Notice No. DGRB-008-99

Industry Canada

Department of Industry Act, S.C. 1995, c.1

Notice No. DGRB-008-99 — Radio Authorization Fees for Fixed Wireless Access Systems in Rural Areas in the Frequency Range 3400-3550 MHz

Introduction

Fixed wireless access (FWA) systems offer an economical alternative to wireline as a way to provide improved telephony and data services that are reliable and affordable in rural areas of Canada. Typically, rural service areas have high service costs because of the extensive wireline facilities needed to serve few customers over a large area.

On August 1, 1998 Industry Canada issued Gazette Notice DGTP-013-98 announcing the release of the paper entitled Spectrum Policy and Licensing Provisions for Fixed Wireless Access Systems in Rural Areas in the Frequency Range 3400-3700 MHz. The paper set out the new microwave spectrum utilization policy for fixed radio systems operating in this frequency range and initiated a first come, first served selection and an interim authorization process.

Given the importance of rapid deployment of FWA systems in rural areas of Canada and the need to accommodate several service providers and technologies, Industry Canada opened immediately for licensing 150 MHz, in six 25 MHz blocks, in the 3400-3550 MHz frequency range.

Interested parties were also invited to comment, by October 13, 1998 on the proposed annual authorization fee that would be proportional to the geographic area being licensed. Specifically, for each 25 km2, an annual fee of $120 for each 25 MHz block in the 3400-3550 MHz band was proposed.

This fee was derived, in part, using the current per telephone channel licensing fee established in the Radiocommunication Regulations as a base and assumes that the block is shared, whether this is the case or not. The number of potential telephone channels that could be accommodated within 25 MHz of spectrum using state-of-the-art data transmission technology was then calculated. The resulting figure was tested against a calculation of the cost of the wireline substitute as reflected in the monthly line access charges of the carriers.

In response to the Notice, four respondents commented on the proposed fee regime. All of the respondents fully support the Department's broad policy objectives of upgrading rural telecommunication services multi-party telephone lines and provide faster access to the Internet.

Most of the respondents favoured using a defined service area and frequency block assignment approach for determining the fee for FWA systems in rural areas. This approach, which does not require site-by-site authorization, facilitates the rapid deployment of these systems.

Several of the respondents, however, argued that the level of the proposed fees would be excessive for rural areas that have low teledensity. Essentially, as the cost per cell is fixed, the cost per customer will increase with lower population densities. A variable cost per customer creates an uncertainty and risk in plans to deploy FWA systems in rural areas. This could be eliminated by establishing a fixed annual fee of about $20 per customer or terminal or the minimum cost for the government to process the application.

Recognizing these and other concerns, and in view of the significant expressed demand for this spectrum, Industry Canada has adopted the following policy that will:

  1. accommodate a greater number of licensees to offer service in rural areas for spectrum blocks in the 3400-3550 MHz frequency range by licensing them on a shared use basis where circumstances
  2. apply these fees only to FWA systems that operate in the 3400-3550 MHz frequency range and that are located in rural areas.
  3. defer licensing and fixing fees for FWA systems that operate in the 3400-3550 MHz frequency range and that are located in urban
  4. defer opening an additional 150 MHz for licensing FWA systems in the 3550-3700 MHz frequency range until service demand warrants the
  5. make use of an area grid of hexagonal cells with an area of 25 square kilometres, which allows licensees and the Department to define and refer to geographic service areas in Canada in a consistent and simple manner.
  6. fix the annual licence fee at $60 per cell per 25 MHz spectrum block. For example, the fee for a FWA in a rural service area composed of five grid cells is $300 ($60 x 5) per 25 MHz.

Complete details of the fees fixed for FWA systems in rural areas are set out in the following fee schedule.

Fee Schedule

The Minister of Industry, pursuant to section 19 of the Department of Industry Act, hereby fixes the following fees, effective upon publication in the Canada Gazette of this notice. The fees are applicable to radio authorizations issued by the Minister pursuant to paragraph 5(1)(a) of the Radiocommunication Act to establish fixed wireless access systems in the 3400-3550 MHz frequency range in accordance with the terms of the authorization.

Interpretation

1. For the purpose of this fee schedule,

"cell"
means a hexagonal cell with an area of 25 km2;
"rural service area"
means the defined geographic area specified in the radio authorization;
"spectrum block"
means a 25 MHz block, or portion thereof, of radio spectrum in the 3400-3550 MHz frequency range;
"total authorized cells"
means the total number of cells in a rural service area;
"renewal fee"
means the annual fee payable for the renewal of a radio authorization before the radio authorization expires on March 31 of each year.

Annual Radio Authorization Fee

Annual Fee

2. The annual radio authorization fee is $60 per cell, per spectrum block, times the total authorized cells.

Initial Annual Radio Authorization Fee

3. The prorated balance of the then-current fiscal year's authorization fee that corresponds to the total authorized cells per spectrum block is due on the date of the issuance of the radio authorization.

Prorated Fees

4. The month that the annual radio authorization is issued determines the applicable prorated fee.

5. The prorated fee is $5 per cell, per spectrum block, times the total authorized cells for each month until the licence expires on March 31.

Renewal Fee

6. The renewal fee is the applicable annual radio authorization fee.

General Notes

The aggregate fee is rounded to the nearest dollar.

This is an interim fee regime that may be adjusted as circumstances so warrant.

John Manley
Minister of Industry

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