Notice DGRB-004-97

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

Notice DGRB-004-97 – Radio Authorization Fees for Fixed Radio Systems in the 38.4-40.0 GHz Frequency Bands

Introduction

The opening of the 38 GHz frequency bands will provide new fixed service applications for broadband local wireless facilities and cell site network support for cellular and Personal Communication Services.

On September 7, 1996 Industry Canada issued Gazette Notice DGTP-007-96 announcing the release of the paper entitled Spectrum Policy and Licensing Considerations, Fixed Radio Systems in the 23 GHz and 38 GHz Frequency Bands. The paper set out the new microwave spectrum utilization policy for these bands and initiated a first come, first served selection and an interim authorization process for fixed radio systems operating in these bands.

Interested parties were also invited to comment, by October 22, 1996 on the proposed annual authorization fee that would be proportional to the geographic area being licensed. Specifically, comments were sought respecting: 

1. the appropriateness of applying a fee based on the area served, as defined by the Department (Local Multipoint Communication System service areas) or the user.
2. an annual fee of $20 per square kilometre per paired block that would be applied to each of the 8 pairs of frequency blocks in the 23 GHz band and to each of the 14 pairs of frequency blocks in the 38 GHz band, and an annual fee of $10 per square kilometre per block that would be applied to the 4 single blocks in the 38 GHz band.
3. the methodology that should be used to set fees for predefined or user defined service areas.
4. the use of a competitive bidding process instead of first come, first served when the express demand for spectrum exceeds the spectrum available in a geographic area.

In response to the Notice, 13 of the 14 comments received concerned the proposed fee regime. 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 23 and 38 GHz frequency bands and fostering sustainable competition and innovative services.

Most of the respondents found favour with using the Local Multipoint Communication Systems (LMCS) service areas and the frequency block assignment approach. This approach does not require site-by-site authorization which facilitates the rapid deployment of these bands.

Several of the respondents, however, argued that the level of the proposed fees, which were derived from the LMCS fee of $.50 per household per 500 MHz frequency block and prorated for 50 MHz, would be excessive. Essentially, the fixed cost of the high annual fee level offset the benefit of the low cost of the equipment in the 38 GHz band. Also, the fees were disproportionate because of the different size of the LMCS service areas for cities with approximately the same population.

The proposed fee regime also lacked flexibility to accommodate systems designed to cover part of, or go beyond, the LMCS service area. With respect to auctioning, one respondent recommended immediately auctioning the spectrum to ensure its efficient allocation. Other respondents opined that the Department should reduce the fees and make more spectrum available before proceeding with auctions.

Recognizing these and other concerns, and in view of the significant expressed demand for this spectrum, Industry Canada issued a subsequent 23/38 GHz Information Release on January 9, 1997 giving notice of its intention to introduce certain policy modifications pertaining to the use of both bands in Canada.

Accordingly, the Department has adopted the following policy that will: 

1. accommodate a greater number of licensees to offer service in a given geographical area for spectrum blocks in the 38 GHz band by licensing them on a shared use basis where circumstances warrant.
2. apply the fees to the 38 GHz frequency band only, covering both sub-band 38.4-38.6 GHz (one-way point-to-point, and one-way point-to-multipoint communications systems) and sub-band 38.6-40.0 GHz (two-way point-to-point communications systems).
3. defer fixing fees for the 23 GHz band because of the need for further development of this band.
4. make use of an area grid of hexagonal cells with an area of 25 square kilometres which allows licensees and the Department to define and refer to geographic service areas in Canada in a consistent and simple manner.
5. fix the annual licence fee at $120 per cell per 50 MHz spectrum block. Thus, the fee for a defined service area covering five area grid cells is $600 ($120 x 5) per 50 MHz, one-way; or $1200, two-way.

Complete details of the fees fixed for these systems 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 upon publication in the Canada Gazette of this notice. The fees are applicable to radio authorizations issued by the Minister pursuant to paragraph 5(1)(a) of the Radiocommunication Act to establish fixed radiocommunication systems in the 38.4-40.0 GHz frequency bands in accordance with the terms of the authorization.

Interpretation

1. For the purpose of this fee schedule,

Annual Radio Authorization Fee

2. The annual radio authorization fee is $120 per cell per spectrum block times the total authorized cells.

Initial Annual Radio Authorization Fee

3. The prorated balance of the then-current fiscal year's authorization fee that corresponds to the total authorized cells per spectrum block is due on the date of the issuance of the radio authorization.

Prorated Fees

4. The month that the annual radio authorization is issued determines the applicable prorated fee.

5. The prorated fee is $10 per cell per spectrum block times the total authorized cells for each month until the licence expires on March 31.

Renewal Fee

6. The renewal fee is $120 per cell per spectrum block times the total authorized cells.

General Notes

This is an interim fee regime. The fees may be adjusted in accordance with a market-determined valuation of the spectrum for these types of systems or as other circumstances so warrant.

John Manley
Minister of Industry

October 4, 1997