Archived—DGBR-001-98 — Maxem Enterprises International

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Maxem Enterprises International
247 White Clover Private
Ottawa K1T 2B5
(613) 247-0480
MaxemEnt@msn.com

September 10, 1998

Mr. Jan Skora
Director General
Radiocommunication and Broadcasting Regulatory Branch
Industry Canada
Ottawa K1A 0C8

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

Dear Mr. Skora,

I am pleased to provide my comments associated with the Canada Gazette Notice No. DGRB-001-98: Spectrum Licence Fees for Mobile Satellite Spectrum Using Radio Spectrum Above 1 GHz, as announced June 13, 1998.

Note that these comments are the views of the author and do not reflect the views of any previous or future clients of Maxem Enterprises International.

Yours truly,

Max Melnyk
Principal


Consultation on Spectrum Licence Fees for Mobile Satellite Services in Canada Using Mobile Satellite Service Spectrum above 1 GHz Notice No. DGRB-005-98)

General

Before commenting specifically on the subject consultation, a number of other consultations are relevant to this discussion.

These include the fact that Industry Canada has not proceeded further on the conclusion of a previous review of radio licence fees commenced in 1996 (Footnote 1). In addition, the department has proceeded to announce, on an ad hoc basis, a number of radio authorization fees for Mobile Satellite Services (Footnote 2), Direct Broadcasting Satellites (Footnote 3), and Fixed Radio Systems (Footnote 4). These were considered as an interim fee regime, as the department indicated that "the fees may be adjusted in accordance with a market determined valuation, which will be used to establish a general fee framework."

Further in 1997, the department proceeded to consult on the question of spectrum auctioning (Footnote 5) and the fees associated with that process, i.e. the fee as established previously by the department and the value of the spectrum as established through an auction process. This as well has not been concluded with the recent issue of a consultation document on the future framework for spectrum auctions (Footnote 6).

In the present consultation, the fee to be established is a Spectrum Licence Fee, which establishes a fee for the use of the spectrum, and initiates what the department terms a "transition of existing users from apparatus-based to spectrum-based licences." (Note: this transition was never the subject of a separate consultation).

The following comments directly address each section of the subject document provided for consultation:

1.0 Purpose

The purpose is to seek comments on spectrum "access" fees, where access is a terminology not used in previous consultations, and therefore needs a definition in this context.

2.0 Background

Examples should have been provided of the magnitude of the inequities on the basis of fees assessed under each circumstance.

I fail to see how "operations with greater spectrum efficiency could pay more for the same amount of spectrum."

3.0 Proposal

The spectrum approach used for spectrum providers below 1 GHz is to be assessed a radio authorization fee.

3.1 Spectrum Licences

If there is more demand for spectrum licences than are available, is it not the intent then to go to a spectrum auction process?

3.2 Spectrum Licence Fees

The statements made that "it is established government policy that licence fees reflect the economic value of the radio frequency spectrum associated with the licence". If such is the case, then an economic value can only be established through a market-based mechanism, according to the department.

However, the department is able to set a potential value of the spectrum without justification of its value or in comparison with the value of spectrum in other service bands, i.e. what is the rationale for establishing an authorization fee of $18,000 per 500 kHz?

3.3 Shared Frequency Assignments

It is conceivable that sharing of satellite services on a multi-user basis will become more prevalent in the future. How does the department expect to account for these situations.

According to your formula, there may be an authorization fee, and a network fee, but what is the spectrum licence fee?

A network is not defined. Sharing of a network will be 1/3 of the fee, and then the fee for a service provider, providing there is more than one, would be « of the authorization fee?

This requires some examples.

4.0 Invitation to Comment

(1) The impact this change in licensing approach may have on the provision of mobile satellite services in Canada.

The licensing approach is not well explained and appears to be mixed in with a fee change concept.

(2) The appropriateness of the proposed annual fee in reflecting the economic value of the spectrum resource.

There is nothing to compare the proposed annual fee with. There should be an economic rationalization and justification for the level.

(3) The suitability of using a minimum bandwidth of 500 kHz with increments of 500 kHz as the basis for assessing the fee for any particular network.

Again, there is no rationalization or justification for the use of 500 kHz, so how can one comment on it?

(4) The proposed reduction of licence fees where sharing of a common band of radio frequencies among two or more service providers is required.

Are we talking spectrum licence fee or authorization fee. Again the rationalization and justification of the 1/3 and « values are not made.

Conclusion

The establishment of a licensing approach is complicated by the inclusion of the new concept of a spectrum licence fee. Further confusion results from the lack of comparison with other categories of fees and other categories of services.


Footnotes

1. Canada Gazette Part l. Consultation on radio licence fees - Phase l, Industry Canada, March 1, 1996.

2. Canada Gazette Part l. Radio Authorization Fees for Mobile Satellite Services Using Radio Spectrum Below 1 GHz, Notice No. DGRB-001-97, September 20, 1997.

3. Canada Gazette Part l. Radio Authorization Fees for Direct Broadcast Satellites (DBS) Services, Notice No. DGRB-002-97, September 20, 1997.

4. Canada Gazette Part l. Radio Authorization Fees for Fixed Radio Systems in the 38.4-40.0 GHz Frequency Bands, Notice No. DGRB-004-97, October 4, 1997.

5. Canada Gazette Part l. Consultation on Issues Related to Spectrum Auctioning, Industry Canada, Notice No. DGRB-003-97, August 9, 1997.

6. Canada Gazette Part l. Framework for Spectrum Auctions in Canada, Notice No. DGRB-002-98, August 28, 1998.

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