Canada finds itself lagging more than two years behind the United States in the transition from analog to digital television broadcasting, a process that could leave millions of Canadians without access to over-the-air television signals. While the elimination of "free TV" would spark outrage in many communities, the most harmful effect of the slow migration will be felt in the competitiveness of Canadian telecommunications, not broadcasting.

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The link between the digital television transition and telecommunications stems from the freed-up spectrum that will become available as broadcasters abandon their analog transmissions. This spectrum -- known as the 700 MhZ spectrum -- opens up a host of possibilities for new innovation, competitors and open Internet access.

The 700 MhZ spectrum will lead to another spectrum auction that could open the door to further entrants into the Canadian wireless market. In fact, some speculate that some would-be bidders stayed out of the most recent AWS spectrum auction (which raised over $4 billion in revenue for the government) in the hope of grabbing some of the MhZ spectrum since it is viewed as technically superior. It more easily penetrates walls, for example, making it ideal for delivering wireless high-speed Internet services.

Industry Minister Tony Clement has the chance to dramatically reshape the Canadian wireless market by establishing a bold policy approach to the auction. For example, as pressure mounts to open up the Canadian market to foreign competition, this auction could provide the entry point. By permitting foreign investors to bid for majority stakes in 700 MHZ spectrum, the government could simultaneously invite increased competition and promote new investment in the Canadian marketplace.

Fill up the 'white spaces'

Moreover, the rules governing the use of the spectrum will also attract considerable attention. In the United States, the Federal Communications Commission has adopted some "open access" requirements, mandating certain openness standards in the use of this spectrum. For consumers tired of the "walled garden" approach of current providers that use both contracts and technology to lock-in consumers, open spectrum policies would spur new innovation and heightened competition by facilitating greater consumer mobility and promote the introduction of new services not tied to a single wireless provider.

In addition to the auctioned spectrum, there is the potential for further unused spectrum to be made available for public use. Known as "white spaces," this spectrum was previously used by broadcasters to ensure that their analog broadcasts did not interfere with one another.

A consortium of companies, including Google, Microsoft and Dell, have argued that this spectrum can be safely used for other purposes. Rather than auctioning the white spaces, they recently persuaded the FCC that the public interest would be better served by allowing anyone to make use of it -- as is the case today with spectrum used for wifi signals. This would allow for the introduction of new services over the white spaces, such as broadband in rural communities or, in the words of Google co-founder Larry Page, "wifi on steroids."

While broadcasters lodged objections to the white space plan, claiming that the new uses could interfere with their digital broadcasts, last week the FCC formally gave the green light to the use of WSDs or white space devices.

We're stuck at the starting line

As the U.S. marches along on this policy front, Canada has not even left the starting gate.

Indeed, it appears increasingly likely that the U.S. approach will be fully implemented by the time Canada gets its act together. While that points to a carbon copy approach, it will ultimately fall to Clement to make the call and to set in motion policies that could change the way Canadians access broadcast, telecom, and Internet services.

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