Backgrounder

March 2013

Licensing Framework for Mobile Broadband Services (MBS)—700 MHz Band

In 2008, the Government of Canada took action to facilitate the entry of new competitors in the wireless sector by setting aside spectrum for new entrants and introducing roaming and tower-sharing policies. Since then, new service providers have emerged, and we have seen wireless prices drop by more than 10 percent.

Last year, the Government took further steps to promote competition by introducing measures to encourage robust investment and promote the timely availability of advanced services for Canadians, including those in rural areas. This included removing foreign investment restrictions, a key barrier to capital for smaller wireless providers, and announcing the auction of key 700 and 2500 MHz spectrum in a manner that would promote the sustainability of at least four competitors in every region.

The 700 MHz auction is scheduled to begin on November 19, 2013, and will use the combinatorial clock auction format. This format uses package bids, eliminating the risk that bidders win some but not all of the licences needed for their business case. Bidders can bid on the entire package of licences that they want, on an all-or-nothing basis, rather than trying to bid on a collection of individual licences. Applications are due on June 11, 2013.

The upcoming auction will provide critical additional spectrum for wireless providers in the near term. As announced in 2012, the Government will apply caps in the auctions, enabling four or more service providers in each region to obtain access to spectrum. Auction rules include rural deployment requirements, for carriers with access to two blocks of paired spectrum, to ensure that rural Canadians may benefit from the timely availability of advanced wireless services.

In support of the stated policy objectives of competition, investment and timely deployment to rural areas, carriers intending to form associations to share 700 MHz spectrum may be permitted to participate in the 700 MHz auction separately if they disclose sufficient information regarding their association. These carriers may also request that the spectrum cap apply individually, but they will be required to demonstrate to Industry Canada's satisfaction that they are separately and actively providing services in the region.

Approximately six weeks prior to the auction, qualified bidders will be provided with access to the winner and price-determination tool for the allocation stage, on a website hosted by Industry Canada. One information session and up to three mock auctions will be conducted prior to the auction.

For more on the rules and format of the 700 MHz spectrum auction, please read the Licensing Framework for Mobile Broadband Services (MBS)—700 MHz Band.