Notice No. DGRB-004-96

Radio Authorization Fees for Local Multipoint Communication Systems in the 28 GHz Range (LMCS)

Department of Industry Act, S.C. 1995, c.1:

Introduction

LMCS, Local Multipoint Communication Systems, provide a wide band wireless telecommunications common carrier service in the 28 GHz range that will be able to carry basic and advanced communications providing such services as "wireless" cable TV, Internet access, video teleconferencing and various other multimedia services.

On March 9, 1996, the Department of Industry issued Gazette Notice DGTP-003-96 announcing the release of the paper entitled "Local Multipoint Communication Systems (LMCS) in the 28 GHz Range: Policy, Authorization Procedures and Evaluation Criteria" to announce the Department's policy and to initiate a comparative selection and authorization process for these systems.

In addition to calling for expressions of interest and, subsequently, full detailed submissions, the paper sought comments on the proposed radio authorization fees for prospective LMCS service providers.

Generally, interested parties were invited to comment, by April 1, on the proposed annual authorization fee of $0.50 per household per 500 MHz spectrum block in each service area and other aspects of the fees. The Department of Industry has defined 66 service areas in which two 500 MHz spectrum blocks are available now for authorization. The above-noted paper provides maps of these areas and a table with the corresponding number of households and authorization fee for each service area.

The policy paper also states that this is an interim fee regime for LMCS which will be adjusted as a result of market-based information derived from the auctioning in 18 to 36 months of the remaining frequency blocks reserved for LMCS.

In response to the Notice DGTP-003-96, 34 submissions were received from interested parties. Of these, 20 submissions contained comments concerning the proposed fees.

Several of the respondents fully support the Department's broad policy objectives of facilitating the timely and orderly implementation within Canada of wireless telecommunications in the 28 GHz range and fostering sustainable competition and innovative services.

They acknowledge that fixing the fees for an interim period and reassessing them after an auction of the remaining spectrum blocks is a prudent and fair way to ensure that all Canadians receive a reasonable return for the use of this valuable spectrum. Prospective LMCS service providers are eager to offer new wireless services that may compete with cable and local telephone services.

Of the respondents who expressed some reservations or opposition to the interim fee proposal, few provided any analysis supporting an alternative amount or showed how the proposal would adversely affect them.

Revising the fee schedule to accommodate prorated entry fees and to fix an annual renewal fee address concerns raised about lowering the fee during the first year of operation and specifying the term of the radio authorization fee. Complete details of the fees fixed for LMCS are set out in the following fee schedule.

Fee Schedule

The Minister of Industry, pursuant to section 19 of the Department of Industry Act, hereby fixes the following fees, effective April 30, 1996. The fees are applicable to radio authorizations issued by the Minister pursuant to paragraph 5(1)(a) of the Radiocommunication Act to establish local multipoint communication systems (LMCS) in accordance with the terms of the authorization.

Interpretation

1. For the purpose of this fee schedule,

"designated service area" means a geographic area comprised of one or more Canada Post Forward Sortation Areas that contains at least 10,000 households and where two FSAs form part of the same service area when the FSAs are separated by less than 8 kilometres;

"Forward Sortation Area" (FSA) means a geographic area designated by the first three characters of the Canada Postal Code;

"household" has the same meaning as defined by "Statistics Canada" in the 1991 Census;

"local multipoint communication systems" (LMCS) means a wireless local broadband distribution system that uses efficient frequency reuse techniques in the radio frequency band from 25.35 to 28.35 GHz to provide services such as video, data and telephony to residential and business subscribers;

"non-designated service area" means a geographic area outside the boundaries of a "designated service area";

"renewal fee" means the annual fee payable for the renewal of a radio authorization before the radio authorization expires on March 31 of each year.

Annual Radio Authorization Fee

Designated Service Areas

2. The annual radio authorization fee is the applicable fee set out in column IV of Part I of the schedule for each 500 MHz spectrum block in each applicable designated service area.

Non-designated Service Areas

3. The annual radio authorization fee is $0.50 per household per 500 MHz spectrum block in each non-designated service area.

Initial Annual Radio Authorization Fee Payment

4. When the Minister issues an initial annual radio authorization to the applicant, payment of

1. 20 percent of the total value of the annual radio authorization fee that corresponds to the 500 MHz spectrum blocks authorized in each designated or non-designated service area is due within five business days after the date of issuance of the radio authorization; and
2. the balance of the initial annual radio authorization fee for the 500 MHz spectrum blocks authorized in each designated or non-designated service area is due within 30 days after the date of issuance of the radio authorization.

Initial Annual Authorization Fees Adjusted for Prorated Entry

5. The month that the Minister issues the initial annual radio authorization determines the applicable fee adjustment factor used to prorate the initial annual authorization fee.

Designated Service Area

6. The prorated entry fee for each 500 MHz spectrum block in each applicable designated service area is the applicable annual radio authorization fee set out in column IV of Part I of the schedule multiplied by the applicable fee adjustment factor set out in column II of Part II of the schedule.

Non-designated Service Area

7. The prorated entry fee for each 500 MHz spectrum block in each applicable non-designated service area is the annual radio authorization fee of $0.50 per household per 500 MHz spectrum block multiplied by the applicable fee adjustment factor set out in column II of Part II of the schedule.

Renewal Fee

8. The renewal fee is the applicable annual radio authorization fee for each 500 MHz spectrum block authorized in each designated or non-designated service area.

General Notes

All fees are rounded to the nearest dollar.

Maps of the designated service areas are in the document entitled "Local Multipoint Communication Systems (LMCS) in the 28 GHz Range: Policy, Authorization Procedures and Evaluation Criteria" released February 29, 1996.

This is an interim fee regime for LMCS. The fees may be adjusted in accordance with a market determined valuation as a result of a competitive bidding process for the remaining frequency blocks reserved for LMCS.

John Manley
Minister of Industry