The Government of Canada will begin to auction the 700 MHz mobile broadband airwaves for telecommunication networks in January 2014. This new spectrum, which can reach remote areas easier, is being offered to service providers to bring high-speed technologies to Canadian residents.
In order to prevent the major telecommunication companies from seizing all available blocks, the government has restricted the number of blocks a provider can win in a certain region (incumbent big companies can bid on only one block, new or smaller entrants can bid on two). This post will look at the auction in some detail.
What is the spectrum auction?
Typically, spectrum auctions are used by a government (not only in Canada but in many countries across the world) to sell the rights (known as licenses) to communicate signals over specific frequencies. Along these lines, the Canadian government is offering licenses to transmit signals over the 700 MHz frequency.
Who are the bidders?
Industry Canada released the updated list of bidders that includes the major telecommunications players as expected along with a few relatively unknown companies. The list is given below:
- Bell Mobility Inc.
- Bragg Communications Incorporated
- Feenix Wireless Inc.
- Globalive Wireless Management Corp.
- MTS Inc.
- Novus Wireless Inc.
- Rogers Communications Partnership
- Saskatchewan Telecommunications (SaskTel)
- TELUS Communications Company
- The Catalyst Capital Group Inc.
- Vidéotron s.e.n.c.
Why is the auction good for us (the consumer)?
The government reports that new policies have fostered competition and offered lower rates for consumers. According to this fact sheet, the average price of wireless plans has fallen by 20% in the last few years. A usual comparison that is brought up, when talking about wireless plans, is the rates in the US and how Canada fares relative to that. The answer depends on the package/plan.
Wall Communications Inc. prepared a detailed report for Canadian Radio-television and Telecommunications Commission and Industry Canada, which offers more insight (here). Also, there are options such as Republic Wireless for the cost-conscious US consumer.
As Canadian consumers, we would be remiss to not notice that the major three telecommunication companies still control >85% of the wireless airwaves and about 90% of the market share. Nonetheless, the domination has diminished to some extent considering that they held around 99% of the airwaves prior to 2008 (please see fact sheet link above).
The government’s wireless policy has helped Canadian consumers to some degree through more choice and better rates. It will be interesting to watch how the auction goes and what the winners (whether incumbent or new) will bring to the table. Nevertheless, a cost-conscious investor may choose to use VOIP to fulfill many of their calling needs and invest in the telecommunication companies. For more information about the upcoming spectrum auction, please refer to this page.
What do you think about your current plan? Do you think service plan rates will go down and/or consumers will get more options to choose from (company-wise and/or plan-wise)? Any other thoughts/insights about the auction?
About the Author: Clark works in Saskatchewan and has been working to build his (DIY) investment portfolio, structured for an early retirement. He loves reading (and using the lessons learned) about personal finance, technology and minimalism. You can read his other articles here.
Welcome to the Million Dollar Journey November 2013 Net Worth Update. For those of you new to Million Dollar Journey, a monthly net worth update is typically posted near the end of the month (or beginning of the next) to track the progress of my journey to one million in net worth, hopefully by the time I’m 35 years old (end of 2014 – soon!). If you would like to follow my journey, you can get my updates sent directly to your email, via twitter (where I have been more active lately) and/or you can sign up for the Money Tips Newsletter.
Lets start off with one of the favorite topics here on MDJ – the stock market. In October, the market was particularly strong which somewhat carried over to November. The TSX took a baby step to new highs with a 0.8% gain over the month. The S&P500 also continued the climb to new highs with a strong 2.4% gain and the MSCI EAFE (international) index returning 1.8%.
How has my portfolio performed during the month? A mixed bag of results. Even though my RRSP has a large portion of US dividend stocks, it lagged the S&P500 by about 0.8%. My CAD dividend stocks portfolio, however, trumped the Canadian index by about 0.6%, and reached an all time high balance of $135,000. My trading account took a bit of a hit where I dabbled a bit with long call options which didn’t work out in my favour. My U.S non-registered trading account, which I use as my fun money account, has been performing very well this year where I have been trading mostly technology stocks.
In addition to our investments, our savings rate remains status quo. Savings has been our biggest driver of net worth growth over the years and likely to be the biggest driver going forward. The higher the savings rate, the faster financial independence comes as indicated in the post “how much do you need to save for early retirement?”
In the big picture, for the November 2013 update we are up 1.27% for the month and 18.09% for the year. We are up to $922k in assets and up to $815k net worth milestone with about 13 months left in the Million Dollar Journey deadline!
On to the numbers:
Assets: $922,700 (+1.15%)
- Cash: $4,500 (+0.00%)
- Savings: $20,000 (+0.00%)
- Registered/Retirement Investment Accounts (RRSP): $168,000 (+1.63%)
- Tax Free Savings Accounts (TFSA): $53,500 (+0.94%)
- Defined Benefit Pension: $47,200 (+0.64%)
- Non-Registered Investment Accounts: $185,000 (+2.78%)
- Smith Manoeuvre Investment Account: $135,000 (+1.50%)
- Principal Residence: $309,500 (+0.00%) (purchase price adjusted for inflation annually)
Liabilities: $107,400 (+0.28%)
- Principal Residence Mortgage (readvanceable): $0 (0.00%) (Paid off in 2010!)
- Investment LOC balance: $107,400 (+0.28%)
Total Net Worth: ~$815,100 (+1.27%)
- Started 2013 with Net Worth: $690,400
- Year to Date Gain/Loss: +18.09%
Readers suggested to chart my net worth progress over time. Below are the net worth values since Dec 2006 with data points taken semi annually. If you cannot see the chart, please click here.
- December 2006: $198,500
- June 2007: $254,695
- December 2007: $279,300
- June 2008: $310,483
- December 2008: $309,950 (rough second half)
- June 2009: $355,850
- December 2009: $399,600
- June 2010: $456,910
- December 2010: $505,800
- June 2011: $558,713
- December 2011: $585,228
- June 2012: $631,400
- December 2012: $690,400
- June 2013: $766,300
Some quick notes and explanations to net worth questions I get often:
The $4,500 cash are held in chequing accounts to meet the minimum balance so that we pay no fees (accounting for regular bill payments – ie. our credit card bill). Yes, we do hold no fee accounts also, but I find value in having an account with a full service bank as the relationship with a banker has proven useful.
Our savings accounts are held with PC Financial and ING Direct. We usually hold a fair bit of cash in case “something” comes up. The “something” can be anything that requires cash such as an investment opportunity that requires quick cash or maybe an emergency car/home repair. We also need cash to cover any future tax liabilities.
Where Does the Savings Come From?
We don’t live a lavish lifestyle (how we save money), and we do not carry a mortgage or any other bad debt. The only debt we have is an investment loan (which pays for itself), so we end up pocketing a majority of our earnings. Our earnings come from salaries, private business income (via dividends to shareholders), and eligible dividends from publicly traded companies.
Our real estate holdings consist of a primary residence and REITs
plus a rental property. The value of the principal residence remains valued at the purchase price (+inflation) despite significant appreciation in the local real estate market.
The pension amount listed above is the value of both of our defined benefit pension plans. I basically take the semi annual statement and add the contribution amounts (not including employer matching) on a monthly basis. The commuted value of the pensions are not included in the statements as they are difficult to estimate.
Updated 2013 – My wife has recently changed her job position which has resulted in switching from a defined benefit plan to a defined contribution plan. This amount will be added to the RRSP totals going forward.
Stock Broker Accounts
Another common question is which discount broker do I use? We actually have accounts with multiple institutions. I’m hoping to reduce the number of accounts that we hold in the near future. Here is a review of some of the more popular online stock brokers.