Archived — Consultation on a New Fee and Licensing Regime for Cellular and Incumbent Personal Communications Services (PCS) Licensees

December 2002

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Table of Contents

1. Introduction

One of Industry Canada's priorities is to create a marketplace framework for the wireless telecommunications industry that is fair, efficient, and competitive. This framework would operate in accordance with common regulations, policies and procedures. The telecommunications policy for Canada is set out in section 7 of the Telecommunications Act, whose objectives include fostering increased reliance on market forces for the provision of telecommunications services and ensuring that regulation, where required, is efficient and effective. This provides the stability and efficiency required to conduct business, while maintaining consumer confidence in the products, services and transactions of the marketplace.

Canada's Innovation Strategy was launched on February 12, 2002. The fee regime proposed in this consultation is a step toward a better innovation environment. It aims to build an environment of trust and confidence where the public interest is protected and marketplace policies provide incentives to innovate. Instruments such as legislation, regulations, codes and standards help create the conditions necessary for Canadians to enjoy the social and economic benefits of innovative activities.

Rapid technological advances in the information and communications technologies sector are important innovations in their own right. The unprecedented technological change that has occurred in the cellular and Personal Communications Services (PCS) industry coupled with the evolution of the licensing processes, as well as the different privileges and conditions that have been associated with the various authorizations for these services, are all factors that have created imbalances among service providers. For example, PCS auction licensees obtained 10-year spectrum licences with enhanced privileges such as transferability, divisibility and not requiring site specific radio authorizations. By contrast, cellular and incumbent PCS licensees, who were selected through a comparative licensing process, operate under five-year spectrum licences. They are also required to obtain radio licences, and do not have the enhanced privileges of transferability and divisibility of PCS auction spectrum licences.

In order to rectify the situation, the Department proposes, through this consultation, to amend the five-year spectrum licences of cellular and incumbent PCS licensees to provide them with enhanced privileges similar to those of auction PCS licences, thereby eliminating the requirement for radio licences and introducing a common fee regime. This transition from apparatus-based to spectrum-based licensing will provide cellular and PCS licensees with a more common marketplace framework.

This consultation paper solicits public comments on all issues related to the proposed new framework. Following the March 5, 2003, closing date for receipt of comments on this consultation paper, copies of all submissions will be made available to the public through Industry Canada's Radio Spectrum Management and Telecommunications Web site, as well as through a commercial printing and copying service. Respondents are required to provide their comments in electronic format to facilitate posting on the Department's Web site.

Note that copies of all documents, legislation and policies cited in this document are available on the Department's Web site at: http://www.ic.gc.ca/spectrum.

Certain Rules of Interpretation

In the document:

  • Cellular licensee – is a radiocommunication carrier who operates radio apparatus installed in a base station that communicates on the transmit and receive frequencies in the radio frequency band 869.040 MHz to 893.970 MHz and the transmit and receive frequencies in the radio frequency band 824.040 MHz to 848.970 MHz.
  • Currency – unless otherwise specified, all references to sums of money are in Canadian currency.
  • Headings – refers to the descriptive headings of paragraphs inserted solely for convenience of reference and are not intended to be used as complete or accurate descriptions of content. These shall not be used to interpret the provisions of this document.
  • Incumbent PCS Licensee – is a PCS licensee authorized in the comparative selection and licensing process in 1995.
  • PCS licensee – is a radiocommunication carrier who operates radio apparatus installed in a base station that communicates on the transmit and receive frequencies in the radio frequency band 1850 MHz to 1990 MHz.
  • Number/Gender – the use of words in the singular or plural, or with a particular gender, shall not limit the scope or exclude the application of any provision of the document to such person or persons or circumstances as the context otherwise permits.

2. Background and Context

This section provides background on the regulations, policies and procedures that impact on cellular and PCS licensees and are of particular interest in this consultation.

2.1 Legislation

Under section 5 of the Radiocommunication Act, the Minister may issue radio authorizations including, but not limited to, radio licences in respect of radio apparatus, spectrum licences in respect of the utilization of specified radio frequencies within a defined geographic area, and any other authorization relating to radiocommunication that the Minister considers to be appropriate. The power to issue spectrum licences came into effect in 1996 as a result of amendments to the Radiocommunication Act. This power provides for a new class of radio authorization that accommodates the concept and process of area licensing. The Minister may also fix the terms and conditions of any radio authorization including the terms and conditions concerning the services that may be provided by the holder thereof

In accordance with section 19 of the Department of Industry Act, the Minister may fix spectrum licence fees in respect of the rights and privileges provided. In accordance with section 6(1)(l) of the Radiocommunication Act, the Governor in Council may make regulations prescribing fees for radio authorizations, including those for cellular and PCS.

2.2 Licensing

Traditionally, for each site at which radio apparatus is to be installed, the Department requests administrative and technical information such as site elevation, effective radiated power, and antenna pattern. Notably, since 1996, the Department has also been in a position to issue spectrum licences, which are defined as authorizations to use specific spectrum in a specified geographic area.

In 1986, the Department prescribed a new fee schedule designed to simplify the licensing and billing process by incorporating licence fees which normally would be paid by users of mobile stations into fees paid by cellular licensees. When PCS was licensed in 1995, the Department's process of licensing and charging fees evolved further by establishing a licence fee for each 10 MHz block of frequencies instead of using individual frequency channels. This was due, in part, to the variety of frequency channelling schemes for the technologies available for PCS.

Cellular

On December 14, 1983, the then Minister of Communications announced that he would issue radio licences to Rogers Cantel Inc. (now Rogers Wireless Inc.) to provide a national cellular service in Canada in the cellular spectrum block A. The Minister had previously set aside cellular spectrum block B for the local telephone companies. Since the cellular licensing decision, the majority of the telephone companies have acquired site specific authorizations for their operating territories. A list of the cellular site licensees is provided in Appendix A.

The cellular licensees have each been awarded 25 MHz of spectrum in the 800 MHz frequency band and are required to obtain site specific authorities in the form of radio licences. The radio licences have a term of one year, expiring on March 31st of each year, with radio licence fees charged for each transmit or receive frequency at a site. Radio licence fees, for each assigned transmit or receive frequency at each site, are set out in Schedule III, Part V, Item 4, of the Radiocommunication Regulations available on the Department Web site at: http://www.ic.gc.ca/spectrum, in Official Publications.

Following the original special authorizations, cellular licensees were awarded five-year special authorizations until 2001 when, the special authorizations were renewed as five-year spectrum licences expiring on March 31, 2006. The licence conditions continue to include the requirement to obtain site specific authority normally in the form of a radio licence. A generic copy of an existing spectrum licence is provided in Appendix B.

PCS

On December 15, 1995, Clearnet PCS Inc., Microcell Networks Inc., Rogers Cantel Inc. and eleven local telephone companies that applied under Mobility Canada were selected, through a comparative selection and licensing process, to provide PCS in the 2 GHz frequency band. The new entrants were awarded 30 MHz of spectrum while Rogers and the local telephone companies were awarded 10 MHz each in their operating territory. On April 15, 1996, they were granted five-year special authorizations which outlined the conditions of licence. One of these conditions required that licensees obtain site specific authority, normally in the form of a radio licence.

The radio licences have a term of one year and expire on March 31st of each year. Radio licence fees, for each 10 MHz-assigned block of transmit or receive frequencies at each site, are set out in Schedule III, Part V, Item 5 of the Radiocommunication Regulations available on the Department Web site at: http://www.ic.gc.ca/spectrum, in Official Publications.

In March 2001, the special authorizations were renewed as five-year spectrum licences, expiring on March 31, 2006. Again, a condition of licence requires that PCS licensees obtain site specific authority, normally in the form of a radio licence. A generic copy of this spectrum licence is provided in Appendix C.

Auctioned PCS

On February 1, 2001, the Minister of Industry announced five provisional licence winners of the PCS spectrum auction. The provisional licence winners bid on 52 spectrum licences for bids totalling $1.48 billion. These licences have enhanced privileges such as transferability, divisibility, and a 10-year licence term. A generic copy of an auctioned spectrum licence is provided in Appendix D. It is important to note that with the payment of the winning bids, no other fees or payments for these licences will be required for the duration of the licence term.

2.3 ESMR

Enhanced specialized mobile radio (ESMR) licensees are not part of this consultation. Spectrum is a de facto commercial input for ESMR, cellular and PCS; however, the 'market conditions' (prevailing supply and demand) for spectrum, are quite different for these services. Spectrum is dedicated and allocated specifically for cellular and PCS services. On the other hand, there is no spectrum allocation dedicated solely to ESMR; it is drawn from the general purpose land mobile spectrum and is made available, as needed, on a first-come, first-served basis to a wide variety of services being offered in this band such as paging, data communication, dispatch, and communication for industrial and public safety needs. The licensees in this band may operate as radiocommunication users, and radiocommunication service providers/carriers. ESMR licensees must contend for spectrum with these other services, not with cellular and PCS.

In the past, it has been suggested that because ESMR competes with PCS and cellular telephony, it should be subject to similar radio authorization fees. Government policy clearly states that fees are to reflect the value of spectrum as a de facto commercial input and, as noted above, the prevailing demand and supply conditions for general purpose land mobile spectrum (the ESMR input) are very different from those for cellular and PCS spectrum notwithstanding that the respective service outputs may have similarities. It should be noted that while ESMR is excluded from this proposal, it remains a potential candidate for spectrum licensing.

3. Legislation, Policy and Technical Considerations

The proposal for the transition of cellular and incumbent PCS licensees does not obviate the requirement that licensees meet established legislative, policy and technical requirements. Further, the initiatives proposed here are without prejudice to future decisions and actions of the Department on associated matters and do not limit the existing policies of the Department governing these services. The following section describes certain legislation, policies and technical considerations that are of particular interest to the transition and that remain in effect.

3.1 Ministerial Authority

Spectrum licences subject to this consultation will continue to be subject to relevant provisions in the Radiocommunication Act and the Radiocommunication Regulations. For example, the Minister continues to have the power to amend the terms and conditions of spectrum licences (paragraph 5(1)(b) of the Radiocommunication Act). As well, section 40 of the Radiocommunication Regulations1 regarding the assignment of frequencies, continues to apply. It is important to note that the Minister, pursuant to this regulation, would reallocate spectrum only under certain circumstances (e.g. a change in international allocation or where an overriding policy need arises to address a national security issue), taking into consideration that licensees have complied with the conditions of licence, made large investments in infrastructure, and are serving an established client base. If a reallocation were contemplated, it would take place only after full public consultation.

3.2 Spectrum Aggregation Limits

Cellular and incumbent PCS licensees will continue to be subject to the spectrum aggregation limit in force. Also, under section 10.3 "Application of the Spectrum Aggregation Limit" of the document Amendments and Supplements and Clarification Questions to the Policy and Licensing Procedures for the Auction of Additional Spectrum in the 2 GHz Frequency Range, issued October 2000, the Department clarifies, with respect to the spectrum aggregation limit, what is meant by an affiliate and an entity which has an operating and/or marketing arrangement.

3.3 Cellular Service to Underserved Areas

The document Policy for the Provision of Cellular Services by New Parties (RP-019) effected changes to policy respecting the authorization of cellular service providers operating in the frequency bands of 824-849 MHz and 869-894 MHz. This policy facilitates the provision of cellular services to unserved and underserved areas in a timely and orderly manner by enabling entities, other than those which previously were or could have been authorized to offer such services, to obtain access to cellular spectrum in areas where incumbent licensees are not offering services or are underserving the area. Actions taken as a result of this consultation do not obviate this policy. The Department will continue to accept applications from potential new cellular service providers for authorization to offer cellular mobile voice telephony services in areas where competitive cellular service provision is not being offered at the time the application is made. The Department will follow the procedures for the submission of applications, including public notification of an application, that are outlined in RP-019.

3.4 International Coordination

The current arrangement for PCS licensees falls under the terms of an interim sharing arrangement that provides for frequency sharing in the border area. The operation of PCS systems that are within 120 km of the Canada/United States border shall comply with both domestic, technical sharing criteria and the terms of any interim sharing arrangement between Industry Canada and the Federal Communications Commission (FCC) of the United States. The present arrangement is entitled Interim Sharing Arrangement Between Industry Canada and the Federal Communications Commission Concerning the Use of the Band 1850 to 1990 MHz. As per the terms of this arrangement, licensees may be required to furnish all necessary technical data to Industry Canada for each relevant site for international coordination.

Coordination is required of any cellular transmitter installations which are within 70 Km (45 miles) of the Canada/ United States border to eliminate any harmful interference that might otherwise exist, and to ensure continuance of equal access to the frequency block by both countries. Systems operators carry out the necessary coordination and are required to notify Industry Canada of the arrangements. The general principles for the coordination of cellular systems in the border area are outlined in SRSP-503.

4. Market Distortions

Cellular, incumbent PCS and PCS auction licensees do not operate under common regulations, policies and procedures and this has led to a number of market distortions. Spectrum and radio apparatus are not only complements but also substitutes for each other. Historically, the number of stations and the effective radiated power of equipment have been used as indicators of the amount of spectrum consumed by licensees. With advances in wireless technology and increases in scale as well as variety of wireless services, this method of measuring spectrum utilization may be considered counterproductive. An example of such substitution is "cell-splitting" that is, increasing the number of radio sites in a specific geographic area to increase the overall capacity of the network in that geographic area, while reusing the same spectrum. With the current fee regime, cell-splitting will result in an increase in fees for cellular and incumbent PCS licensees in the same geographic area, despite the fact licensees are utilizing spectrum more efficiently.

Another distortion the existing system creates is a no-cost opportunity for cellular and incumbent PCS licensees to 'warehouse' their spectrum, thus, distorting spectrum availability. Essentially, in some areas, licensees are not offering service and are not charged a licence fee, nevertheless, they maintain the allotment of the spectrum. Also, as cellular licensees are licensed on a channel by channel basis, they may be offering service in an area but may not be utilizing all the 25 MHz of spectrum allotted to them. They maintain the allotment of the 25 MHz of spectrum but pay no licensing fees for that unused allotment. The Department has partially addressed this situation by introducing a policy entitled Policy for the Provision of Cellular Services by New Parties (RP-019) referred to in section 3.3 of this document.

A third distortion is the effect on the investment decisions of licensees. With apparatus based licensing, fees attached to radio sites add to the cost of network expansion. The presence of these marginal costs may compromise the economics of otherwise extending the network into lesser populated areas or corridors along major highways, where the business case may be borderline.

Footnotes

1 Section 40 of the Radiocommunication Regulations reads: "The assignment of a frequency or frequencies to a holder of a radio authorization does not confer a monopoly on the use of the frequency or frequencies, nor shall a radio authorization be construed as conferring any right of continuing tenure in respect of the frequency or frequencies."

5. Proposed Framework

The Department believes that the above noted market distortions can be addressed by:

  • introducing a number of measures that support spectrum efficiency by associating fees with the amount of spectrum consumed instead of number of sites deployed;
  • avoiding situations where spectrum is effectively consumed at no cost and denied to others; and
  • eliminating the incremental costs of licence fees associated with network expansion.

This approach has the added benefit of reducing the administrative burden on licensees as well as the Department. The goal is for all cellular and PCS spectrum licensees to operate under a common framework that aims to ensure there is:

  • fairness and consistency in applying policy;
  • enough flexibility to allow companies to be innovative and facilitate the delivery of innovative services;
  • increased reliance on market forces; and
  • administrative efficiency.

To create a framework that is more fair, efficient, and competitive, the Department proposes two initiatives:

  • amend current five-year spectrum licences issued to cellular and incumbent PCS licensees in 2001 to include enhanced privileges similar to auctioned PCS spectrum licences and eliminate the need for associated radio station licences other than in specified exceptional circumstances; and
  • implement a common fee regime for cellular and incumbent PCS licensees using a rate that takes into account the amount of spectrum assigned (number of MHz) and the total population included in the service area (number of pop).

The amended spectrum licences would authorize the use of specific frequencies or a frequency block within a defined geographic area under certain minimal constraints. The privileges that would be associated with the amended licences include (subject to compliance with the Act, the Regulations and the terms and conditions of licence) the ability to transfer in whole or in part the licence in both the geographic and spectral domains.

This transition from apparatus-based to spectrum-based licensing would remove the disincentive for service providers to use their spectrum intensively and efficiently. This would be accomplished by dissociating fees and the number of stations in the network. Furthermore, deployment of service in lesser populated areas would not result in additional fee expense. In other words, the transition to spectrum licences will remove the disincentive associated with building the stations required to use the spectrum most efficiently and over the broadest area.

5.1 Proposed Spectrum Licence Attributes

Spectrum licences are defined in subparagraph 5(1)(a)(i.1) of the Radiocommunication Act as authorizations "in respect of the utilization of specified radio frequencies within a defined geographic area." The proposed amendments to existing five-year spectrum licences issued to cellular and PCS providers in April 2001 are outlined in the following subsections.

5.1.1 Licence Term

The Department will extend current spectrum licence terms from five years to ten, with a high expectation of renewal at the end of the term. The extended term would therefore expire on March 31, 2011. Generally, renewed licences would be offered in subsequent ten-year terms.

5.1.2 Spectrum and Geography

Under the proposed framework, the Department will create service areas for all cellular operating territories. Through this consultation the Department proposes to offer those companies that have not yet applied for a spectrum licence to offer service in their operating territory, the right of first refusal to these licences. If companies do not want to be assigned these licences, they will be made available through the process used for new party cellular applicants as outlined in Policy for the Provision of Cellular Services by New Parties (RP-019). This is consistent with the announcement in the Canada Gazette, Notice DGTN-006-82/DGTR-017-82 in which the Minister of Communications set aside a cellular spectrum block for local telephone companies. In his December 14, 1983, licensing decision, the Minister of Communications announced that he would consider applications from telephone companies to provide cellular service in the cellular block B. Companies that are not yet licensed will be given 90 days from the issuance of the final policy decision resulting from this consultation, to submit their application for the spectrum licence. Should these companies forego this opportunity, the Department will rescind the set aside provisions established in 1983.

The spectrum licences will be issued in respect of the use of specific frequencies or a frequency block(s) within a defined geographic area. The Department will use, where possible, the Tier service areas defined in the Department's document Service Areas for Competitive Licensing, in order to determine the geographic area of the spectrum licences. However, the operating territories of the majority of local telephone companies do not fall neatly into the existing Tier service areas. Thus, for those operating territories which cannot be defined in terms of the existing Tier service areas, the Department proposes creating new Local Telephone Service Provider Tier service areas. The Department foresees the need to define 3 new Local Telephone Service Provider Tier service areas for British Columbia, 27 for Ontario, and 17 for Quebec. A list of the proposed new service areas is provided in Appendix E. Maps reflecting the service areas are available on the Spectrum Web site at http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/h_sf01627.html.

In developing the new service areas, the Department used the most reliable information available. As part of this consultation, those affected are asked to verify the data contained in Appendix F and the service area maps on the web site to ensure that they reflect the correct information as these are used to calculate the fee for each of the service areas identified. It is also necessary to bear in mind that the population figures used for the purpose of the distribution of fees are those of the 1996 census.

A list of spectrum blocks associated with the geographic areas for cellular and incumbent PCS licensees is provided in Appendix F. Definitive and detailed maps of all service areas will be made available at the conclusion to this consultation.

5.1.3 Transferability/Divisibility

The Department proposes that the spectrum licences which are the subject of this consultation be divisible and transferable, in part or whole, within the geographic (partitioning) and bandwidth (disaggregation) domains, subject to the following conditions and guidelines:

  • All conditions of the licence will continue to apply should the licence be transferred or divided.
  • The party that constitutes the newly created licensee, from the transfer or division of a licence, must meet the eligibility criteria for a radiocommunication carrier as outlined in subsection 10(2) of the Radiocommunication Regulations.
  • Should licensees transfer or divide their licence to another party, the second party will only receive a licence term equal to that remaining on the original licence but will be eligible for the same licence renewal provisions as original licensees. For example, if the transfer occurs at year six of the licence term, the second party will receive a licence term equal to four years.
  • All proposed licence transfers and divisions must comply with any spectrum aggregation limits or other measures intended to preclude anti-competitive behaviour that may be in place. It should be noted that any licence transfer or division may also be subject to the provisions of the Competition Act.
  • The minimum geographic size that any licence may be partitioned is the lesser of one census subdivision, or a new Local Telephone Service Provider Tier service area created to accommodate the serving areas. These are sufficiently small that even with this restriction an extremely high degree of flexibility will be available to the parties involved in determining the size and shape of partitioned licences.
  • No minimum limit will be imposed on the amount of spectrum transferred in the bandwidth dimension.
  • Written notification of all proposed licence transfers and divisions will be required. The Department will also request attestations or other documentation to ensure that compliance with the eligibility criteria and other conditions of licence have been satisfactorily addressed. Once a licence transfer or division has been registered, the Department will revoke the original licence and issue a new licence in its place.
  • The Department will maintain a publicly accessible database that lists all licences and their respective licensees and will update the database as changes occur to the licences.

5.1.4 Flexibility of Use

Licensees will have the maximum possible flexibility in determining the services they will offer and the technologies they will employ. Beyond the need to conform to the technical requirements set forth in section 5.3 of this document, "Proposed Conditions of Licence", and the applicable Canadian spectrum allocation, only those limitations required for interference management purposes, including the provisions of international agreements, will be imposed. This will ensure that licensees can continue to quickly and efficiently adapt their services to changing consumer demands.

5.1.5 System Access Fees

The Department is aware that consumers are the subject of inconsistent messages from service providers when it comes to System Access Fees (SAF). All four main cellular/PCS providers define SAF differently. Continuing consumer inquiries to Industry Canada indicate that there is confusion in the marketplace about the costs associated with SAF. The Department welcomes suggestions on how cellular/PCS providers could clarify this issue for consumers.

However to ensure that uncertainty is minimized as it applies to SAF, the Department is considering a new licence condition that would apply to all cellular/PCS licences. Where licensees include in their customer invoice a 'System Access Fee' or a 'Network and Licensing Charge' or a similar line item, licensees would also have to include the following statement in their customer contract and information materials explaining such charges:

System Access Fees are neither required nor collected by the Government. [Name of Company] is subject to licence fees for the use of the public radio frequency spectrum it uses in its business operations. There is no correlation between the licence fees for the radio frequency spectrum and the number of subscribers to whom the service is provided. Industry Canada encourages consumers to seek the best value from among the competing service providers that have been licensed.

5.1.6 Domestic Sharing Arrangements

With full transferability and divisibility, coordination may be required between licensees that have been licensed for similar spectrum in adjacent service areas. For coordination among PCS licensees, the Department will apply the same approach as outlined in the document, entitled Interim Sharing Arrangement between Industry Canada and the Federal Communications Commission Concerning the Use of the Band 1850 to 1990 MHz :

  • The efficient operation of PCS systems will be best assured through coordination by the PCS licensees operating in adjacent service areas.
  • The development of sharing arrangements between operators in the adjacent areas is required for any PCS base station that exceeds the field strength of 47 dBµV/m at any location at or beyond the area boundary, unless PCS operators in adjacent areas agree to a higher value.

The above sharing arrangements could include technical and/or business agreements, and should also permit service availability to users along area boundaries.

The Department will apply the current arrangement for cellular licensees outlined in SRSP-503.

5.1.7 Resale and Roaming

The current requirements with regard to resale and roaming will continue to be in effect on spectrum licences of cellular licensees as outlined in section 5.3, "Proposed Conditions of Licence", of this document.

5.1.8 Lawful Intercept

On August 25, 2002, the Honourable Martin Cauchon, Minister of Justice and Attorney General of Canada, the Honourable Lawrence MacAulay, Solicitor General of Canada, and the Honourable Allan Rock, Minister of Industry, announced that the Government of Canada will consult with Canadians concerning lawful access to information and communications. The consultation was launched by Minister MacAulay, on behalf of his colleagues.

To facilitate these consultations and public input, a consultation document on lawful access was made available. The consultation document outlines legislative, regulatory and policy options that would ensure that law enforcement and national security agencies maintain their lawful access capability, while taking into account legal, technical, privacy and economic considerations. A central element of these proposed options would require all wireless, wireline and Internet service providers to have the technical capability to provide access to communications and information, under legal authority, to law enforcement and national security agencies.

At this time PCS licensees are required by condition of licence to provide lawful interception capability. This requirement will continue for the PCS licensees and will be subject to the determinations that will follow the above noted public consultation. However, the Department notes that the Solicitor General's Enforcement Standards for Lawful Interception of Telecommunications was written to apply to circuit-switched voice telephony systems and as such is not readily applicable to a packet-based environment using routers rather than traditional switches. Router-based networks pose a number of challenges to the provision of lawful interception capabilities, in that routers may only receive a portion of a target's traffic, a target's traffic may be simultaneously routed through several routers at different points in a network, and routers permit customers to distribute traffic across several service providers.

Notwithstanding the technical complexities involved, the Department recognizes that electronic interception of personal communications under lawful warrant is an indispensable technique for law enforcement. However, the Department will only incorporate compliance with the Solicitor General's current standard for circuit-switched voice telephony systems since technical and legal requirements to support lawful interception capabilities in new network technologies and topographies are still undefined and under development. If standards are developed for router-based networks, the requirement to provide lawful interception capability for such traffic may be imposed via a licence condition or other future legislative provision.

5.2 Proposed Licence Fees

The Department proposes to institute a new licence fee regime based on a rate corresponding to the amount of spectrum assigned and the total population included in the service area. To determine what this rate should be, the Department used as its model the cellular network of Rogers Wireless Inc. which:

  • covers more than 93% of the Canadian population and the major traffic corridors;
  • is established in all provinces and the Northwest Territories;
  • operates in the 25 largest Census Metropolitan Areas (CMA) of Canada; and
  • is assigned 25 MHz of spectrum.

Rogers' annual fee for fiscal year 2000/2001 was $37,181,576 or approximately $1.5 million per 1 MHz of national cellular spectrum.2

To determine fees on a per pop basis, the Department chose to use the 1996 census data3 where the population of Canada was 28,846,761. A formula was then developed that distributes the fees based on the amount of spectrum bandwidth and the population of the geographic area licensed to each licensee. The application of the formula results in a licence fee of $0.052 per 1 MHz of assigned spectrum per person in a defined geographic area.

A transition fee estimation tool is available on the Spectrum Management and Telecommunications Web site. This tool is to be used to estimate a company's fees. The example provided is for a company which is nationally authorized for a specific frequency block. Companies having multiple authorizations with differing frequency bands and/or geographical areas will require a more in-depth calculation.

The Department proposes a seven year implementation time frame before the full measure of the new fee becomes payable. Implementation would be graduated based on the difference between licence fees payable at March 31, 2004 and the final amount payable. This graduated implementation would apply to both licensees seeing an increase in their current annual licence fees and to those seeing a decrease in their fees including situations where partitioning and disaggregation take place.

The Department will establish this fee framework by:

  • fixing the annual fees on a per 1 MHz per pop of assigned cellular and PCS spectrum using the formula referred to above and limiting the minimum fee for a licence to $1,000.00;
  • fixing the $0.052 per MHz per pop fee and allowing prorating at 1/12 the annual fee for each month remaining until April 1; such a fee will apply to all new licences issued in the cellular/PCS bands covered by this consultation effective April 1, 2004; and
  • implementing the spectrum licence fee regime over seven fiscal years.4

Should there be a proposal to amend the fee for a subsequent term, a consultation on such a proposal will begin no later than two years prior to the end of the licence term.

5.3 Proposed Conditions of Licence

The proposed conditions of licence for cellular and incumbent PCS licensees are outlined below. Given the legacy requirements of cellular and incumbent PCS licensees, some conditions will apply to both, while others will only be applicable to PCS licensees, and one condition dealing with roaming and resale will apply to cellular licensees only.

5.3.1 Licence Conditions Common to All Cellular and Incumbent PCS Licensees

  1. Licence Term

    The term of this licence will expire on March 31, 2011. At the end of this term and any subsequent terms, licensees will have a high expectation of renewal for a 10-year term unless a breach of a licence condition has occurred, a fundamental reallocation of spectrum to a new service is required, or an overriding policy need arises. A public consultation regarding the renewal of the licence will begin no later than two years prior to the end of the licence term if the Department foresees the possibility that it will not renew this licence.

    It should be noted that the licence is subject to relevant provisions in the Radiocommunication Act and the Radiocommunication Regulations. For example, the Minister continues to have the power to amend the terms and conditions of spectrum licences (paragraph 5(1)(b) of the Radiocommunication Act). Such powers would be exercised on an exceptional basis and only after full consultation.

  2. Licence Transferability and Divisibility

    Licensees may transfer their licence(s) in whole or divide the licence in both bandwidth (disaggregation) and geographic (partitioning) dimensions. The smallest geographic area that may be partitioned will be the smaller of a census subdivision (Tier 4) or a new Local Telephone Service Provider Tier area. No minimum limit will be imposed on the amount of spectrum that may be disaggregated.

    For each proposed transfer or division of this licence, licensees must provide a written notification to the Department. Transferees must also provide an attestation (or other appropriate documentation) that they meet the eligibility criteria and all other conditions of this licence. The Minister of Industry reserves the right, prior to transferring or dividing the licences, to request additional documentation in order to determine if the proposed new licensees comply with the appropriate eligibility requirements. The proposed new licensees must also provide an attestation (or other appropriate documentation) that they will meet the appropriate conditions of licence.

    For the purposes of this condition, the "transfer" of a licence includes any leasing, subleasing or other disposition of the rights and obligations of the licence.

  3. Spectrum Aggregation Limit

    Licensees must comply with the spectrum aggregation limits outlined in Radio Systems Policy 021 (RP-021), Revision to the PCS Spectrum Cap and Timing for Licensing Additional PCS Spectrum. The spectrum aggregation limit within a service area consists of spectrum licensed to licensees and their affiliates. Licensees must notify the Minister of any change that would have a material effect on their compliance with these spectrum aggregation limits. Such notification must be made in advance of any proposed transactions of which licensees have knowledge.

  4. Eligibility Criteria

    Licensees will employ the radio frequencies that are the subject of this licence as a radiocommunication carrier in order to operate one or more interconnected radio-based transmission facilities (that is any radio apparatus that is used for the transmission or reception of intelligence to or from anywhere on a public-switched network) that may be used by licensees or another person to provide radiocommunication services for compensation.

    Licensees acting as radiocommunication carriers must comply on an ongoing basis with the eligibility criteria in subsection 10(2) of the Radiocommunication Regulations. Licensees must notify the Minister of Industry of any change that would have a material effect on their eligibility. Such notification must be made in advance of any proposed transactions of which licensees have knowledge. For more information, refer to Client Procedures Circular 2-0-15 (CPC-2-0-15), Canadian Ownership and Control, as amended from time to time.

  5. Radio Station Installations

    For each radio station, licensees must ensure that:

    • radio stations are installed and operated in a manner that complies with Health Canada's limits of human exposure to radiofrequency electromagnetic fields for the general public including the consideration of existing radiocommunication installations within the local environment;
    • where applicable, antenna structures are marked in accordance with the recommendations of Transport Canada with respect to a potential hazard to air navigation;
    • prior to installation of antenna structures, meaningful consultation has taken place with all local municipalities or land-use authorities with the aim of developing consensus solutions. Installation of any antenna structure must be delayed for a period of time sufficient for departmental review where, after considering reasonable alternatives and consultation options, land-use consultation negotiations remain at an impasse;
    • all requirements prescribed in the Client Procedures Circular (CPC-2-0-03), Environmental Process, Radiofrequency Fields and Land-Use Consultation, as amended from time to time, are respected; and
    • radio installations are installed and operated in a manner that complies with technical boundary and out-of-band emission conditions as specified by the Department.
  6. Provision of Technical Information

    When the Department requests technical information on a particular station or on a network, the information must be provided by licensees to the Department according to the definitions and criteria specified by the Department.

  7. Laws, Regulations, and Other Obligations

    Licensees are subject to, and must comply with, the Radiocommunication Act, the Radiocommunication Regulations, the International Telecommunication Union (ITU) Radio Regulations and the Canadian Table of Frequency Allocations pertaining to their licensed radio frequency bands. The licence is issued on condition that the certifications made in the application materials are all true and complete in every respect.

  8. Technical Considerations

    Cellular

    Licensees must comply with the technical requirements set forth in Standard Radio System Plan 503 (SRSP-503), Technical Requirements for Cellular Systems Operating in the Bands 824-849 MHz and 869-894 MHz, and must deploy equipment certified under Radio Standards Specification 118 (RSS-118), Land and Subscriber Stations and its Annex A, Cellular System Mobile Station Land Station Compatibility Standard, Radio Standards Specification 128 (RSS-128), and Radio Standards Specification 129 (RSS-129). SRSP-503 provides information on channelling plans, power and antenna height limitations and image frequency relationship with UHF-TV channels. The RSS documents set out standards for transmitters and receivers for cellular in the 800 MHz band.

    PCS

    Licensees must comply with the technical requirements set forth in Standard Radio System Plan 510 (SRSP-510), Technical Requirements for Personal Communications Services in the Bands 1850-1910 MHz and 1930-1990 MHz, and must deploy equipment certified under Radio Standards Specification 133 (RSS-133), GHz Personal Communications Services. SRSP-510 provides information on channelling plans, out-of-block emission limits, permissible effective isotropic radiated power (EIRP) and antenna heights. RSS-133 sets out standards for transmitters and receivers for PCS in the 2 GHz band.

  9. International and Domestic Coordination

    Licensees must comply with the requirements of cross-border sharing and coordination arrangements established between Canada and the United States, as amended from time to time. While new cellular/PCS spectrum licences will not be subject to site-by-site licensing, licensees may be required to provide technical data to Industry Canada for given sites. This data may be requested for reasons such as the resolution of coordination conflicts as well as possible interference issues. Should international coordination be required, Industry Canada will identify the appropriate data elements, format and means of submission.

    Coordination between licensees within Canada will follow similar procedures as those used in international coordination.

  10. Research and Development

    Licensees must invest, as a minimum, 2 percent of the adjusted gross revenues resulting from operations in this spectrum, over the term of the licence, in eligible research and development activities related to telecommunications. This condition is subject to the policy provisions contained in the Department's policy circular RP-019, entitled Policy for the Provision of Cellular Services by New Parties. Eligible research and development activities are those that meet the definition of scientific research and experimental development adopted in the Income Tax Act. Adjusted gross revenues are defined as total service revenues, less inter-carrier payments, bad debts, third-party commissions, and provincial and goods and services taxes collected.

    If the licence is transferred/divided to any eligible entity prior to the expiration of its term, the condition of licence relating to investment in research and development will continue to apply on the initial transfer of the licence and on any subsequent transfer until the term of this licence expires. Prior to a transfer, in whole or in part, of this licence, the proposed transferee must undertake to ensure that the sum of the investment it will make in eligible research and development activities and all investments made by prior licensees in eligible research and development activities equal a minimum of 2 percent of the aggregated adjusted gross revenues resulting from all operations in this spectrum, over the term of the licence. An attestation signed by the proposed transferee setting out the undertaking must accompany the licence transfer notification to be submitted to the Department by licensees prior to the transfer being effected.

    To facilitate compliance with this condition of licence, licensees should consult the Department's Guidelines for Compliance with the Radio Authorization Condition of Licence Relating to Research and Development. Further details on the exact administrative procedures for transferring a spectrum licence will be provided in a forthcoming Client Procedures Circular.

  11. Annual Reporting

    Licensees must submit an annual report for each year of the term of the licence indicating continued compliance with all licence conditions, and include:

    • audited financial statements as required under licensees' jurisdictions of incorporation, as well as an audited Statement of Research and Development Expenditures with an accompanying Auditor's Report, prepared in accordance with the same standards of reporting; to facilitate compliance with this reporting requirement, licensees should consult the Guidelines for Compliance with the Radio Authorization Condition of Licence Relating to Research and Development published by Industry Canada; and
    • a copy of any existing corporate annual report for the licensees' fiscal year.

    The reports are to be submitted, in writing, within 120 days of the licensees' fiscal year-end to:

    Manager, Wireless Networks
    Radiocommunications and Broadcasting Regulatory Branch
    300 Slater Street, 15th Floor
    Ottawa, Ontario
    K1A 0C8

    Confidential information provided in the reports will be treated in accordance with subsection 20(1) of the Access to Information Act and the Privacy Act.

  12. System Access Fees

    Where licensees include in their customer invoice a 'System Access Fee' or 'Network and Licensing Charge' or similar line item, they shall also include the following statement in their customer contract and in their information materials explaining such charges:

    System Access Fees are neither required nor collected by the Government. [Name of Company] is subject to licence fees for the use of the public radio frequency spectrum it uses for business operations. There is no correlation between the licence fees for the radio frequency spectrum and the number of subscribers to whom the service is provided. Industry Canada encourages consumers to seek the best value from among the several competing service providers that have been licensed.

5.3.2 Conditions Applicable to PCS Licensees Only

  1. Displacement of Incumbent Microwave Licensees

    Licensees must comply with the revised transition policy outlined in Appendix 2 of the Policy and Licensing Procedures for the Auction of Additional PCS Spectrum in the 2 GHz Frequency Range issued on June 28, 2000, and the relocation procedure for the relocation of incumbent microwave stations outlined in Client Procedures Circular 2-1-09 (CPC-2-1-09), Displacement of Fixed Service Stations Operating in the 2 GHz Frequency Range to Accommodate Licensed Personal Communications Services (PCS).

  2. Lawful Interception

    Licensees using spectrum for circuit-switched voice telephony systems must, from the inception of service, provide for and maintain lawful interception capabilities as authorized by law:

    • The requirements for lawful interception capabilities are provided in the Solicitor General's Enforcement Standards for Lawful Interception of Telecommunications (Rev. Nov. 95). These standards may be amended from time to time following consultation with the Solicitor General of Canada and licensees.
    • Licensees may request the Minister of Industry to forbear from enforcing certain assistance capability requirements for a limited period. The Minister, following consultation with the Solicitor General of Canada, may exercise his power to forbear from enforcing a requirement or requirements where, in the opinion of the Minister, the requirement is not reasonably achievable. Requests for forbearance must include specific details and dates indicating when compliance to requirement can be expected.
  3. PCS Resale

    Licensees must offer PCS resale throughout their service area to other PCS licensees on a non-discriminatory basis.

    The Department notes that the CRTC has retained oversight under section 27(2) of the Telecommunications Act with respect to public-switched mobile voice services. It also notes that it is government policy to support resale and access to network facilities by third parties, to the extent practicable, as stated in the Order in Council P.C. 1994-1689 and confirmed in the Convergence Policy Statement of August 1996. As well, one of the objectives of section 7 of the Telecommunications Act is to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective.

    It is also important to note that the conditions of licence for existing PCS licensees and for PCS licensees affected by this proceeding are without prejudice to decisions and actions of the CRTC on associated matters.

5.3.3 Condition Applicable to Cellular Licensees Only

  1. Cellular Analogue Resale and Roaming

    The cellular licensees will be required to offer analogue cellular resale and analogue cellular roaming through commercial arrangements to PCS licensees who are not also cellular licensees. The commercial arrangements are to be offered on a non-discriminatory basis and apply to those licensed areas which are common to the parties of any such arrangement. The Department does not define further the scope of these commercial arrangements.

    The Department notes that the CRTC has retained oversight under section 27(2) of the Telecommunications Act with respect to public-switched mobile voice services. It also notes that it is government policy to support resale and access to network facilities by third parties, to the extent practicable, as stated in the Order in Council P.C. 1994-1689 and confirmed in the Convergence Policy Statement of August 1996. As well, one of the objectives of section 7 of the Telecommunications Act is to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective.

    It is also important to note that conditions of licence for cellular licensees are without prejudice to decisions and actions of the CRTC on associated matters.

6. Submitting Your Comments

Interested parties should submit their comments no later than March 5, 2003. Shortly after the close of the comment period, all comments received will be posted on Industry Canada's Spectrum Management and Telecommunications Web site.

Respondents are requested to provide their comments in electronic format (WordPerfect, Microsoft Word, Adobe PDF or ASCII TXT) to the following email address: licence.transition@ic.gc.ca along with a note specifying the software, version number and operating system used.

Written submissions should be addressed to the Manager Operational Policies, Radiocommunications and Broadcasting Regulatory Branch, Industry Canada, 300 Slater Street, Ottawa, Ontario, K1A 0C8.

All submissions should cite the Canada Gazette, Part I, publication date, the title, and the notice reference number (DGRB-004-02).

This consultation is available electronically on Industry Canada's Spectrum Management and Telecommunications Web site at: http://www.ic.gc.ca/spectrum.

Paper copies can be obtained for a fee from:

St. Joseph Print Group Inc.
1165 Kenaston Street
P.O. Box 9809, Station T
Ottawa, Ontario
K1G 6S1
Phone Number: 613-746-4005
Toll free number: 1-888-562-5561
Fax: 819-779-2833
email for St. Joseph Print Group Inc.: DLSOrderdesk@eprintit.com

For further information concerning the proposals outlined in this document or related matters, you may contact:

Manager
Operational Policies
Radiocommunications and
Broadcasting Regulatory Branch
Phone: 613-990-4736
Fax: 613-991-3514.

Footnotes

2 The annual fees for the other main cellular licensees were as follows: TELUS $18,100,114 and Bell Mobility $27,680,906.

3 The Department feels it is not necessary to adjust the population value for the duration of the implementation period since the relative impact of population changes would result in only a marginal impact on the distribution of the total fee.

4 Fiscal year refers to a government fiscal year ending on March 31st.

Appendix A

Cellular List

The following is a list of all cellular licensees in Canada:

National:  Rogers Wireless Inc.

Ontario: 

Ameltecom Inc.
Bell Mobility Cellular Inc.
Brooke Telecom Co-Operative Ltd.
Bruce Municipal Telephone System
Cochrane Cellular Mobility
Corporation of the Town of Kenora
Corporation of the City of Thunder Bay
Dryden Mobility
Execulink Telecom Inc. (formerly Hurontario Telephones Limited)
Hay Communications
Huron Telecommunications
Gosfield North Communications
Lansdowne Rural Telephone Co. Ltd.
Mornington Communications
Nexicom Telecommunications Inc.
NorTel Mobility Inc. (Northern Telephone Limited)
North Frontenac Telephone Co. Ltd.
North Renfrew Telephone Co. Ltd.
O.N. Tel Inc.
People's Communications Inc.
Quadro Communications Co-operative
Roxbororough Telephone Co. Ltd.
Superior Wireless Inc.
Tuckersmith Communications
Westport Telephone Company Limited
Wightman Telephone Limited

Quebec: 

Bell Cellulaire Inc.
CoopTel (Le Syndicat coopératif de éléphone de Valcourt)
La Cie de Téléphone de Courcelles Inc.
La Compagnie de Téléphone de Lambton Inc.
La Compagnie de Téléphone de St-Victor
La Compagnie de Téléphone de Warwick
La Compagnie de Téléphone de Nantes Inc.
La Compagnie de Téléphone de Upton
La Compagnie de Téléphone de La Baie
Le Téléphone de St-Éphrem Inc.
Le Téléphone de St-Liboire de Bagot Inc.
Téléphone Milot Inc.
SOCIETE TELE-MOBILE (formerly QuébecTel Communications
SogeTel Mobilité Inc.
Télébec Mobilité
Téléphone Guèvremont Inc.

Atlantic: 

Aliant Telecom Inc.

Prairies: 

MTS Mobility Inc.
SaskTel Cellular
TELE-MOBILE COMPANY (formerly TELUS Mobility Inc.)

BC

City of Prince Rupert
NorthWest Tel Mobility Inc.
TELE-MOBILE COMPANY (formerly TELUS Mobility Inc.)

NWT

NorthWest Tel Mobility Inc.

Yukon: 

NorthWest Tel Mobility Inc.

Nunavut: 

NorthWest Tel Mobility Inc.


Appendix B

Generic Cellular Spectrum Licence (existing)

Dear:

The cellular mobile radiotelephone (cellular) five-year special authorization issued to [company], on April 4, 1996, will expire on March 31, 2001. By this letter and under the authority granted to me under the Radiocommunication Act, I am renewing that authorization with this five-year spectrum licence for the provision of a national cellular mobile radiotelephone service using the frequencies listed in Sub-Band [A/B] as indicated in Standard Radio System Plan 503 (SRSP-503) for the period of April 1, 2001 to March 31, 2006.

The conditions attached to this authorization remain unchanged at this time. Industry Canada recognizes, however, that there is an interest among some of the Personal Communication Service (PCS) and cellular providers in securing terms and conditions similar to those associated with recently auctioned PCS spectrum licences. Interest has been expressed in enhanced privileges such as transferability and divisibility as well as in a longer licence term. The Department intends to engage in a public consultation on these and other matters such as fees and other licence terms and conditions within the coming year. The Department anticipates that at the end of this consultation it will give effect to its conclusions by making suitable amendments to this authorization.

May I take this opportunity to wish you continued success in the provision of cellular mobile radiotelephone service to Canadians.

Sincerely,

Jan Skora
Director General
Radiocommunications and Broadcasting
Regulatory Branch

Attachment

Cellular Mobile Radiotelephone Service Provider
Conditions for Operating Authority (existing)

The following conditions apply to all licensees for cellular mobile radiotelephone services.

  1. You must undertake research and development related to wireless telecommunications activities. As a minimum, you must invest 2 per cent of your adjusted gross revenue resulting from your cellular mobile radiotelephone operations, averaged over the next five years. Eligible research and development is that which meets the definition adopted by Revenue Canada.

    Adjusted gross revenues are defined as total service revenues less inter-carrier payments, bad debt, third party commissions, and provincial and goods and services taxes collected.

  2. You must comply with the eligibility criteria as set out in section 16 of the Telecommunications Act and the Canadian Telecommunications Common Carrier Ownership and Control Regulations.

    You must notify the Minister of any change in the ownership and control requirements which would have a material effect on your ownership or control in fact. Such notification must be made in advance for any of the proposed transactions within your knowledge.

  3. You must submit an annual report for each of the five years of this operating authority indicating your continued compliance with these licence conditions including: 
    • an audited statement of research and development expenditures as required in condition 1 above for the fiscal year covered by the report;
    • a description of research and development activities including their distribution in Canada's regions;
    • a copy of any existing corporate annual report for your fiscal year with respect to this authorization.

    The reports are to be submitted, in writing within 120 days of your fiscal year end, to the Director, Spectrum Management Operations, Radiocommunications and Broadcasting Regulatory Branch.

  4. You must obtain site specific authority, normally in the form of a radio licence, prior to installing or operating any cellular mobile radiotelephone base stations.

Appendix C

Generic PCS Spectrum Licence (existing)

Dear:

The Personal Communication Service (PCS) five-year special authorization issued to [company], on April 15, 1996, will expire on April 14, 2001. By this letter and under the authority granted to me under the Radiocommunication Act, I am renewing that authorization with this five-year spectrum licence for the provision of a personal communication service using frequency Block D (1865 – 1870 / 1945 - 1950 MHz) in the telephone operating area of [company] for the period of April 1, 2001 to March 31, 2006.

The conditions to this authorization are provided in Attachment B and remain unchanged at this time. The Department recognizes however, that there is an interest among some of the cellular and PCS providers in securing terms and conditions similar to those associated with recently auctioned PCS spectrum licences. Interest has been expressed in enhanced privileges such as transferability and divisibility as well as in a longer licence term. The Department intends to engage in a public consultation on these and other matters such as fees and other licence terms and conditions within the coming year. The Department anticipates that at the end of this consultation it will give effect to its conclusions by making suitable amendments to this authorization.

May I take this opportunity to wish you continued success in the provision of PCS service to Canadians.

Sincerely,

Jan Skora
Director General
Radiocommunications and Broadcasting
Regulatory Branch

Attachment

Licence Conditions for Personal Communications Service (PCS) Licensees (existing)

The following conditions apply to all licensees for personal communications services in the 2 GHz range (PCS licensees).

1.0 Full National Coverage

1.1 In order to realize the Government's objective of full national coverage, you must implement your system substantially in accordance with the full five-year plan contained in your detailed submissions to the Department notwithstanding any stated conditions therein. In addition, you and any entities with which you have submitted an application for 2 GHz PCS, must offer a reasonable level of service in all regions of Canada within two years of the date of this authorization.

2.0 Research and Development

2.1 You must substantially honour research and development commitments made in your detailed submission. As a minimum, you must invest an average of 2 per cent of your adjusted gross revenue resulting from your 2 GHz PCS operations on PCS-related research and development activities averaged over the next five years. Eligible research and development is that which meets the definition adopted by Revenue Canada.

Adjusted gross revenues are defined as total service revenues less inter-carrier payments, bad debt, third party commissions, and provincial and goods and services taxes collected.

3.0 Other Commitments

3.1 You must substantially honour all other commitments made in your detailed submission.

4.0 Ownership and Control

4.1 You must comply with the eligibility criteria as set out in section 16 of the Telecommunications Act and the Canadian Telecommunications Common Carrier Ownership and Control Regulations.

You must notify the Minister of any change which would have a material effect on your ownership or control in fact. Such notification must be made in advance for any of the proposed transactions within your knowledge.

5.0 Annual Reporting

5.1 You must submit an annual report for each of the first five years indicating your continued compliance with these licence conditions including:

  • an update on the implementation of PCS in the areas outlined in your detailed submission including a summary of notices to displace incumbent microwave licensees, showing their respective status and proposed PCS in-service dates;
  • an audited statement of research and development expenditures as required in condition 2.0 above for the fiscal year covered by the report;
  • a description of research and development activities including their distribution in Canada's regions;
  • an update on the number of subscribers and their distribution across your service area;
  • an update on the actual direct and indirect jobs created with respect to PCS, including their distribution across Canada;
  • a description of direct investments undertaken with respect to PCS;
  • an update on any other commitments made in your detailed submission; and
  • a copy of any existing corporate annual report for your fiscal year with respect to this authorization.

The reports are to be submitted, in writing within 120 days of your fiscal year end, to the Director, Spectrum Management Operations, Radiocommunications and Broadcasting Regulatory Branch.

6.0 Provision of Lawful Interception

6.1 You shall, from the inception of service, provide for and maintain lawful interception capabilities as authorized by law.

  • The requirements for lawful interception capabilities are provided in the Solicitor General's Enforcement Standards for Lawful Interception of Telecommunications (Rev. Nov.95). These standards may be amended from time to time following consultation with the Solicitor General of Canada and the licensees.
  • You may request the Minister to forbear from enforcing certain assistance capability requirements for a limited period. The Minister following consultation with the Solicitor General of Canada, may exercise his power to forbear from enforcing a requirement or requirements where in the opinion of the Minister, the requirement(s) is (are) not reasonably achievable. Requests for forbearance must include specific details and dates indicating when compliance to requirement(s) can be expected.
7.0 Microwave Transition

7.1 You must comply with the transition policy and relocation procedure for the relocation of incumbent microwave stations.

8.0 Commencement of Service

8.1 If you are a cellular licensee, or its affiliate, you may only offer any PCS service to the public within each of the 25 Census Metropolitan Areas (CMAs) at such time as:

  1. conditions 8.2 through 8.5 are met; and
  2. either: 
    • PCS service at 2 GHz is available to the public within that CMA by a non-cellular PCS licensee; or
    • One year has elapsed following the fulfilment of conditions 8.2 through 8.5.

If you are a cellular licensee, or its affiliate, you may only offer PCS service to the public outside of the 25 CMAs at such time as conditions 8.2 through 8.5 are met.

For the purpose of paragraph 8.3 and 8.4 of this section, non-cellular PCS licensees shall only offer cellular services by means of handsets that are also capable of providing PCS in their chosen PCS standard.

Availability of Public-Switched Telephone Network (PSTN) Interconnection

8.2 Interconnection to the wireline PSTN is available for all PCS licensees in the market area.

Cellular Resale

8.3 You, and any entities with whom you have an operating and/or marketing arrangement for the provision of uniformly branded or jointly offered cellular service, offer analogue cellular resale throughout the respective cellular service area on a non-discriminatory basis to all PCS licensees who are not cellular licensees or affiliates of cellular licensees (non-cellular PCS licensees) on terms which are acceptable to at least one such non-cellular PCS licensee or as set out by the regulator.

In the event that both non-cellular PCS licensees accept an offer for cellular resale from only one cellular licensee, condition 8.3 would be deemed to have been met for the other cellular PCS licensees.

Cellular Roaming

8.4 You, and any entities with whom you have an operating and/or marketing arrangement for the provision of uniformly branded or jointly offered cellular service, offer a cellular roaming arrangement for analogue cellular service utilizing the standard you use for inter-system operation, on a non-discriminatory basis to all non-cellular PCS licensees on terms which are acceptable to at least one non-cellular PCS licensee or as set out by the regulator. However, other roaming arrangements for analogue cellular service utilizing the said standard in use for inter-system roaming may be offered to those entities with whom you have an operating and/or marketing arrangement for the provision of uniformly branded or jointly offered cellular service.

In the event that both non-cellular PCS licensees accept an offer for cellular roaming from only one cellular licensee, condition 8.4 would be deemed to have been met for the other cellular PCS licensees.

Relocation of Microwave Links

8.5 Microwave links operating within the band 1850 MHz to 1990 MHz for which you are authorized, are relocated to ensure that sufficient spectrum is available for any other PCS licensee to operate within that same market area.

9.0 PCS Resale

9.1 You must offer PCS resale throughout your service area to PCS licensees on a non-discriminatory basis.

10.0 Interim Sharing Arrangement

10.1 You must comply with the provisions set out in the Interim Sharing Agreement between Industry Canada and the Federal Communications Commission Concerning the Use of the Band 1850 MHz to 1990 MHz.

11.0 Site Specific Authority

11.1 You must obtain site specific authority, normally in the form of a radio licence, prior to installing or operating any 2 GHz PCS base stations.

Appendix D

Sample PCS Auction Spectrum Licence (existing)

Account No. 07 - 0XXX000

Spectrum Licence
Issued under the authority of the Minister of Industry in accordance with the Radiocommunication Act and Regulations made thereunder

Appendix

The following conditions of licence apply to licensees for radio frequency spectrum licensed through the auction of additional PCS spectrum in the 2 GHz frequency range. Please note that under paragraph 5(1)(b) of the Radiocommunication Act the Minister of Industry may amend the terms and conditions of a spectrum licence. Any proposed amendment would be on an exceptional basis, and only following a full consultation.

  1. Licence Term

    The term of this licence will be ten years from the date of licence issuance. At the end of this term and any subsequent terms, the licensee will have a high expectation of renewal for a further ten-year term unless a breach of licence condition has occurred, a fundamental reallocation of spectrum to a new service is required, or an overriding policy need arises.

    A public consultation regarding the renewal of the licence will commence no later than two years prior to the end of the licence term if the Department foresees the possibility that it will not renew this licence or if renewal fees are contemplated.

    It should be noted that the licence is subject to relevant provisions in the Radiocommunication Act and the Radiocommunication Regulations. For example, the Minister continues to have the power to amend the terms and conditions of the spectrum licence (paragraph 5(1)(b) of the Radiocommunication Act). Such powers would be exercised on an exceptional basis, and only after full consultation.

  2. Licence Transferability and Divisibility

    The licensee may transfer its licence(s) in whole or in part (divisibility), in both the bandwidth and geographic dimensions. The area transferred in the geographic dimension may be no smaller than a single spectrum grid cell. A spectrum grid cell is a six-sided figure with an area of 25 square kilometres. The grid cells fit together in an interlocking pattern over the geography of Canada. No minimum limit will be imposed on the amount of spectrum transferred in the bandwidth dimension.

    For each proposed transfer of this licence, the licensee must provide a written notification to the Department. The transferee(s) must also provide an attestation (or other appropriate documentation) that it meets the eligibility criteria and all other conditions of this licence. The Minister of Industry reserves the right, prior to transferring the licences, to request additional documentation to determine if the transferee(s) complies with the appropriate eligibility requirements. The transferee(s) must also provide an attestation (or other appropriate documentation) that it will meet the appropriate conditions of licence.

    For the purposes of this condition, the "transfer" of a licence includes any leasing, subleasing or other disposition of the rights and obligations of the licence.

  3. Spectrum Aggregation Limit

    The licensee must comply with the spectrum aggregation limits outlined in Radio Systems Policy 021 (RP-021), Revision to the PCS Spectrum Cap and Timing for Licensing Additional PCS Spectrum, published November 5, 1999. The spectrum aggregation limit within a service area consists of spectrum licensed to the licensee and to its affiliates. The licensee must notify the Minister of any change that would have a material effect on its compliance with these spectrum aggregation limits. Such notification must be made in advance for any proposed transactions within its knowledge.

  4. Eligibility Criteria

    The licensee will employ the radio frequencies that are the subject of this licence as a radiocommunication carrier in order to operate one or more interconnected radio-based transmission facilities (any radio apparatus that is used for the transmission or reception of intelligence to or from anywhere on a public-switched network) that may be used by the licensee or another person to provide radiocommunication services for compensation.

    The licensee acting as a radiocommunication carrier must comply on an ongoing basis with the eligibility criteria in subsection 10(2) of the Radiocommunication Regulations. The licensee must notify the Minister of Industry of any change that would have a material effect on its eligibility. Such notification must be made in advance for any proposed transactions within its knowledge. For more information, refer to Client Procedures Circular 2-0-15 CPC-2-0-15), Canadian Ownership and Control, as amended from time to time.

  5. Displacement of Incumbent Microwave Licensee

    The licensee must comply with the revised transition policy outlined in Appendix 2 of the Policy and Licensing Procedures for the Auction of Additional PCS Spectrum in the 2 GHz Frequency Range

    issued June 28, 2000, and relocation procedure for the relocation of incumbent microwave stations outlined in Client Procedures Circular 2-1-09 (CPC-2-1-09), Displacement of Fixed Service Stations Operating in the 2 GHz Frequency Range to Accommodate Licensed Personal Communications Services (PCS).

  6. Radio Station Installations

    For each radio station, the licensee must ensure that:

    • radio stations are installed and operated in a manner that complies with Health Canada's limits of human exposure to radiofrequency electromagnetic fields;
    • where applicable, antenna structures are marked in accordance with the recommendations of Transport Canada;
    • prior to installation of significant antenna structures, consultation with the appropriate land use authorities has taken place;
    • installation of any significant antenna structure must be delayed for a period of time sufficient for departmental review where, after considering reasonable alternatives and consultation options, land-use consultation negotiations remain at an impasse; and
    • radio installations are installed and operate in a manner that complies with technical boundary and out-of-band emission conditions as specified by the Department.

    Refer to the document Environmental Process, Radiofrequency Fields and Land-Use Consultation (CPC-2-0-03), as amended from time to time.

  7. Provision of Technical Information

    When the Department requests technical information on a particular station or on a network, the information must be provided by the licensee to the Department according to the definitions and criteria specified by the Department. Refer to Client Procedures Circular 2-1-10 (CPC-2-1-10), Licensing of Personal Communications Services (PCS) in the 2 GHz Band.

  8. Laws, Regulations, and Other Obligations

    The licensee is subject to, and must comply with, the Radiocommunication Act, the

    Radiocommunication Regulations and the International Telecommunication Union (ITU) Radio Regulations and Canadian Table of Frequency Allocations pertaining to its licensed radio frequency bands. The licence(s) is(are) issued on condition that the certifications made in the application materials are all true and complete in every respect.

  9. Technical Considerations

    The licensee must comply with the technical requirements set forth in Standard Radio System Plan 510 (Plan SRSP-510), Technical Requirements for Personal Communications Services in the Bands 1850-1910 MHz and 1930-1990 MHz, and must deploy equipment certified under Radio Standards Specification 133 (RSS-133), GHz Personal Communications Services. SRSP-510 provides information on channelling plans, out-of-block emission limits, permissible effective isotropic radiated power (EIRPs) and antenna heights. RSS-133 sets out standards for transmitters and receivers for PCS in the 2 GHz band.

  10. International and Domestic Coordination

    The licensee must comply with the requirements of cross-border sharing and coordination arrangements established between Canada and the United States, as amended from time to time. While frequency assignments are not subject to site by site licensing, licensees may be required to furnish all necessary technical data to Industry Canada for each relevant site in order for international coordination to be effected with the United States as per the terms of any existing or future sharing arrangement. Should international coordination be required, Industry Canada will identify the appropriate data elements, format and means of submission.

    Coordination between licensees within Canada will follow similar procedures as those for international coordination.

  11. Lawful Interception

    Licensees using the spectrum for circuit-switched voice telephony systems must, from the inception of service, provide for and maintain lawful interception capabilities as authorized by law:

    • The requirements for lawful interception capabilities are provided in the Solicitor General's Enforcement Standards for Lawful Interception of Telecommunications (Rev. Nov. 95). These standards may be amended from time to time, following consultation with the Solicitor General of Canada and the licensees.
    • Licensees may request the Minister to forbear from enforcing certain assistance capability requirements for a limited period. The Minister, following consultation with the Solicitor General of Canada, may exercise his power to forbear from enforcing a requirement or requirements where, in the opinion of the Minister, the requirement(s) is (are) not reasonably achievable. Request for forbearance must include specific details and dates when compliance to requirement(s) can be expected.
  12. Research and Development

    The licensee must invest, as a minimum, 2 percent of its adjusted gross revenues resulting from its operations in this spectrum, over the term of the licence, in eligible research and development activities related to telecommunications. Eligible research and development activities are those that meet the definition of scientific research and experimental development adopted in the Income Tax Act. Adjusted gross revenues are defined as total service revenues, less inter-carrier payments, bad debts, third-party commissions, and provincial and goods and services taxes collected.

    If the licence is transferred to any eligible entity prior to the expiration of its term, the condition of licence relating to investment in research and development will continue to apply on the initial transfer of the licence and on any subsequent transfer until the term of this licence expires. Prior to a transfer, in whole or in part, of this licence, the proposed transferee must undertake to ensure that the sum of the investment it will make in eligible research and development activities and all investments made by prior licensees in eligible research and development activities equal, as a minimum, 2 percent of the aggregated adjusted gross revenues resulting from all operations in this spectrum, over the term of the licence. An attestation signed by the proposed transferee setting out the undertaking must accompany the licence transfer notification to be submitted to the Department by the licensee prior to the transfer being effected.

    To facilitate compliance with this condition of licence, the licensee should consult the Department's Guidelines for Compliance with the Radio Authorization Condition of Licence Relating to Research and Development. Further details on the exact administrative procedures for transferring a spectrum licence will be provided in a forthcoming Client Procedures Circular.

  13. PCS Resale

    Licensees must offer PCS resale throughout their service area to other PCS licensees on a non-discriminatory basis.

  14. Implementation of Spectrum Usage

    Within five years of the auction's close, the licensee must demonstrate to the Department that the spectrum has been put into use. The establishment of coverage to 50% of the population within the licensed service area, or some other indicator of usage that is acceptable to the Department, will be required. Supporting documentation should be submitted to the Manager, Wireless Networks Radiocommunications and Broadcasting Regulatory Branch at the address provided below.

  15. Annual Reporting

    The licensee must submit an annual report for each year of the term of the licence indicating

    continued compliance with all licence conditions, including:

    • audited financial statements as required under the licensee's jurisdiction of incorporation, including an audited Statement of Research and Development Expenditures with an accompanying Auditor's Report, prepared in accordance with the same standards of reporting; (to facilitate compliance with this reporting requirement, the licensee should consult the Guidelines for Compliance with the Radio Authorization Condition of Licence Relating to Research and Development published by Industry Canada);
    • a copy of any existing corporate annual report for the licensee's fiscal year with respect to the authorization.
    • an update on the implementation and spectrum usage within the area covered by the licence.

    The reports are to be submitted, in writing, within 120 days of the licensee's fiscal year-end, to:

    Manager, Wireless Networks
    Radiocommunications and Broadcasting Regulatory Branch
    300 Slater Street, 15th Floor
    Ottawa, Ontario
    K1A 0C8

    Confidential information provided in the reports will be treated in accordance with subsection 20(1) of the Access to Information Act and to the Privacy Act.

The information and service areas of Appendix E were proposed as part of the 2002 consultation.

The current Local Telephone Service Areas can be found at: http://www.ic.gc.ca/eic/site/smt-gst.nsf/en/sf08288.html.


Appendix E

New Tier Service Areas

On the Department's Web site, the Web page entitled Service Areas for Competitive Licensing located at http://www.ic.gc.ca/eic/site/smt-gst.nsf/en/h_sf01627.html was developed to provide descriptions of Tiers 1, 2, 3 and 4 and their associated service areas that the Department uses for all competitive licensing processes. These processes include spectrum auctions and comparative review processes.

The Department proposes to create the following additional Local Telephone Service Provider Tier service areas to accommodate the transition of non-auctioned Cellular and Personal Communications Services (PCS) licences from apparatus-based licences to spectrum licences.

The new Tier is comprised of 47 local telephone service provider areas which generally correspond to the wireline services areas of the telephone companies operating in Québec, Ontario and British-Columbia. Boundaries and population data of the new Tier service areas are based on best available information. The service areas of telephone companies operating in those provinces other than Quebec, Ontario and British-Columbia fall well within Tier 2 and Tier 4 service areas. Those companies will therefore be issued Tier 2 or Tier 4 spectrum licences for the purpose of the transition process.

A graphical representation of the new Local Telephone Service Provider Tier service areas is available on the Department's Web site.

Comments are invited to correct any inaccuracies associated with the new Tier service areas. The Local Telephone Service Provider Tier Service Area Numbers are used by the Department in this licensing process to officially reference a service area in our licensing database. The Descriptive Names of the new Tier service areas are for ease of reference only and open to suggestion during this consultation. The names could be changed to reflect new circumstances.

Service Area Number Descriptive Name
QUEBEC
TEL-01 BCE Québec : Bell Mobilité
TEL-02 BCE Québec: Bell Mobilité PCS B3 (auction licenced area 2-15G)
TEL-03 BCE Québec: Telebec Mobilité
TEL-04 CoopTel
TEL-05 La Corporation de Téléphone de La Baie (1983)
TEL-06 La Compagnie de Téléphone de Courcelles Inc.
TEL-07 La Compagnie de Téléphone de Lambton Inc.
TEL-08 La Compagnie de Téléphone Nantes Inc.
TEL-09 La Compagnie de Téléphone de St-Victor
TEL-10 La Compagnie de Téléphone de Warwick
TEL-11 La Compagnie de Téléphone Upton Inc.
TEL-12 Le Téléphone de St-Ephrem Inc.
TEL-13 Le Téléphone de St-Liboire de Bagot Inc.
TEL-14 Sogetel Mobilité Inc.
TEL-15 Téléphone Guèvremont Inc.
TEL-16 Téléphone Milot Inc.
TEL-17 TELUS Quebec: SCP B3 (licensed area within 2-04)
ONTARIO
TEL-18 Amtelecom Inc.
TEL-19 BCE Ontario : Bell Mobility
TEL-20 BCE Ontario : NorTel Mobility Inc.
TEL-21 Brooke Telecom Co-Operative Ltd.
TEL-22 Bruce Municipal Telephone System
TEL-23 Cochrane Cellular Mobility
TEL-24 Corporation of the City of Thunder Bay
TEL-25 Dryden Mobility
TEL-26 Corporation of the Town of Kenora
TEL-27 Execulink Telecom Inc.
TEL-28 Gosfield North Communications Co-operative Limited
TEL-29 Hay Communication Co-operative Limited
TEL-30 Huron Telecommunications
TEL-31 Lansdowne Rural Telephone Co.Ltd.
TEL-32 Mornington Communications Co-operative Limited
TEL-33 Nexicom Telecommunications Inc.
TEL-34 Nexicom Telephones Inc.
TEL-35 North Frontenac Telephone Co.Ltd.
TEL-36 North Renfrew Telephone Co.Ltd.
TEL-37 O.N.Tel Inc.
TEL-38 People's Communications Inc.
TEL-39 Quadro Communications Co-operative
TEL-40 Roxborough Telephone Co.Ltd.
TEL-41 Superior Wireless Inc.
TEL-42 Tuckersmith Communications Co-operative Limited
TEL-43 Westport Telephone Company Limited
TEL-44 Wightman Telecom Limited
BRITISH COLUMBIA
TEL-45 TELUS - Southern B.C.
TEL-46 Northwestel – Northern B.C.
TEL-47 City of Prince Rupert

Appendix F

Spectrum Allotments

Licensee Area Spectrum Block Frequency (MHz)
Microcell Telecommunications Inc. 1-01 PCS A/A' 1850 - 1865 / 1930 - 1945
TELUS Inc. 1-01 PCS B1/B1' 1870 - 1875 / 1950 - 1955
2-01 PCS B2/B2' 1875 - 1880 / 1955 - 1960
2-01 PCS B3/B3' 1880 - 1885 / 1960 - 1965
2-02 PCS B2/B2' 1875 - 1880 / 1955 - 1960
2-02 PCS B3/B3' 1880 - 1885 / 1960 - 1965
2-03 PCS B2/B2' 1875 - 1880 / 1955 - 1960
2-03 PCS B3/B3' 1880 - 1885 / 1960 - 1965
2-04 PCS B2/B2' 1875 - 1880 / 1955 - 1960
2-05 PCS B2/B2' 1875 - 1880 / 1955 - 1960
2-05 PCS B3/B3' 1880 - 1885 / 1960 - 1965
2-06 PCS B2/B2' 1875 - 1880 / 1955 - 1960
2-06 PCS B3/B3' 1880 - 1885 / 1960 - 1965
2-07 PCS B2/B2' 1875 - 1880 / 1955 - 1960
2-07 PCS B3/B3' 1880 - 1885 / 1960 - 1965
2-08 PCS B2/B2' 1875 - 1880 / 1955 - 1960
2-08 PCS B3/B3' 1880 - 1885 / 1960 - 1965
2-09 PCS B2/B2' 1875 - 1880 / 1955 - 1960
2-09 PCS B3/B3' 1880 - 1885 / 1960 - 1965
2-10 PCS B2/B2' 1875 - 1880 / 1955 - 1960
2-10 PCS B3/B3' 1880 - 1885 / 1960 - 1965
2-11 PCS B2/B2' 1875 - 1880 / 1955 - 1960
2-11 PCS B3/B3' 1880 - 1885 / 1960 - 1965
2-12 PCS D1/D1' 1865 - 1870 / 1945 - 1950
2-12 Cellular Block B 835 - 845 /880 - 890
2-12 Cellular Block B 846.5 - 849 / 891.5 - 894
2-14 PCS B2/B2' 1875 - 1880 / 1955 - 1960
2-14 PCS B3/B3' 1880 - 1885 / 1960 - 1965
TEL-02 Cellular Block B 835 - 845 / 880 - 890
TEL-02 Cellular Block B 846.5 - 849 / 891.5 - 894
TEL-17 PCS B3/B3' 1880 - 1885 / 1960 - 1965
TEL-45* PCS D1/D1' 1865 - 1870 / 1945 - 1950
TEL-45* Cellular Block B 835 - 845 / 880 - 890
TEL-45* Cellular Block B 846.5 - 849 / 891.5 - 894
Rogers Wireless Inc. 1-01 PCS F/F' 1890 - 1895 / 1970 - 1975
1-01 Cellular Block A 824 - 835 / 869 - 880
1-01 Cellular Block A 845 - 846.5 / 890 - 891.5
Saskatchewan Telecommunications 2-11 PCS D1/D1' 1865 - 1870 / 1945 - 1950
Holding Corp. 2-11 Cellular Block B 835 - 845 / 880 - 890
2-11 Cellular Block B 846.5 - 849 / 891.5 - 894
MTS Communications Inc. 2-10 PCS D1/D1' 1865 - 1870 / 1945 - 1950
2-10 Cellular Block B 835 - 845 / 880 - 890
2-10 Cellular Block B 846.5 - 849 / 891.5 - 894
Aliant Telecommunications Inc. 2-01 PCS D1/D1' 1865 - 1870 / 1945 - 1950
2-01 Cellular Block B 835 - 845 / 880 - 890
2-01 Cellular Block B 846.5 - 849 / 891.5 - 894
2-02 PCS D1/D1' 1865 - 1870 / 1945 - 1950
2-02 Cellular Block B 835 - 845 / 880 - 890
2-02 Cellular Block B 846.5 - 849 / 891.5 - 894
2-03 PCS D1/D1' 1865 - 1870 / 1945 - 1950
2-03 Cellular Block B 835 - 845 / 880 - 890
2-03 Cellular Block B 846.5 - 849 / 891.5 - 894
Bell Mobility 2-04 PCS D1/D1' 1865 - 1870 / 1945 - 1950
2-05 PCS D1/D1' 1865 - 1870 / 1945 - 1950
2-06 PCS D1/D1' 1865 - 1870 / 1945 - 1950
2-07 PCS D1/D1' 1865 - 1870 / 1945 - 1950
2-08 PCS D1/D1' 1865 - 1870 / 1945 - 1950
2-09 PCS D1/D1' 1865 - 1870 / 1945 - 1950
TEL-01 Cellular Block B 835 - 845 / 880 - 890
TEL-01 Cellular Block B 846.5 - 849 / 891.5 - 894
TEL-02** PCS D1/D1' 1865 - 1870 / 1945 - 1950
TEL-03 Cellular Block B 835 - 845 / 880 - 890
TEL-03 Cellular Block B 846.5 - 849 / 891.5 - 894
TEL-19 Cellular Block B 835 - 845 / 880 - 890
TEL-19 Cellular Block B 846.5 - 849 / 891.5 - 894
TEL-20 Cellular Block B 835 - 845 / 880 - 890
TEL-20 Cellular Block B 846.5 - 849 / 891.5 - 894

Footnotes

* Area TEL-45 is previously known as PCS Auction Licence area 2-16.

** Area TEL-02 is previously known as PCS Auction Licence area 2-15G.

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