Archived — Consultation on the 24 and 38 GHz Frequency Bands: Proposed Policy and Licensing Procedures

August 1998
Spectrum Management and Telecommunications Policy


Table of Contents

  1. Introduction
  2. Background
  3. Spectrum Policy Issues
  4. Definition of Licences
  5. Technical Considerations
  6. Licensing Process
  7. Financial Aspects of the Auction
  8. Submitting Your Comments
  9. Further Information

List of Tables

Table 1 - 24 GHz Frequency Block Pairs of 40+40 MHz

Table 2 - Paired Spectrum Blocks in the Frequency Band 38.6-40.0 GHz

Table 3 - Spectrum Licence Package Proposal

Table 4 - Examples of Reserve Prices


Consultation on the 24 and 38 GHz Frequency Bands: Proposed Policy and Licensing Procedures
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1. Introduction

In the Speech from the Throne on September 23, 1997, the Canadian Government reiterated its determination to place Canada at the forefront of the information revolution by making Canada the most connected nation in the world by the year 2000. Providing timely and efficient access to spectrum is one way to allow Canadian equipment manufacturers and service providers to compete and succeed in the global information economy while advancing Canada's connectedness agenda. On June 1, 1998, the Minister of Industry, recognizing that microwave broadband wireless communications is emerging as a potential competitive service offering to connect Canadians, announced that Industry Canada is launching a spectrum licensing process for the 24 GHz and 38 GHz microwave bands.

Through this discussion paper, Industry Canada initiates consultation on a competitive process to issue spectrum licences for exclusive access to spectrum blocks in the 24 GHz and 38 GHz bands in service areas across Canada. Prospective licensees are encouraged to provide comments to the Department on the various issues discussed in this consultation paper.

Following the closing date for receipt of comments to this consultation paper, copies of all the submissions will be made available to the public through Industry Canada's web site, Industry Canada libraries, and a commercial printing and copying service. We recommend that respondents provide their comments in electronic format to facilitate posting on the Department's web site.

Shortly after the close of the comment period, a reply period of approximately 21 days will follow to give the public an opportunity to respond on the initial comments. Again, the submission of comments in electronic format is strongly encouraged. After the closing date of this second period, these "reply comments" will also be made available to the public.

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2. Background

2.1 Spectrum Developments

In October 1996, Canada became one of the first countries to designate broadband wireless spectrum for Local Multipoint Communications Systems (LMCS) services.1 LMCS is a wireless broadband system, in the band 25-28 GHz, that is capable of carrying basic and advanced telecommunication services. The Minister of Industry awarded LMCS licences to three companies through a comparative licensing process. It was the Department's stated intention at that time to make available for licensing, via an auction process, additional LMCS spectrum two years hence.

On June 1, 1998, the Minister of Industry announced that there would be a postponement in the licensing of further spectrum in the band 25-28 GHz for LMCS for at least 18 months. This deferral was in response to a number of developments which had taken place over the past two years including: a shift in the business focus for LMCS from the residential market to the business market, the licensing delay for LMCS spectrum in the U.S., and the subsequent delay in the development of equipment for this band.

The Minister also announced that in order to accommodate the increased demand for high speed local access telecommunications infrastructure, the Department would make available for licensing new spectrum in the 24 GHz and 38 GHz bands. This spectrum is aligned with that in the United States, thus Canadian service providers can take advantage of the economies of scale offered by a combined North American equipment marketplace. A number of manufacturers are developing radio equipment that can operate in these bands.

2.2 Auction Process

In February 1996, Industry Canada announced its intention to introduce the use of spectrum auctions where reliance on market forces to select licensees was in the public interest2. Auctions offer a number of advantages such as:

  • the ability to promote economically efficient use of spectrum;
  • openness and objectivity as an assignment mechanism;
  • procedural efficiency; and,
  • the ability to yield an appropriate return to Canadians for the use of a public resource.3

The Radiocommunication Act was amended in June 1996 to give the Minister of Industry the explicit authority to use spectrum auctions. In August 1997, Industry Canada initiated a public consultation process on auction implementation issues with the publication of Canada Gazette Notice DGRB-003-97 announcing the availability of a document entitled Consultation on Issues Related to Spectrum Auctioning.4

It is the Department's view that in addition to the general advantages of an auction process discussed above, the following factors suggest that an auction would be the most appropriate licensing mechanism for the 24 GHz and 38 GHz bands:

  • it is anticipated that the demand for spectrum in these bands will exceed the available supply, at least in some geographic areas; and,
  • an auction will allow for the effective and efficient assignment of the large number of localized licences that will be made available.

Coincident with the release of this paper, the Department is releasing the document entitled Framework for Spectrum Auctions in Canada, which outlines the general framework for all the future auctions the Department may undertake. As discussed more fully in this document, the Department proposes that elements of the general framework for spectrum auctions be adopted for licensing of 24 GHz and 38 GHz spectrum. The Department encourages all respondents to this consultation paper to familiarize themselves with the Framework document.

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3. Spectrum Policy Issues

Since the release of the spectrum policy for the 23 GHz and 38 GHz bands in September 19965, wireless broadband technology in this frequency range has continued to advance. Notably, many more manufacturers have developed broadband wireless products, particularly in the 24 GHz and 38 GHz bands. New and existing telecommunication service providers are considering wireless broadband solutions for the implementation of new systems or expansion of existing networks. There are indications that point-to-point and point-to-multipoint systems operating in the 24 GHz and 38 GHz bands can offer cost effective solutions for service providers wishing to offer competitive voice, data and multi-media services.

The Department proposes to make available 700 to 900 MHz of spectrum in the 38 GHz band and 400 MHz in the 24 GHz band to foster the introduction of new broadband wireless services. In order to accomplish this objective, it is necessary to modify the existing spectrum and licensing policy for the 38 GHz band and develop a new policy for the 24 GHz band. The following sub-sections attempt to identify key frequency band structure, allocation, and eligibility issues for public comment.

3.1 Frequency Band Structure

It is recognized that the operation of broadband wireless systems in frequency bands above 20 GHz have many challenges including radio propagation at these frequencies and rapidly changing technology. Point-to-multipoint technology in particular is in the early stages of development in Canada and the United States. Taking these factors into account, the Department is of the view that the frequency band structure should align as closely as possible with other administrations to ensure the greatest availability of equipment, minimize costly customization requirements and ensure a larger equipment market for our manufacturers. In addition, sufficient spectrum should be available to service providers to permit the development of viable business plans and foster competition in the local market place. Other factors, such as the need to coordinate with other operators using adjacent frequency blocks in the same area have to be taken into account.

3.1.1 The 24 GHz Band

In Canada, industry is now expressing interest in the 24 GHz band as a result of recent developments in the United States. In 1997, the U.S. opened the frequency bands 24.25-24.45 GHz and 25.05-25.25 GHz to accommodate the Digital Electronic Message Service (DEMS) which was being moved out of the 18 GHz band. This decision by the United States government was made in order to protect planned and existing satellite services in the 18 GHz band. The action resulted in the creation of a new point-to-multipoint band at 24 GHz and the assignment of part, or all, of this spectrum to the DEMS operators. Currently, these operators are working with manufacturers to develop new broadband equipment.

Against this backdrop, there has been increasing interest in Canada to open this spectrum for broadband wireless services. The Department is of the view that it would be in the public interest to allocate some spectrum for the fixed service and establish appropriate spectrum policy provisions.

The following proposals outline the essential policy provisions for broadband wireless services operating in the 24 GHz band:

  1. The bands 24.25-24.45 GHz and 25.05-25.25 GHz shall be allocated to the fixed service on a primary basis (see section 3.2 for allocation proposals).
  2. The fixed service use of the 24 GHz bands is intended for broadband wireless applications including point-to-point and point-to-multipoint systems.
  3. The frequency blocks available for licensing shall be symmetrically paired to facilitate two-way systems; refer to Table 1.
  4. Paired frequency blocks shall be assigned within a geographical area and any paired block will be assigned only once in a service area.
Table 1 - 24 GHz Frequency Block Pairs of 40+40 MHz
Paired Block Lower Frequency Block (MHz) Upper Frequency Block (MHz)
A/A' 24,250-24,290 25,050-25,090
B/B' 24,290-24,330 25,090-25,130
C/C' 24,330-24,370 25,130-25,170
D/D' 24,370-24,410 25,170-25,210
E/E' 24,410-24,450 25,210-25,250

This frequency block arrangement is harmonized with the spectrum designated in the United States.

Interested parties are requested to comment on the 24 GHz band plan. Any alternate band plan proposals are welcome.

3.1.2 The 38 GHz Band

Spectrum in the band 38.6-40.0 GHz was opened for point-to-point fixed systems in September 1996.6 Since then, a number of operators have used 38 GHz radio links for a variety of applications including "last mile" connections for fibre networks and backhaul links for Personal Communications Services (PCS) cell sites. The licensing procedure allows operators to apply, on a first-come, first-served basis, for authority to utilize 50+50 MHz paired blocks in user-defined areas. Since it is possible to coordinate point-to-point systems, the paired blocks may be shared by a number of users where necessary.

The point-to-point links currently authorized in the 38 GHz band occupy five paired blocks in the major urban centers. Consequently the Department is in a position to make available seven to nine paired blocks in the 38 GHz band to service providers who require exclusive use of this spectrum for either point-to-point or point-to-multipoint systems. For this consultation process therefore, steps have been taken to limit current 38 GHz licensing activity to blocks A/A', B/B', L/L', M/M' and N/N' of frequency plan as described in Table 2 below.

The following are the proposed changes to accommodate existing and emerging wireless broadband service requirements in the 38 GHz band.

1. The standard frequency block size will continue to be 50 MHz throughout the frequency band 38.6-40.0 GHz.

2. The following frequency band plan options are offered for consideration:

Option 1: Set aside 700 MHz for broadband wireless services (exclusive use)
Seven spectrum blocks
in the 38700-39050 MHz band and 39400–39750 MHz band (blocks C/C' to I/I' inclusive) will be assigned in 50+50 MHz block pairs, on an exclusive basis. Licensees may deploy point-to-point or point-to-multipoint systems in these spectrum blocks. The remaining seven blocks (blocks A/A', B/B' and J/J' to N/N' inclusive) will continue to be available on a shared basis for point-to-point systems only.

Option 2: Set aside 900 MHz for broadband wireless services (exclusive use)
Nine spectrum blocks in the 38700-39150 MHz band and 39400-39850 MHz band (blocks C/C' to K/K' inclusive) will be assigned in 50+50 MHz block pairs, on an exclusive basis. Licensees may deploy point-to-point or point-to-multipoint systems in these spectrum blocks. The remaining five blocks (blocks A/A', B/B' and L/L' to N/N' inclusive) will continue to be available on a shared basis for point-to-point systems only.

Interested parties are requested to comment on the 38 GHz band plan and proposed options.

3. Licensees are permitted to use any channelling arrangement within the assigned block(s) of spectrum.

4. The "shared" spectrum blocks will continue to be available for deployment of point-to-point systems in the band 38.6-40.0 GHz on a first-come, first-served basis.7 The spectrum policy provisions inSP 23/38 GHz should be modified to reflect current licensing practices. A revised set of spectrum policy provisions for the first-come, first-served paired blocks can be found in Appendix A of this document.

5. With the development of high density broadband wireless systems in the band 38.6-40.0 GHz, the fixed service will be given priority over other service allocations. The authorization of frequency assignments to systems of other services would be conditional on the need to protect the operation and growth of fixed service systems.

Table 2 - Paired Spectrum Blocks in the Frequency Band 38.6-40.0 GHz
BLOCK FREQUENCY LIMITS (MHz) USAGE LICENSING PROCESS EXCLUSIVITY
A/A' 38600-38650 / 39300-39350 point-to-point first-come, first-served shared
B/B' 38650-38700 / 39350-39400 point-to-point first-come, first-served shared
C/C' 38700-38750 / 39400-39450 point-to-point point-to-multipoint auction exclusive
D/D' 38750-38800 / 39450-39500 point-to-point point-to-multipoint auction exclusive
E/E' 38800-38850 / 39500-39550 point-to-point point-to-multipoint auction exclusive
F/F' 38850-38900 / 39550-39600 point-to-point point-to-multipoint auction exclusive
G/G' 38900-38950 / 39600-39650 point-to-point point-to-multipoint auction exclusive
H/H' 38950-39000 / 39650-39700 point-to-point point-to-multipoint auction exclusive
I/I' 39000-39050 / 39700-39750 point-to-point point-to-multipoint auction exclusive
J/J' 39050-39100 / 39750-39800 to be determined to be determined to be determined8
K/K' 39100-39150 / 39800-39850 to be determined to be determined to be determined8
L/L' 39150-39200 / 39850-39900 point-to-point first-come, first-served shared
M/M' 39200-39250 / 39900-39950 point-to-point first-come, first-served shared
N/N' 39250-39300 / 39950-40000 point-to-point first-come, first-served shared

Comments are sought on the amount of spectrum that is required to support the business plans of the operators wishing to continue to deploy point-to-point systems in the shared blocks. Further, comments are sought on the spectrum policy provisions contained within Appendix A.

3.2 Allocation Issues

In Canada, the 24.25-24.45 GHz and 25.05-25.25 GHz bands are not currently used by the services to which this spectrum is allocated. These services include radionavigation and feeder links for broadcasting-satellite space stations. In order to accommodate broadband fixed services in these bands, it is necessary to amend the Canadian Table of Frequency Allocations to include a primary allocation for the fixed service, as shown in the table below.

GHz
CANADIAN ALLOCATION TABLE
24.25 - 24.45 FIXED*
RADIONAVIGATION
24.45 - 24.65 INTER-SATELLITE 882E
RADIONAVIGATION
24.65 - 24.75 INTER-SATELLITE
RADIOLOCATION-SATELLITE (Earth-to-space)
24.75 - 25.05 FIXED-SATELLITE (Earth-to-space) 882G MOD C44 C47
25.05 - 25.25 FIXED FIXED-SATELLITE (Earth-to-space)
882G MOD C44 C47

MOD C44
(CAN-94) Feeder links to broadcasting-satellite space stations operating in the band 17.3-17.8 GHz shall be implemented in the band 24.75-25.25 GHz. In areas where fixed systems have been licensed using a competitive process, future earth stations (Earth-to-space) in the band 25.05-25.25 GHz will be permitted provided that such installations will not cause interference to any fixed systems to be deployed in the authorized service areas.

* modifications indicated by bold letters

Comments are sought on the proposed changes to the Canadian Table of Frequency Allocations and views on suitable sharing and coordination criteria which would facilitate the use of these bands by the fixed service and by incumbent primary services.

3.3 Eligibility

3.3.1 General Principles

One of the key advantages that has led the Department to introduce auctioning as a spectrum assignment tool is the ability of an auction mechanism to award spectrum in an economically efficient manner. Within a competitive environment, a market-based spectrum assignment mechanism will be best able to select licensees who can most efficiently provide the wireless services most valued by Canadian consumers. To ensure that economic benefits are maximized, it is important that licensees will indeed be operating in a competitive market-place.9

The means available to the government to promote a competitive post-auction market-place for broadband services include disallowing the participation of certain firms in the auction and imposing aggregation limits on the amount of spectrum that any bidder may acquire. With regard to these two measures, the Department suggests that the principles listed below should be adhered to.

Principle 1 - A company that currently provides telecommunications services should be restricted from holding certain licences in the following circumstances:

  1. the company possesses market power in the supply of one or more telecommunications services in a region covered by the licence to be auctioned;
  2. a new entrant is likely to use the licence to provide services in competition with the company's existing services; and,
  3. the anti-competitive effects of the company's acquisition of a licence are not outweighed by the potential economies of scope arising from the integration of 24 GHz and 38 GHz spectrum into the company's existing network.

Principle 2 - When multiple licences for the use of spectrum in a given geographic area are auctioned, and these can be used to provide closely substitutable services, limits on the amount of spectrum that any single bidder is allowed to acquire may be required to ensure competitive markets. Spectrum aggregation limits should be imposed only in the following circumstances:

  1. a bidder that acquires a significant amount of spectrum would not face effective competition from providers of services that do not require use of the spectrum being auctioned; and,
  2. the anti-competitive effects arising from the acquisition of a significant amount of spectrum by a single bidder would not be offset by lower costs or higher valued services resulting from holding this amount of spectrum.

3.3.2 Eligibility Requirements

Given the anticipated nature of the market-place that will be served by 24 GHz and 38 GHz licensees and with regard to the first principle stated above, the Department is of the view that no restrictions on bidder eligibility are required. Prospective bidders should note that all entities operating as common carriers must comply with the Canadian ownership and control requirements, as outlined in subsection 10(2) of the Radiocommunication Regulations.

As competition in the local telecommunication market begins to unfold, it is an objective of Industry Canada to foster new and enhanced services. In the case of broadband wireless spectrum, this entails striking a balance between the need to provide sufficient spectrum to support viable business plans, the need to accommodate a range of service providers and address the general principles described above. The Department believes that these objectives can be satisfied by implementation of a spectrum aggregation limit.

In 1996, Local Multipoint Communication Systems (LMCS) spectrum licences of 1000 MHz were awarded to three operators to provide service in 193 communities. Over the past two years the business focus of LMCS has shifted from the residential market to the business market with an emphasis on the provision of high speed data (Intranet/Internet) services. Also during this period, developments in the 24 GHz and 38 GHz bands indicate that competitive access providers want to expand their point-to-point operations to include point-to-multipoint systems in order to better serve the telecommunication requirements of small and medium businesses. As a result, it has become evident that there is little difference between the market focus of the 28 GHz LMCS service providers and other broadband operators using frequency bands such as the 38 GHz band.

In response to these changes, a number of manufacturers have developed, or are in the process of developing, point-to-multipoint broadband technology that can operate in a variety of frequency bands above 20 GHz, including the bands 24 GHz, 28 GHz and 38 GHz. Industry Canada is of the view that the licensing process of the 24 GHz and 38 GHz spectrum should take into account spectrum already awarded in the 28 GHz band to LMCS licensees.

In addition, the Department is concerned that anti-competitive market power could be exercised should the spectrum available to provide these services be concentrated in the hands of too few players. The Department proposes that a spectrum aggregation limit be implemented for the 24.25-24.45 GHz, 25.05-25.25 GHz, 38.70-39.05 GHz and 39.40-39.75 GHz frequency bands10 while taking into account the authorized users of the 28 GHz spectrum. Any entity will be eligible to hold spectrum licences covering, in any service area, frequency assignments aggregating up to a total of 700 MHz of spectrum. This spectrum aggregation within a service area consists of:

  1. spectrum licensed for wireless broadband services in the 24.25-24.45 GHz, 25.05-25.25 GHz, 38.70-39.05 GHz and 39.40-39.75 GHz frequency bands;
  2. spectrum licensed for Local Multipoint Communication Systems (LMCS) in the 27.35-28.35 GHz band; and,
  3. spectrum as defined in i) and ii) above that is licensed to any affiliate11 of the entity.

Further information on the enforcement of spectrum aggregation limits can be found in section 6.2.10 of this document.

If an LMCS licensee does not participate in the auction or does not acquire 24 GHz or 38 GHz exclusive spectrum blocks in the secondary market in its LMCS service area, its 28 GHz licences are not affected by the proposed aggregation limit. However, should an LMCS licensee wish to acquire, either in the auction or in the secondary market, 24 GHz or 38 GHz exclusive spectrum blocks in a particular 24/38 GHz service area, and its existing LMCS coverage area overlaps the 24/38 GHz service area it is acquiring, then its LMCS spectrum assignment will be included in this spectrum aggregation limit.

The Department proposes that this limit on the aggregation of spectrum will be in effect during a term of three years following the close of this licensing process or until a subsequent licensing process is announced for other wireless broadband services, whichever comes first. The aggregation rule will also be observed when the transfer of an ownership interest in a successful applicant is effected.

Comments are sought on the eligibility requirements proposed.
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