Notice No. DGRB-013-99

Industry Canada

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

Notice No. DGRB-013-99 — Radio Authorization Fees for Multipoint Communications Systems (MCS) that Operate in the 2500 MHz Range and on Other Related Frequencies and Multipoint Distribution Systems (MDS) that Operate in the 2600 MHz Range that Provide Non-Broadcasting Services

Introduction

Multipoint Communications Systems (MCS) that operate in the 2500 MHz range and Multipoint Distribution Systems (MDS) that operate in the 2600 MHz range are wireless communications systems. They provide wideband wireless telecommunications services that are capable of carrying basic and advanced communications such as "wireless" cable TV, high-speed Internet access, video teleconferencing, and various other multimedia services.

On December 12, 1997, Industry Canada issued a consultation document entitled Multipoint Communications Systems (MCS) in the 2500 MHz Range (Gazette Notice DGRB-007-97). This document outlined the general telecommunications policy objectives for the licensing of MCS, and invited comments on spectrum structure and use, service areas, licence aggregation, licence fees, and the treatment of incumbent licensees.

In response to this consultation, thirty-eight submissions were received from interested parties. Comments were received on key points such as: the requirement for larger blocks of spectrum than initially proposed; the importance for service providers to have flexibility of choice of service offerings; the extensive use of MCS by some existing licensees, i.e., Manitoba, for learning purposes; and the potential of these bands to further fulfill learning goals across Canada.

With respect to the licensing and fee proposal of this initiative, most respondents supported the use of spectrum licences, also referred to as block area licences, instead of site-specific radio station licences. Spectrum licences authorize a licensee to use specified radio frequencies within a defined geographic area. Many respondents also supported the Department's proposal of an annual authorization fee for MCS at 2500 MHz of $0.008 per household in each service area per 6 MHz of spectrum.

As a result of the public consultations launched in 1997, a learning focus that is consistent with the Government's Connecting Canadians strategy has been added to the licensing selection process.

On June 12, 1999, the Department of Industry issued Gazette Notice DGRB-006-99 which announced the release of the paper entitled Multipoint Communications Systems in the 2500 MHz Range, Policy and Licensing Procedures. This paper initiated a comparative selection and authorization process for these systems because requests on a first-come, first-served basis far exceeded the spectrum available in the band.

In addition to calling for expressions of interest by July 9, 1999, and subsequently, full detailed submissions by October 11, interested parties such as existing or prospective MCS and MDS service providers were invited to comment by July 9 on the proposed radio authorization (spectrum licence) fees as well as on certain other licensing aspects.

In light of the licensing requirement that they submit a learning plan as part of their submission, it was deemed necessary to redefine the seventeen contiguous service areas, proposed in 1997, to service areas that follow provincial and territorial boundaries and that correspond with provincial and territorial learning authorities. The Department of Industry defined fourteen service areas with one service area per province and territory and with the eastern Ontario and Outaouais service area being a stand-alone area for economic and technical reasons. The above-noted paper provides maps of these areas, as well as a table with the corresponding number of households and authorization fee for each service area for MCS systems. For non-broadcasting services using MDS, the service area will be the area authorized by the Canadian Radio-television and Telecommunications Commission.

The policy paper also stated that spectrum licenses would be issued for a ten-year term, partitioning of a licence will only be permitted along census subdivision lines so that the spectrum licence fee can be recalculated commensurate with the number of households in each resulting area, and disaggregation of a licence will only be permitted in multiples of 1 MHz blocks. Furthermore, this would be an interim fee regime that will be adjusted from time to time, as more recent census data becomes available.

The Department proposed for Multipoint Communications Systems:

  1. a fee of $1.30 per 1 MHz per 1000 households, rounded off to the nearest 500 households. This fee is equivalent to $0.008 per household in each service area, per 6 MHz of spectrum, as originally proposed, because the spectrum will be licensed in one 96 MHz parcel per service area as set out in the policy document;
  2. the same fee of $1.30 per 1 MHz per 1000 households, rounded off to the nearest 500 households, for use of the additional bands of 2150-2156 MHz and 2686-2688 MHz to provide out-of-band return spectrum capability; and
  3. the calculation of fees for the entire licensed area and band, regardless of the portion actually in use.

The Department also proposed to institute the same fee regime for Multipoint Distribution Systems (MDS) providers who want to use part of their licensed broadcasting spectrum in the 2596-2686 MHz band to provide radiocommunication (non-broadcasting) services or, upon application, access spectrum in the 2156-2160 MHz and 2688-2690 MHz bands, which will be licensed by the Department to MDS licensees.

In response to the Notice DGRB-006-99, 19 expressions of interest were received. Of these, only one submission contained comments concerning the proposed fees. Several respondents fully support the Department's broad policy objectives of facilitating the timely and orderly implementation within Canada of new wireless telecommunications services to foster learning, sustainable competition and innovative services. Prospective MCS and MDS service providers are eager to offer new wireless services that may compete with cable and telephone services to help make Canada the most connected country in the world.

The one respondent who expressed some reservations to the fee proposal believes that the Department should recalibrate and reduce the fees for MCS in the 2500-2596 band to account for the potentially significant economic impact of the learning plans that MCS licensees will implement. The Department has already taken learning plans, as well as other factors, into consideration in its proposal.

The licence fees for spectrum will not act as an impediment to MCS and MDS service providers offering new innovative telecommunication services. Moreover, under a spectrum licensing regime, residential and business customers will not incur any direct licence fees for the use of these bands. Although the spectrum licensing regime offers greater flexibility of defining service areas and spectrum blocks to facilitate rapid deployment of radio systems, existing MCS licensees may remain under the current radio licensing regime on a site-by-site basis. This is consistent with Manitoba's concerns which were MCS band.

In light of the favourable consultations with existing and prospective MCS and MDS service providers, the spectrum licence fees for these wireless communications systems will be established as proposed in the licensing policy document released in June. Complete details of the fees, established in accordance with the licensing policy for MCS, 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 the date of publication of this notice in the Canada Gazette. The fees are applicable to radio authorizations issued by the Minister pursuant to paragraph 5(1)(a) of the Radiocommunication Act to establish wireless communications systems in accordance with the terms of the authorization.

Interpretation

1. For the purpose of this fee schedule,

"service area"
defined geographic area specified in the radio authorization;
"specified frequencies"
the range of frequencies, or portion thereof, in the frequency bands 2500-2596 MHz, 2150-2160 MHz, 2686-2690 MHz and 2596-2686 MHz
"household"
has the same meaning as defined by Statistics Canada in the 1996 Census;
"multipoint communications systems"
(MCS) means radio systems that operate primarily in the 2500-2596 MHzband;
"multipoint distribution systems";
(MDS) means radio systems that operate primarily in the 2596-2686 MHzband as broadcast distribution undertakings;
"wireless communications systems"
include "multipoint communications systems" (MCS) or multipoint distribution systems‛ (MDS) that operate on specified frequencies to provide directly to residential and business subscribers non-broadcasting services on MDS frequency bands, or telecommunications services in the MCS frequency bands allotted to MDS licensees; and
"renewal fee"
the annual fee payable for the continuance in force of the radio authorization until the radio authorization expires.

Annual Radio Authorization Fee

2. The annual radio authorization fee is $1.30 per 1 MHz per 1000 households, or portion thereof, in respect of the specified frequencies assigned to a wireless communications system in the service area.

Initial Annual Radio Authorization Fee

3. The prorated balance of the then-current fiscal year's authorization fee for the applicable specified frequencies per authorized service area per 1000 households, or portion thereof, is due on the date of the issuance of the radio authorization.

4. The month that the Minister issues the initial annual radio authorization determines the applicable prorated fee.

5. The prorated fee is 1/12 of the applicable annual authorization fee for each month until March 31 of the then-current fiscal year.

Renewal Fee

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

General Notes

The aggregate fees are rounded to the nearest dollar.

Annual renewal fees are due before March 31 for the subsequent year commencing on April 1.

These fees may be revised from time to time as circumstances warrant or as more recent census data become available.

Incumbent licensees: In particular circumstances, as outlined in the policy, incumbent licensees may be permitted to continue to operate under the existing terms and conditions of their radio licences and will be subject to appropriate fees set out in the Radiocommunication Regulations.

Maps of the service areas for MCS are in the document entitled Multipoint Communications Systems in the 2500 MHz Range, Policy and Licensing Procedures released June 12, 1999.

John Manely
Minister of Industry

Date modified: