Wind Mobile, a relative newcomer to Canada’s telecom industry, will likely boycott an upcoming auction of wireless spectrum because the rules do not give smaller players enough bandwidth to build the most advanced network.

Canada’s Conservative government said on Wednesday it would loosen curbs on foreign investment in the telecommunications sector and also presented rules for a government auction of prized 700 MHz wireless spectrum.

The rules cap how much spectrum Canada’s three biggest wireless carriers — BCE Inc’s Bell Canada, Rogers Communications Inc and Telus Corp — will be able to buy.

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“As I understand that cap system, we will not bid,” Wind Mobile chief executive officer Anthony Lacavera told Reuters. He said that proposed 10 MHz blocks of spectrum would not be enough for his company to build a long-term evolution (LTE) network to compete with dominant industry players.

Each of the three main players are using existing spectrum to build out LTE networks, which promise faster mobile Internet speeds.

“I don’t know how we’re going to be able to successfully raise the financing. We’re going to make our best efforts, but I don’t know how we’re going to raise the financing when there’s technically no way for us to roll out LTE,” he said.

Wind Mobile forced the issue of foreign ownership onto centre stage with its backing from Egypt’s Orascom Telecom, which has since sold assets including Wind to Russia’s VimpelCom.

The auction of the low-frequency 700 MHz airwaves — which travels longer distances and penetrate walls more easily than other spectrum — will take place in early 2013, five years after an auction of the same frequency spectrum took place in the United States.

“This is a classically Canadian solution, which on the surface looks like they gave all market players an opportunity, but at the end of the day what they’ve actually done is hurt the Canadian wireless industry and therefore hurt Canadian consumers,” Lacavera said.

Wind Mobile launched after a 2008 spectrum auction in which the government blocked established players from bidding on some airwaves so as to encourage more competition.

Another company that bought set-aside spectrum in that auction, Mobilicity, welcomed the rules for the 2013 auction.

“We’ll be there, we’ll be bidding 100 per cent and we’ll be bidding aggressively,” said Stewart Lyons, Mobilicity’s chief operating officer.

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“It’s good news for the Canadian wireless consumer, that’s for sure. It’s a real strong indication of their (the government’s) commitment to maintaining a competitive environment, which means lower prices, greater availability of technology, proliferation of devices.”

He said it was possible to build an LTE service on just 10 MHz, although he acknowledged it would not be optimal.