Archived — Notice No. DGTP-015-98

Industry Canada

Review of The Spectrum Cap Applied to Providers of Personal Communications Services

Industry Canada
Radiocommunication Act

Notice No. DGTP-015-98

1. Intent

The purpose of this Notice is to solicit public comment on whether to continue, modify or rescind the application of a limit on the aggregate amount of spectrum that can be held by providers of Personal Communications Services (PCS).

2. Background and Discussion

The Policy and Call for Applications for Wireless Personal Communications Services in the 2 GHz Range, dated June 15, 1995 (Notice No. DGTP-005-95/DGRB-002-95) established the regulatory framework for the implementation of PCS in Canada and invited eligible entities to apply for licences to provide PCS. Among other matters, the Policy addressed the issue of the potential for the existing cellular service providers to use their established position in the mobile radio market to their advantage in the new market for PCS if they were awarded licences with the same provisions as new entrants. Among the methods of addressing this matter, a limit on the aggregation of spectrum was established. This limit, commonly referred to as the Spectrum Cap, was set at 40 MHz and consists of frequency assignments for PCS at 2 GHz, cellular radiotelephony and similar public high-mobility radiotelephony services. The determination of the services counted as part of the Spectrum Cap included those services offered by an affiliate of the entity. Footnote 1

The Policy stated that the Spectrum Cap will be in effect during a term of three years from the initial selection of PCS licensees, after which the restriction may be reviewed by Industry Canada. This three-year period will terminate in December 1998 and Industry Canada believes that it is appropriate to review, through public consultation, the application of the Spectrum Cap.

The Policy also indicated that in the absence of exceptional circumstances, no transfer of PCS radio authorizations will be permitted in the first three years after the award of authorizations, after which, the transfer of an authorization to another party will not be allowed without a full review of the application by Industry Canada and the approval of the Minister. The three-year prohibition on the transfer of radio authorizations ends on December 18, 1998.

On December 18, 1995, the Minister of Industry announced his decision to authorize four PCS providers at 2 GHz, following consideration of the applications received in the Call for Applications. In accordance with the Policy, the incumbent cellular service providers, Rogers Cantel Inc. and Mobility Canada, were each authorized 10 MHz PCS spectrum blocks. The new entrant PCS providers, Clearnet Communications Inc. and Microcell Telecommunications Inc., were each authorized 30 MHz PCS spectrum blocks.

In 1985, two licensed Canadian cellular service providers Footnote 2 began offering service in the 800 MHz band. This duopoly provision of cellular radio services served Canada well. By 1995, when public consultation on the PCS Policy was undertaken, the cellular industry was mature, offering service to a significant percentage of Canadians. The advent of PCS provided an opportunity to access additional spectrum for mobile radiotelephony services.

An objective of the Policy was to provide a greater opportunity for competition in the provision of PCS than had existed in the duopoly provision of cellular services, as competition is considered to provide the most efficient means of achieving more aggressive deployment and implementation strategies, lower prices, greater consumer choice and an accelerated introduction of innovative new services.

The Spectrum Cap encouraged new entrants and, therefore, competition, by providing the means to authorize the new entrants the larger 30 MHz PCS spectrum blocks, but also provided the means to allow for the participation of incumbent service providers by recognizing the potential economies of scale and scope they could derive from adapting their networks to provide PCS.

The application of the Spectrum Cap during the initial authorizations of PCS licences in December 1995 appears to have been successful, as it has generated a more competitive market than had existed in the duopoly provision of cellular services in regions where the new entrant PCS providers have established services.

The licensing of the smaller 10 MHz PCS blocks appears to have caused no spectrum shortage to the incumbent cellular service providers in their initial deployment of PCS. However, the implementation of the next generation of PCS technologies, which will be capable of supporting much higher communication capacity services than available today, may present unique technical and economic challenges for any licensee that has limited spectrum in the 2 GHz range.

3. Issues

In order for the Department to assess the relative impact of the potential removal or modification of the Spectrum Cap, we are seeking public comment on the following issues:

  1. Has the original purpose of the Spectrum Cap been served, or is there a need for its retention, possibly with modification? What sort of modification would be appropriate?
  2. Would the removal of the Spectrum Cap lessen or enhance competition? For example, would rescinding the Spectrum Cap remove a barrier to consolidation, which may reduce competition, or would it strengthen service providers and hence promote competition? Does the Competition Act provide sufficient safeguards against anti-competitive industry consolidation?
  3. What would be the effect of the continuation of the Spectrum Cap in the future on the availability of new PCS services and on the growth of these services?
  4. What would be the effect of the removal of the Spectrum Cap on the efficient use of frequency spectrum?
  5. What other matters are relevant to this review of the Spectrum Cap?

Note: The Department plans to conduct a separate public consultation, commencing in early 1999, on the use of PCS spectrum blocks C and E and other spectrum that would eventually be licensed for PCS.

4. Invitation to Comment

Comment is invited on issues concerning the potential removal or modification of the Spectrum Cap.

This Notice is available electronically as follows: World Wide Web (WWW) http://www.ic.gc.ca/spectrum

Written submissions should be addressed to the Director General, Telecommunications Policy Branch, Industry Canada, 300 Slater Street, Ottawa, Ontario, K1A 0C8 and must be received on or before January 22, 1999 to receive full consideration.

All representations should cite the Canada Gazette Part 1 Notice publication date, title, and the Notice reference number.

Respondents are strongly encouraged to provide their comments in electronic format (WordPerfect, Microsoft Word, Adobe PDF or ASCII TXT) to facilitate posting on the Department's web site. Documents submitted via electronic media should be sent to spectrumcap@ic.gc.ca with a note specifying the software, version number and operating Canada Gazette Notice reference number DGTP-015-98.

Our time frame for a decision on the Spectrum Cap is early spring, 1999. Should this schedule be problematic to any entity, it may submit an application requesting temporary relief for a particular geographical area, and for a certain amount of spectrum, pending the outcome of the review. Any such applications will be made available to the public on the Industry Canada Internet site referenced above for comment for a period of 30 days after which the Department will deal expeditiously with the request.

All submissions received in response to this Notice will be made available for viewing by the public two weeks after the closing date of this Notice, during normal business hours, at the Industry Canada Library, 235 Queen Street, West Tower, 3rd Floor, Ottawa and at the offices of Industry Canada in Moncton, Montreal, Toronto, Winnipeg and Vancouver, for a period of one year from the close of the comment period of the Notice. These submissions may also be obtained, for a fee, from:

Organization:
Tyrell Press Ltd.
Address:
2714 Fenton Road, Gloucester, Ontario K1T 3T7 Canada
toll-free telephone: 
1-800-267-4862
United States toll-free telephone: 
1-800-574-0137
Worldwide telephone: 
613-822-0740
Facsimile: 
613-822-1089

and

Organization:
Canada Communications Group
Address:
45 Sacré-CoeurBoulevard Hull, Quebec K1A 0S7 Canada
toll-free telephone:
 1_888_562_5561
Canada toll-free facsimile: 
1-800-565-7757
Worldwide telephone:
 819-779-4335
Worldwide facsimile:
 819-779-2833

Michael Helm
Director General
Telecommunications Policy Branch

Footnotes

Footnote 1

Refer to Section 6.1 of the Policy and Call for Applications for Wireless Personal Communications Services in the 2 GHz Range dated June 15, 1995 (Notice No. DGTP-005-95/DGRB-002-95)

Return to footnote 1 referrer

Footnote 2

 The cellular licences awarded to affiliates of telephone companies were granted on the basis of the operating area of the telephone companies.

Return to footnote 2 referrer

Date modified: