Archived—DGRB-001-98 — Inmarsat

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6 September 1998

Director, Space and International Regulatory Activities
Radiocommunication and Broadcasting Regulatory Branch
300 Slater Street
15th floor
Ottawa, Ontario, K1A OC8
Canada
e-mail: DGIR@ic.gc.ca

Dear Sir,

Ref.: Canada Gazette , Part I, 13 June 1998, Notice No. DGRB-001-98

Re: Consultation on Spectrum Licence Fees for Mobile Satellite Services in Canada Using Mobile Satellite Service Spectrum above 1 GHz

Inmarsat is pleased to have the opportunity to respond to your invitation for comments in regard to the above referenced policy proposal.

As you know, Inmarsat operates a global satellite system providing mobile communications to a wide range of users on land, in the air and at sea. The Inmarsat system is used to provide communications to a number of Canadian users both in Canada and abroad. Inmarsat is owned by its Signatories who are designated by member governments. Currently, Teleglobe Canada is the Signatory from Canada, although this role is expected to be taken over in the near future by Stratos Mobile Network which already operates a Land Earth Station facility at Laurentides in Quebec. Inmarsat is currently going through a restructuring process which will convert it into a national law company under UK jurisdiction. The restructured organization will, nevertheless, continue to benefit from the investment and ownership of a wide range of companies from around the world, including from Canada. Several Canadian companies have supplied equipment, components and services in the Inmarsat system. In short, Canada has enjoyed many benefits fro m Inmarsat over many years.

In the above referenced consultation document, Industry Canada proposes to issue spectrum licences to service providers for the use of MSS spectrum above 1 GHz with an annual authorisation fee of $18,000 per 500 kHz. Industry Canada recognises that some assigned frequency bands will be shared by more than one mobile satellite system and that there may be more than one service provider associated with a particular satellite network. Where a particular network is required to share assigned spectrum with one or more other networks, the proposed fee for the network will be one-third of the authorisation fee for an equivalent unshared band. Where more than one Canadian service provider is authorised to use the spectrum associated with a given mobile satellite network, the proposed fee for an individual service provider would be one-half the authorisation fee for the network.

Inmarsat is pleased to provide comments as follows:

Impact of the proposed licensing approach on the provision of MSS in Canada

Until now, Industry Canada has had a regime of relatively low licence fees for individual mobile earth stations . While the annual fee of $41 is low in comparison with many other countries around the world, there is a trend toward class or blanket licences or licence exemptions. The GMPCS MoU and associated Arrangements, for example, advocate class or blanket licences in preference to the licensing of individual terminals. While the proposed new Canadian approach would do away with individual licences in favour of an approach whereby the service provider is licensed, the cost to the SP is likely to be significantly greater than the cost to users under the existing regime. The SP will need to reflect these new costs in the services provided to the customer. Hence, overall, the customer is likely to end up paying more than now.

The consequences of this cost increase would be that the number of potential users may be lower than would otherwise be the case because of the higher associated costs. The impact on Canada would be felt in its socio-economic development by virtue of the reduced use of the service, especially in remote and rural areas where users have no or less than adequate communications by other means.

The impact of the proposed new policy regime could extend beyond Canadian borders since some countries may be inclined to pursue a similar regime.

Appropriateness of the proposed annual fee

The Industry Canada consultation document argues that a domestic satellite system is subject to licensing by its administration while an international satellite system is not - hence the service provider using an international system may have an unfair advantage. It should be noted, however, that the international satellite system is licensed by its notifying administration and any associated licensing fees will be reflected in the charges for space segment supplied to its service providers.

Inmarsat respectfully suggests that there may be other ways for Industry Canada to get the balance right between service providers of domestic and international satellite systems.

Inmarsat encourages Industry Canada to take into account the GMPCS Arrangements as well as the Report of the Opinion 5 Experts Group. As a result of the first World Telecommunication Policy Forum in October 1996, the Director of the ITU's Telecom Development Bureau established a group of experts to examine the socio-economic impacts of GMPCS. The Report was an input (document 162) to the World Telecommunication Development Conference convened in Malta in March. The Report highlighted a number of significant socio-economic benefits accruing to countries as a result of the introduction of GMPCS (Footnote1). Inmarsat believes these benefits are such that it should not be necessary to impose additional financial burdens via licence fees on satellite operators and service providers.

Suitability of using the minimum bandwidth of 500 kHz as the basis for assessing the fee

The consultation document seeks comments on the specific approach whether the unit of 500 kHz with an authorisation fee of $18,000 is appropriate, especially with a view towards divisions of this fee between a number of operators and service providers. Inmarsat comments as follows: 

  1. The authorisation charges for all MSS systems above 1 GHz can not be the same. An administration is likely to have to do more to facilitate MSS in the 2 GHz band than in the L-band. We respectfully suggest that there is a case for differing charges based on the existing usage of the MSS bands.

  2. It is not apparent to us on what basis Industry Canada has determined a licensing fee based on units of 500 kHz at $18,000 per unit. We would be interested to know the rationale behind these figures.

    If the intent is to equalise the satellite licensing charges (X), then granting that the foreign satellite system has already been licensed in another country and that similar requirements may be imposed by several other countries, a suitable percentage (10 per cent) of that figure could be levied as an indirect space segment licence charge. A further relief in the ratio of spectrum used / total spectrum would be justified. Thus, the net charge or authorisation fee Y could be determined as follows: 

    Y = 0.1*X*(spectrum used/total spectrum).

  3. If there are 'n' service providers for a given system, the above fee would be divided equally among them.

  4. Further, Inmarsat respectfully suggests that Industry Canada take into account an important difference between Inmarsat and other systems, i.e., Inmarsat provides distress and safety services recognised within the IMO GMDSS and by ICAO for AMS©S.

The amount of spectrum available for use in the vicinity of North America is determined as a result of the multilateral co-ordination process. A number of meetings have been held between Inmarsat, the Russian Volna system, AMSC, TMI and Solidaridad, all of which have satellites covering the North American region and all of which share the same frequency bands. The amount of spectrum used by each operator is reviewed at these meetings and a new determination of the amount to be used may result. The amount available to Inmarsat as of now for global and spot beams affecting North America is 2 x 13.5 MHz, which includes that available for maritime and aeronautical traffic. Of this amount, only the spectrum for domestic Canadian usage should be counted towards any authorisation charges that may be devised for Inmarsat service providers. We do not know exactly how much spectrum we use in Canada, but could estimate it from call statistics and an estimate of the number of users in Canada.

Inmarsat reuses spectrum between North America, Europe and Africa and in the Pacific Ocean Region, in parts of Asia and Oceania, but such reuse does not impact the North American co-ordination process. Due account of this reuse also should be taken in the Canadian fee-setting process.

Proposed reduction of licence fees where sharing among two or more service providers is required

The consultation document recognises that MSS spectrum may be shared by different satellite systems and different service providers. However, the document seems to provide somewhat arbitrary formulations in regard to the fees.

For example, if the spectrum is shared by four or five or even more satellite networks, why should the fee be based on a formula of one-third? Similarly, if there are more than two service providers sharing the spectrum why should each be required to pay one-half the perceived value of the spectrum. Would it not be fairer to use a formula which is directly related to the number of sharing networks and service providers? Thus, if five networks shared the spectrum, then each would pay a fee based on 20 per cent (not one-third) of the perceived value of the spectrum. Similarly, if there were five service providers, then each would pay one-fifth (not one-half) of the value of the spectrum.

Inmarsat is grateful to have the opportunity to provide comments on the proposed policy. However, we encourage Industry Canada to review again its policy proposal to consider other alternatives which would be more equitable for service providers. We especially urge Industry Canada to take into account the socio-economic benefits achieved through the provision of mobile satellite services, including GMPCS, and, as a result, to construct a policy and regulatory environment which fosters a competitive environment and which encourages satellite operators and service providers to develop their services in the interests of Canada as a whole.

Yours sincerely,

Don Kennedy
Director, International Regulatory Affairs


Footnotes

1. For example, the Report says as a result of authorising GMPCS services, "it is anticipated that there will be an accompanying rise in the overall volume of calls over a country's network. This is because increased access to service leads to greater consumption of that service. The increase in information flows will also stimulate the economy of the country, which will in turn increase the tax base for the government. Ultimately, most countries should recognise that they can benefit from access to GMPCS through improvement in the quality of life of the population, an influx of investment, and participation in the ownership and operations of GMPCS facilities and services."

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