Minneapolis signed on as the "anchor tenant" to provide financial stability for a privately-run wireless network that is set to blanket the city.

There have been some notable Canadian experiments as well - Fredericton, New Brunswick was one of the first communities to create municipal wifi zones - but lack of funding remains a barrier.  Allocating a portion of the spectrum surplus toward encouraging municipal initiatives might allow Canadian cities to leapfrog other countries in providing ubiquitous wireless access in urban areas.

Third, a large chunk of the surplus could be allocated toward fulfilling the goal of ensuring that all Canadians enjoy access to high-speed networks. Canada's broadband global ranking has been steadily declining in recent years with one-third of Canadian communities still without high-speed access.  For those Canadians without access - whether in rural areas or on the outskirts of major cities - the Internet's potential for communication, commerce, access to knowledge, and culture remains largely unrealized.  

In 2001, then-Industry Minister Brian Tobin was unable to convince cabinet colleagues to commit $1 billion toward a national broadband strategy.  As Canadian plans lie dormant, others countries have seized the opportunity.  Australia recently committed A$4.7 billion toward a national broadband strategy that plans to provide 99 percent of its population with broadband access at minimum speeds that are double those offered by most Canadian providers.

Governments should always exercise caution against unwarranted new program spending, however, the spectrum surplus provides a rare opportunity to jump-start Canadian communication networks without the need for new taxes or creative accounting.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at or online at