Amendments and Supplements and Clarification Questions to the Policy and Licensing Procedures for the Auction of Spectrum Licences in the 2300 MHz and 3500 MHz Bands

Table of Contents


10.1 General

In accordance with Section 7.7 of the Policy and Licensing Procedures for the Auction of Spectrum Licences in the 2300 MHz and 3500 MHz Bands(the Policy), the following clarifies and amends the Policy issued on September 20, 2003. These amendments and supplements also include the Department's response to the clarification questions which were submitted prior to the October 17, 2003 deadline.

For convenience, these amendments and supplements have been formatted so to be considered as Section 10 of the Policy. The text has been organized around the following themes:

  • Definition of licences
  • Incumbents, transition policy and technical considerations
  • Licence conditions
  • Licensing process
  • Auction design and rules
  • Post-auction procedures

10.1.1  Response to Clarification Question Related to Auction Proceeds

Question 1:

Does the Department have any plans to use the auction proceeds to fund, in whole or in part, specific public capabilities that licensees may be required to implement, such as lawful access, or other services that may not necessarily be implemented for commercial purposes?

Answer:

All auction proceeds are transferred to the Finance Department for deposit into the Consolidated Revenue Fund. The Minister of Finance, under guidance from the federal cabinet, is responsible for the management of the Consolidated Revenue Fund.

10.1.2  Response to Clarification Question Related to the Department's Plans for Releasing Additional Spectrum

Question 2: 

Can the Department clarify its plans for releasing additional spectrum?

Answer:

In the Framework for Spectrum Auctions in Canada, the Department indicated that it would provide a forecast of certain types of spectrum to be released and the timing for initiating future competitive licensing. The Department provides its forecast in Radio Systems Policy-20, Guidelines on the Licensing Process and Spectrum Release Plan (2001 Edition)(RP-20). The forecast is updated to reflect changes in spectrum policies, demand for certain bands and the public interest as new information is available. In RP-20, spectrum resources are grouped as follows: narrowband/wideband wireless access; broadband wireless access, satellite orbital positions, mobile and licence-exempt.

The 2300/3500 MHz spectrum is defined as narrowband/wideband wireless spectrum (below 10 GHz) while spectrum above 10 GHz is generally referred to as broadband.

As described in RP-20, the Department is planning various licensing activities in the mobile area such as the licensing of spectrum for Advanced Wireless Services which includes fixed wireless components of IMT-2000 also known as 3G.

Also, in RP-20 the Department indicated that it announced in November 2001, that it is adding the fixed and mobile allocations throughout the 2500-2690 MHz band and that it would consult on licensing considerations arising from the change in allocations. Since that time, the Department sent a letter to the CRTC on June 20, 2003 imposing a moratorium on the release of MDS spectrum for areas of the country where MDS broadcasting licences have not been issued. The Department intends to carry out a public consultation within the next 18 to 24 months. MDS broadcasting licences have not been issued in several areas of Canada, including the province of Alberta, the Atlantic provinces and many areas of northern Canada.

Other than indicated above, the Department does not have specific plans for releasing additional spectrum for narrowband wireless access below 10 GHz in the immediate future.


10.2 Definition of Licences

10.2.1 Responses to Clarification Questions Related to FWA and WCS Spectrum in General

Question 3: 

Advise whether Mobile Aeronautical Telemetry Services (MATS) will be permitted in the WCS Band.

Answer:

The Department wishes to clarify that WCS will be licensed under the frequency allocations for fixed and mobile services. While aeronautical mobile service and maritime mobile service are defined as part of the mobile service, these services are not included in the permitted services under the WCS licence. Provision has been made to retain the designation for the use of the Mobile Aeronautical Telemetry Service (MATS) in the band 2300-2360 MHz on a secondary basis (no interference, no protection) in Section 5.1.2 of the Policy, footnote C17 of Appendix 2, and Spectrum Utilization Policy SP 2285 MHz. "Where MATS does not impact the implementation of WCS and other services, it may be authorized to the Department of National Defence, on a secondary basis, on major military bases and vicinities, in the band 2300-2360 MHz." The band 2360-2400 MHz is designated for mobile aeronautical telemetry services with priority of use given to the Government of Canada. (see SP 2285 MHz)

Question 4:

Will the Department allow licence-exempt low-powered devices in the WCS and FWA Bands?

Answer:

The Department will continue to accommodate low power licence-exempt equipment in these bands according to RSS-210 procedures and technical guidelines. This could include new wideband systems such as UWB which operate at levels close to the noise floor.

Question 5:

Advise whether point to point transport service applications will be permitted in the FWA Band.

Answer:

As stated in Section 4.1.2 of the Policy, licensees may deploy a full range of fixed applications (i.e. point-to-multipoint or point-to-point) in support of FWA applications. This could include point-to-point transport service applications, however, the Department anticipates that the FWA spectrum will be deployed predominantly for point-to-multipoint configurations.

As outlined in the transition policy for displacement in Appendix 3 of the Policy , the intent of displacing incumbent point-to-point systems is to allow for the establishment of new FWA systems, with the anticipation that these would be point-to-multipoint systems. Requests that would require the displacement of existing point-to-point systems, in order to allow the licensee to establish point-to-point systems would be scrutinized by the Department. As well, point-to-point systems deployed under the FWA licence will need to meet the coordination requirements with respect to adjacent areas.

Question 6: 

The policy paper states that the Department expects broadband services and that the maximum flexibility will be afforded to successful bidders in terms of the services they will offer. Will the Department confirm that telephony services will be permitted in these bands?

Answer:

Telephony services will be permitted in both the FWA and WCS bands in accordance with the policy provisions for each band (Particularly Sections 4.1.1 and 5.3.1 for WCS, and Sections 4.1.2 and 5.4.1 for FWA). However, please refer to Section 5.2.4 in the Policy regarding additional restrictions, on FWA systems, in the provision of critical services (such as 911) in the Halifax, Dartmouth, Vancouver and nearby coastal areas and communities along the Strait of Georgia.

Question 7:

What are the license terms, conditions and fees applicable to spectrum in these bands provided through the current FCFS process?

Answer:

Currently, only FWA is available on a FCFS basis and only in high-cost service areas.

Under the current FCFS process for FWA systems, the licensee must be deemed eligible to become a radiocommunication carrier and comply with the eligibility criteria as set out in section 10 of the Radiocommunication Regulations and in the Canadian Telecommunications Common Carrier Ownership and Control Regulations of the Telecommunications Act. The areas of operation in the existing 1998 spectrum policy generally are limited to high-cost service areas. Licences issued under the FCFS policy have one-year terms and are renewed on an on-going basis. Licence fees are proportional to the geographic area being licensed, that is, for each 25 Km² grid cell, an annual fee of $60.00 for each 25 MHz block in the 3400-3650 MHz band is applied. FWA systems need to be brought into service within a period of six months from receipt of an approval-in-principle/licence.

For greater detail on licence terms, conditions and fees please see the Spectrum Policy and Licensing Provisions for Fixed Wireless Access Systems in Rural Areas in the Frequency Range 3400-3700 MHz, DGTP-013-98 (http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf01625.html) and the two Gazette Notices subsequently published (DGTP-002-03 and DGTP-006-03) which announce rearrangements of the spectrum in the band 3400-3650 MHz to better accommodate FWA systems and radiolocation operations.

Question 8: 

The 1998 FWA FCFS policy states that licensees will be provided with discrete channels within shared blocks. Please advise whether the entire blocks will be licensed to individual licensees or whether the blocks will be shared.

Answer:

For FCFS FWA spectrum, please note that licences are now being assigned for full paired blocks (25+25 MHz) on a non-shared basis.

The FWA spectrum licensed during this auction process, as well as any FWA spectrum assigned in a post-auction licensing process, will not require that licensees share the licence blocks.

10.2.2  Responses to Clarification Questions Related to Exchange of Licences in FWA

Question 9: 

In the event that one or more licences in the 3500 MHz band is unsold, would it be possible for the winner of one of the other licences in that band to swap their own licence with one held by Industry Canada, in accordance with the FCFS procedures, without penalty?

Answer:

The Department would be favourably disposed to requests for any post-auction spectrum transfers of licence(s) won in the auction with any of the unsold licence(s), so as to rationalize the holdings of a licensee for the improvement of spectral efficiency.

10.2.3  Responses to Clarification Questions Related to Geography

Question 10: 

Please identify the areas not included in the auction and the reason why they are not included.

Answer:

In reference to Section 4.3 of the Policy, licences covering all of Canada will be auctioned in the WCS band except for areas and spectrum used by incumbent point-to-multipoint systems identified in Appendix 9 of the Policy. In the FWA band, the areas to be auctioned will include all of Canada except: 

  1. Vancouver Island (Tiers 4-153, 4-154, and 4-155), due to the increased potential for interference in that area, and;
  2. Spectrum grid cells occupied by incumbent FWA systems in rural areas. A complete list of incumbents and their licence areas, including approvals in principle, will be posted on the Spectrum Management and Telecommunications Web site three to four weeks prior to the auction. Note that the unlicensed portions of Tier areas containing incumbent licensees will still be available at auction.

Question 11: 

"It should be noted that spectrum in the band 3475-3650 MHz is currently available on a first come first served (FCFS) basis in rural and remote areas..." (Section 3.4)

  1. Indicate whether any of the areas classified as "rural & remote areas" overlap the Tier 4 areas identified in Appendix 7.
  2. Indicate whether any of the Tier 4 areas identified in Appendix 7 are currently available through the FCFS process. If so, identify the bands and locations.

Answer:

As outlined in DGTP-013-98, Spectrum Policy and Licensing Provisions for Fixed Wireless Access Systems in Rural Areas in the Frequency Range 3400-3700 MHz  (http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf01625.html), FWA systems may generally be licensed in high cost serving areas.

The FWA spectrum currently available on a FCFS basis in rural and remote areas, is only available by grid cell, not by the Tier 4 service areas. A spectrum grid cell is a six-sided figure with an area of 25 Km² (see Service Areas for Competitive Licensing at http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/h_sf01627.html). A grid cell or grid cells in rural and remote areas may partially cover a Tier 4 area and in some cases may even fully cover a Tier 4 area. However, it is never the case that a grid cell covers parts of two Tier 4 areas. Annex 1 of DGTP-013-98, Spectrum Policy and Licensing Provisions for Fixed Wireless Access Systems in Rural Areas in the Frequency Range 3400-3700 MHz provides a full description of FWA spectrum available on a FCFS basis.

During the auction process, the WCS and FWA spectrum blocks will be available for licensing using the Tier 4 service areas as shown on the Spectrum Management and Telecommunications Web site at http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf05909.html. The Tier 4 areas cover all of Canada and thus encompass all existing FCFS licence areas.

Question 12: 

The existing FCFS process is only for FWA spectrum in rural/high cost low teledensity serving areas. Annex 1 of the FWA FCFS policy issued in 1998 lists the (then current) applicable areas. Please provide a more recent/up to date list of the applicable serving areas.

Answer:

The 1998 FWA FCFS policy lists the most current service areas available for licensing.


10.3 Incumbents, Transition Policy and Technical Considerations

10.3.1  Approvals-in-principal in the FWA Band

For the purpose of the 2300 MHz and 3500 MHz auction only, those entities having received written approvals-in-principle will be treated as incumbent FWA licensees and are not subject to the transition policy. Such entities are still obligated to meet the FCFS conditions. For example, in the case of approvals-in-principle, if the six month implementation requirement is not respected these entities will not be granted licences or become incumbent licensees.

10.3.2  Responses to Clarification Questions Related to Incumbents in the FWA and WCS Bands

Question 13:

"A significant and/or unjustified delay in the use of released frequency spectrum by WCS and FWA licensees, after the displacement date, will be viewed by Industry Canada as a serious breach of commitment, particularly if fixed stations were displaced prematurely." (Reference Appendix 3, Item 9.)

How will these licensees be penalized for

  1. not using the spectrum, and
  2. having displaced incumbent systems?

Will they be required to pay the cost of the displacement?

Answer:

The Department will serve notification for displacement to open spectrum for new systems and services as required. It also recognizes that factors affecting the use of released spectrum may occur.  The Department will take relevant factors into consideration before determining what action it would take. The Department wishes to discourage unjustified delays in the use of released spectrum.

Spectrum is a public resource which should be used in ways that serve the public interest.

Question 14:

"A list of these FWA incumbent licenses will be made available in advance of the auction so that bidders will know which licenses are encumbered, and the location of the incumbents within the service area." (Reference Section 4.1.3.)

Please indicate precisely how far in advance of the start of the auction this information will be available.

Answer:

Information on spectrum licence holders, including both FWA and WCS incumbents, continues to be available by searching on the Department's Assignment and Licensing System (ALS) database, on the Spectrum Direct Web site, at http://sd.ic.gc.ca. The Department also plans to provide alternate methods of viewing the FWA and WCS incumbents, in the form of maps.  As stated in Section 5.2.1 of the Policy, a complete list of incumbents, including approvals in principle, will be posted on the Spectrum Management and Telecommunications Web site three to four weeks prior to the auction.

10.3.3  Responses to Clarification Questions Related to the Transition Policy of the FWA and WCS bands

Question 15:

"Industry Canada will monitor the effectiveness of the spectrum policy provisions related to the displacement of fixed systems. In the long term, changes to these provisions and/or licence conditions may be made to ensure that the continued availability of spectrum for WCS and FWA systems is accomplished in the most efficient manner."

If and when Industry Canada changes the provisions and/or license conditions, will they first conduct a public consultation regarding these changes? (Reference Appendix 3 Item 10)

Answer:

The Minister, under section 5(1)(b) of the Radiocommunication Act, has the power to amend the terms and conditions of spectrum licences.

When considering such changes to spectrum policy provisions or licence conditions, the Minister will exercise his/her discretion in determining whether a consultation is necessary.

10.3.4  Responses to Clarification Questions Related to Technical Considerations of the FWA and WCS bands

Question 16:

What measures will the Department put into place to ensure that the successful bidders in WCS enjoy unfettered use of the WCS spectrum, for which they have paid and not be interfered with by S-DARS?

Answer:

As noted in Section 5.3.2 of the Policy, the Department expects applicants bidding for WCS spectrum licences to take into account the potential operation of digital satellite radio terrestrial repeaters in the band 2320-2345, as well as other services in spectrum above 2360 MHz and below 2305 MHz.

The Department has outlined a series of technical parameters including in-band and out-of-band emission levels which will create an environment within which WCS will operate. The Department has made its best effort to characterize the environment of the WCS spectrum, including the consideration of services in adjacent spectrum, but does not purport to have identified all potential interference situations or their potential impact on WCS. The extent to which this environment constrains a specific implementation of WCS, will depend on a number of factors including equipment characteristics and deployment strategy. It is the responsibility of the applicants bidding for WCS spectrum licenses to assess the implications of the spectrum environment on their business case.

In addition to the above, the use of the WCS spectrum will be subject to the sharing conditions among WCS licensees in adjacent service areas. These licensees are encouraged to enter into mutually beneficial coordination arrangements.

A new SRSP-302.3 will prescribe a coordination procedure between WCS licensees. Such a procedure will contain many of the elements of the cross border WCS coordination arrangement with the US (see Section 5.3.2). 

Question 17:

Please confirm our understanding, pursuant to section 5.3.1 of the Policy, that applications of the 2300 MHz band, by winning bidders, will be restricted to low mobility or portable terminals?

Answer:

Winning bidders in the 2300 MHz frequency band will be licensed under fixed and mobile services, thus deployments may have elements of both services. Licensees may deploy a full range of terminal devices which operate in accordance with the technical provisions to be developed in RSS-195. The technical limits are intended, in part, to facilitate the operation of services in adjacent bands. It has been recognized that with the current state of technology, these rules would severely limit if not preclude most mobile uses, particularly wide area high mobility services such as those currently provided in the cellular and PCS bands. However, it is noted that more relaxed out-of-band emission limits have been adopted in the US for portable WCS terminals which due to their operating characteristics do not increase the interference environment for services in adjacent bands. Similar limits can be adopted in Canada, and will be considered in the development of RSS-195.

Question 18:

The Department states that both fixed and mobile services will be permitted in the 2.3 GHz band and that technical restrictions will be placed on mobile systems to ensure compatibility with systems operating in adjacent bands. Will the potential future removal of any such restrictions on mobile services be possible without the completion of a public consultation? Please explain the process that will take place.  

Answer:

The Department recognizes that changes, such as evolution in the use of adjacent bands, international allocations or technological advances, could result in changes to the restrictions that are required on the use of the WCS band.

The Department does review technical requirements from time to time in consultation with affected parties as appropriate (see response to question 17), however, a public consultation may be conducted if the Department considers it to be in the public interest.

Question 19:

For the purposes of question 18 above and for the purposes of section 5.3.1 of the Policy, what is the definition of "low mobility or portable terminals" which will be applied by the Department?

Answer:

Winning bidders wishing to deploy mobile services in the 2300 MHz frequency band must conform to the technical limits which will be included in RSS-195. These rules define the technical restrictions on mobile and portable devices and will make the provision of high mobility cellular and PCS services quite difficult (see response to question 17).

Question 20:

At page 19 of Policy and Licensing Procedures for the Auction of Spectrum Licences in the 2300 MHz and 3500 MHz Bands (DGRB-003-03), the Department states as follows:

The Department anticipates that satellite radio service in Canada would require S-DARS terrestrial repeaters to operate with power levels up to 12.5kW e.i.r.p. (41 dBW e.i.r.p.), but typically at lower power levels.

Please confirm that this power level is measured over the same 1 MHz bandwidth as the S-DARS OOB [out-of-band] emission level.

Answer:

This value is the total effective isotropic radiated power from an S-DARS terrestrial repeater station. It is measured over the entire transmitted bandwidth of that station, not over 1 MHz bandwidth.

Question 21:

At page 18 of DGRB-003-03, the Department states as follows:

Canadian WCS licensees are advised to consider employing base station receivers with adequate front-end RF filtering to facilitate compatibility with potential S-DARS terrestrial repeater operation in adjacent band. Note that any such design constraint would be limited to the urban environment where S-DARS terrestrial repeaters would be implemented.

  1. Please confirm that these statements should not be interpreted by WCS licensees to mean that the operations of S-DARS providers will be limited soley to urban environments.
  2. In certain non-urban environments, S-DARS terrestrial repeaters will be required where satellite signal blockage continues to present a concern (e.g., transportation corridors and commuter routes). With reference to the paragraph above, please explain whether procedures will be adopted in order to ensure that adequate WCS design constraints are implemented by WCS licensees in order to facilitate compatibility with S-DARS terrestrial repeaters in non-urban environments.

Answer:

The above statement should be interpreted to mean that the operation of S-DARS terrestrial repeaters are needed essentially to improve service in urban areas. Any resulting design consideration for WCS receivers would therefore be limited to the urban environment where provisions for S-DARS terrestrial repeaters are being made.

In the case of terrestrial repeaters located outside of urban areas, the satellite radio licensee is required to seek an arrangement with the WCS licensee(s) that may be impacted.

It should be noted that S-DARS terrestrial repeaters operate in their own band, as does WCS. In situations where the repeater is designed, situated and operated at sufficiently low power so as not to adversely affect existing and future WCS implementations, the Department will permit these applications as required.

Potential WCS licensees are advised to carefully study the U.S. regulatory and operational environment with regard to WCS and S-DARS terrestrial repeater implementations.


10.4 Licence Conditions

10.4.1  Responses to Clarification Questions Related to Licence Transferability and Divisibility

Question 22:

"In the past, the Department has interpreted the transfer of a licence to include any leasing, subleasing or other disposition of the rights and obligations of the licence. The Department is planning to consult to determine whether this interpretation will continue to apply for this licensing process and future licensing processes." (Reference Section 6.2.)

Provide details as to this planned consultation including timing and whether this will be completed before the commencement of the auction.

Answer:

The Department intends to consult on a proposal wherein holders of spectrum licences that have transferability and divisibility privileges would be able to enter into lease-type arrangements with respect to their spectrum-usage privileges.

The consultation paper is expected to be released in the next few months, but it is not anticipated that the consultation will be completed prior to the commencement of the auction. However the Department will consider granting an interim authority for lease-type arrangements on a case-by-case basis. Any interim authorities would be subject to the outcome of the consultation.

Question 23:

"The spectrum aggregation limit does not prevent subsequent transfers during the first two years as long as the 100 MHz limit per single holder (Affiliates and Associated Entities) is not exceeded."

  1. Please advise whether spectrum leases/sub-leases and other non-ownership arrangements will be permitted.
  2. Comment on whether it would be possible for a firm already holding 100 MHz of spectrum to enter into a non-ownership arrangement for additional spectrum (leases, third party arrangements, etc.). If not, please advise as to the mechanisms that will be implemented to detect and prevent this and the penalties assessed if it does occur.

Answer:

As noted above in the response to Question 22, the Department intends to consult on a proposal wherein holders of spectrum licences with transferability and divisibility privileges would be granted further flexibility to enter into lease-type arrangements with respect to their spectrum-usage privileges. The Department is considering whether this will apply to this licensing process and future licensing processes.

If the Department's proposal is implemented, it is anticipated that any company gaining access to spectrum either through a lease-type arrangement, a transfer or other third party arrangement, would be required to be in compliance with any Canadian ownership and control requirements and/or spectrum aggregation limits that apply to the licence. It is also anticipated that the same mechanisms which are in place for ensuring compliance and the same penalties for non-compliance will apply to both the primary licensee and any subordinate licensee associated with that licence.

10.4.2  Responses to Clarification Questions Related to Radio Installation

Question 24:

"...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...":

Provide details on the maximum time required by the Department for this referenced "review". (Reference Section 6.6.)

Answer:

Industry Canada has recently undertaken a review of its antenna tower policy and siting procedures. As part of this review, the Department anticipates an update of Client Procedures Circular 2-0-03 Environmental Process, Radiofrequency Fields and Land-Use Consultation (CPC-2-0-03). The current version of CPC-2-0-03 states:

"When Industry Canada becomes aware of a land-use authority objection to a site-specific station, issuance of the licence will be delayed for a period of time sufficient for negotiations between the parties. While individual circumstances will vary, Industry Canada generally considers that once a participating land-use authority is contacted, it should make its views known to the applicant within 60 days. Further, the consultation process should be completed within 120 days."

Bidders are reminded that the current antenna tower policy is the subject of a review and these time limits may change.

10.4.3 Responses to Clarification Questions Related to the Spectrum Aggregation Limit

Question 25:

Does the 100 MHz spectrum aggregation limit pertain to the combined total spectrum held in the two bands or to the total spectrum held in each band?

Answer:

The spectrum aggregation limit of 100 MHz per service area will apply to the combined total spectrum held in the two bands. To provide maximum flexibility for bidders, the 30 MHz WCS block will be counted as 25 MHz towards the spectrum aggregation limit. The aggregation limit will remain in place for the duration of the auction and will continue to apply for two years after the close of the auction. It will be enforced during the auction through the use of penalties.

Question 26:

Please confirm our understanding, pursuant to section 3.4 of the Policy, that the spectrum aggregation limit will apply on a service area basis?

Answer:

The spectrum aggregation limit will apply on a service area basis. The service areas in the auction are Tier 4 service areas and post-auction may be Tier 4 or on a grid cell basis.

10.4.4  Responses to Clarification Questions Related to Research and Development

Question 27:

Will the "Small Business" determination be made for an individual licensee, or will it also include that licensee's affiliates, or individual members of a bidding association/consortium? (Reference Section 6.12.)

Answer:

As outlined in Section 6.12 of the Policy, the Department has decided that licensees that are small businesses with less than $5 million in annual gross operating revenues will not be required to meet the R&D expenditure requirement. The combined annual gross operating revenues of the entity, its Affiliates and/or any Associated Entities will be included in determining whether the small business definition applies.

10.4.5  Responses to Clarification Questions Related to Implementation of Spectrum Usage

Question 28:

Does the Department intend to reward those licensees that have not adequately utilized their licensed spectrum by granting them "landlord" rights? (Reference Section 6.13.)

Answer:

Spectrum is a public resource which should be used in ways that serve the public interest. As outlined in Section 6.13, in the event that spectrum obtained in the auction of the 2300 MHz and 3500 MHz bands has not been put to use within five years of the receipt of the licence(s), the Department may begin a suspension or revocation process to afford the licensee the opportunity to demonstrate why its licence should not be revoked or suspended.

Question 29:

"The Department will consider the level of service coverage and spectrum development by year five as an important criteria in deciding whether the licensees should continue to have an expectation of license renewal." (Reference Section 6.13.)

Given that the license renewal occurs 5 years after the initial 5 year implementation requirement, is the above noted statement to suggest that non-compliance with this section and revocation of the licence may only occur or could occur at the end of the 10 year licensing period?

Answer:

In Section 6.13 of the Policy, the Department outlines the implementation requirements for spectrum licences obtained in the auction. Licensees are required, as a condition of licence, to demonstrate that their spectrum is being put to use at a level acceptable to the Department within five years of receipt of licence(s). In the event that spectrum obtained in this auction has not been put to use within five years of receipt of licence(s), the Department may begin a process to afford the licensee the opportunity to demonstrate why its licence should not be revoked or suspended. The timing of such a review is left to the discretion of the Department. In addition, the Department will consider the level of service coverage and spectrum development by year five as an important criteria in deciding whether the licensees should continue to have an expectation of licence renewal.

The following questions are closely related and will be answered together.

The following questions relate to Section 4 - Overview of Attributes of 2300 MHz and 3500 MHz Licenses. 

"Implementation requirement - licensee must demonstrate to the Department that the spectrum has been put to use at a level acceptable to the Department within 5 years of receipt of licence."

Question 30:

In the event that the spectrum is used for transport, or point to point applications, advise as to the measurements that the Department will use with respect to determining whether the implementation requirement has been met.

Question 31:

Please advise of the process for conducting this evaluation.

Question 32:

When will this evaluation take place?

Question 33:

Please advise as to the penalties for non-compliance.

Question 34:

Please advise whether parties will be provided an opportunity to correct any short comings in this area. If so, what period of time will be provided?

Question 35:

Advise whether the compliance review process will be public. If not, why not?

Answer:

As described in Section 6.13 of the Policy, licensees will be required, as a condition of licence, to demonstrate that their spectrum is being put to use at a level acceptable to the Department within five years of receipt of licence(s). For example, the establishment of coverage to 50% of population within the service area, or some other indicator of usage that is acceptable to the Department, will be required.

The evaluation of other indicators acceptable to the Department for other technologies such as point-to-point transport will be done on a case-by-case basis. In the event that spectrum obtained in this auction process has not been put to use within five years of receipt of licence(s), the Department may begin a process to afford the licensee the opportunity to demonstrate why its licence should not be revoked. At the discretion of the Department, opportunity will generally be provided for licensees to correct short comings in this area. It should be noted that while the compliance review process is not public, the results of such a review may be made public.


10.5 Licensing Process

10.5.1    Financial Deposits

It has been brought to the Department's attention that the current calculation of the financial deposit (under Section 7.3.1 of the Policy) is not in keeping with the Department's objective to not disadvantage those applicants who may only be interested in obtaining spectrum in a few areas. As such, please note the replacement of:

"Therefore, the Department has decided that the financial deposit will be equal to $500 per eligibility point for the first forty (40) points and $3,000 per eligibility point requested thereafter."

with

"Therefore, the Department has decided that the financial deposit will be equal to $500 per eligibility point for the first two hundred (200) points and $3,000 per eligibility point requested thereafter."

10.5.2  Participation in the Auction

Under Section 7.2 of the Policy, the Department outlines the participation in the auction by Affiliated and Associated entities. Specifically, it should be noted that only one member of an Affiliate relationship or Associated Entity will be permitted to become a qualified bidder in the same service area. Affiliated and Associated Entities, must, therefore, decide prior to the application deadline which entity will apply to participate in specific service areas in the auction.

In addition to the information provided in the Policy, please note that if more than one Affiliated and Associated entity apply for the same service area(s), the Department will provide the entities a period of five days within which to notify the Department which one of them will participate in that service area(s). If the entities fail to notify the Department within the period specified, then the Department will qualify only the bidder that otherwise satisfies all bidder qualifications and that submitted the largest financial deposit.

10.5.3  Responses to Clarification Questions Related to Participation in the Auction

Question 36:

Can an unincorporated group or association of Canadian companies bid as a single entity? Will the 100 MHz cap apply to each member individually or to the association or group as a whole? What other conditions would apply to such a group?

Answer:

A joint venture or partnership of Canadian companies can bid as a single entity. However, as outlined in Section 7.2, any entities who enter into any partnerships, joint ventures, agreements (including agreements in principle) to merge, consortia or any arrangements, agreements or understandings of any kind, either explicit or implicit, relating to the licences being auctioned or relating to the post-auction market structure, will be treated as Associated Entities. Only one member of an Affiliate or Associated Entity will be permitted to become a qualified bidder in the same service area. Affiliates and Associated Entities must, therefore, decide prior to the application deadline which entity will apply to participate in specific service areas in the auction.

The 100 MHz spectrum aggregation limit jointly applies to all Associated Entities and Affiliates, per service area. Given that only one member of an Associated Entity or Affiliate will be permitted to become a qualified bidder in the same service area, the 100 MHz aggregation limit will apply to that member for that service area. Other Affiliates or Associated Entities will not be permitted to become qualified bidders in that service area, therefore the application of the aggregation limit is not relevant.

Question 37:

"Changes made after the application deadline which create an association with another applicant are not permitted, and any applicant who has formed such an association will be disqualified from participating in the auction". (Reference Section 7.2.2)

Please clarify:

  1. That this condition applies from the application deadline until the deadline for final payment on high bids.
  2. That this condition will continue to apply even if the start of the auction is postponed after the application date has passed.
  3. That all entities involved in the association will be disqualified, rather than a sufficient subset of the entities such that the remaining entities are no longer associated.

Answer:

As outlined in Section 7.2.2 of the Policy, any entities who enter into any partnerships, joint ventures, agreements (including agreements in principle) to merge, consortia or any arrangements, agreements or understandings of any kind, either explicit or implicit, relating to the licences being auctioned or relating to the post-auction market structure, will be treated as Associated Entities.

The existence of such agreements, arrangements or understandings must be disclosed in writing to the Department at the time of application and this information will be disclosed to other bidders and to the public. Changes made after the application deadline which create an Association with another applicant are not permitted, and any applicant who has formed such an association will be disqualified from participating in the auction.

This condition applies from the application deadline until the deadline for final payment on high bids and will continue to apply even if the start of the auction is postponed after the application date has passed. Should changes be made after the application deadline which create an Association with another applicant, the applicant(s), and all associated entities, who have formed such an association will be disqualified from participating in the auction.

Question 38:

Please confirm our understanding, pursuant to section 7.2 of the Policy, that alternate members of an Affiliated Relationship or Associated Entity would be eligible to apply to participate in the auction in alternate service areas?

Answer:

Yes, alternate members of an Affiliate or Associated Entity will be eligible to apply to participate in the auction in alternate service areas. As outlined in Section 7.2, only one member of an Affiliate or Associated Entity will be permitted to become a qualified bidder in the same service area. Affiliates and Associated Entities must decide prior to the application deadline which entity will apply to participate in specific service areas in the auction. Therefore, alternate members of an Affiliate or Associated Entity are eligible to apply to participate in the auction as long as they are not applying for the same areas.

Question 39:

Please confirm our understanding, pursuant to section 7.2.2 of the Policy, that for the purposes of the Policy the "Associated Entity" relationship is determined solely with regard to the 2300 MHz and 3500 MHz licences being auctioned or relating to the post-auction market structure for the 2300 MHz and 3500 MHz bands?

Answer:

Yes, the Department has defined "Associated Entity" in Section 7.2.2 of the Policy for the 2300 MHz and 3500 MHz auction. For the purposes of the Policy, any entities who enter into any partnerships, joint ventures, agreements (including agreements in principle) to merge, consortia or any arrangements, agreements or understandings of any kind, either explicit or implicit, relating to the licences being auctioned or relating to the post-auction market structure, will be treated as Associated Entities. It should be noted that a similar definition was used for the PCS auction and that a similar definition may be used for other licensing processes.

10.5.4  Responses to Clarification Questions Related to Submissions

Question 40:

It is indicated that the department reserves the right to request additional financial deposits during the auction. (Reference Section 7.3.1.)

  1. Identify all circumstances under which the Department would exercise this right.
  2. Explain what will occur if the bidder is unable to comply with the request for additional deposits within the 2 full business day limit prescribed by the Department.

Answer:

The Department reserves the right to use its discretion when requesting additional financial deposits during the auction. The Department will ensure that bidders are notified, should additional financial deposits be required, as quickly as possible.

If the bidder is unable to comply with the Department's request for additional financial deposits, the bidder will not be permitted to continue bidding. The bidder will be fully responsible for their high bids on any licence(s) and any penalties that they may have incurred.

Question 41:

Please describe all circumstances under which the Department would accept applications and associated documentation after the revised deadline of November 24, 2003. (Reference Section 7.3.3.)

Answer:

As outlined in Section 7.3.3 of the Policy, the Department reserves the right, but only under exceptional circumstances, to accept applications and associated documentation after the deadline, but prior to publication of the list of applicants. The Department will exercise its discretion in determining whether or not such an application will be accepted.

Question 42:

Advise whether the Department could change the date of the auction start after financial deposits are submitted on November 24, 2003.

  1. If so, advise whether the financial deposits would be returned to the applicants and then applicants would then be asked to resubmit at a date closer to the start.
  2. If not, what financial compensation will be made to the applicants in terms of interest payments?
  3. What is the maximum period of time that would elapse between submission of deposit and the start of the auction?

Answer:

Yes, the Department has the right to change the date of the auction after the financial deposits have been submitted on November 24, 2003.

It is unlikely that the Department would return the financial deposits in the event of a delay in the auction, however, the length of the delay would be taken into consideration by the Department.

The Department would not provide any financial compensation to the applicants in terms of interest payments in the event of a delay in the auction.

The Department is unable to provide specifics on the maximum period of time between the submission of a deposit and the start of the auction, however typically this time is less than three months.

Question 43:

Will the Department provide interest payments to the successful bidder for the period of time between the payment of the fees and actual receipt of the spectrum licence?

Answer:

The Department will not provide interest payments to the successful bidder for the period of time between the payment of the fees and actual receipt of the spectrum licence. As outlined in Section 9.6 of the Policy, "Provisional winners of spectrum licences will have those licences issued to them on completion of the following: (1) payment of the sum of their standing high bids and the sum of their penalties, if any; and (2) a determination by the Department that the Canadian ownership and control requirements have been met." This determination may take several months to complete, depending on the complexity of the provisional winners' ownership and control structures and the responsiveness of the winners in providing any required additional documentation.

Question 44:

Please advise exactly what information will be made publicly available regarding the following:

  1. The ownership structure of applicants, including the identity of any significant shareholders and, where the immediate shareholders are holding companies, the ownership structure of the holding companies;
  2. Any agreements between applicants and other entities regarding the possible transfer or use of a licence (whether by sale or lease or any other mechanism) after the auction;
  3. The identity of any bidders that have been designated as 'affiliates' or 'associated bidders'; and
  4. The reasons why particular bidders have been designated as 'affiliates' or 'associated bidders'.

When will this information be released? (Reference Section 7.2.2/3.)

Answer:

  1. As outlined in Section 7.3 of the Policy, in the interest of providing both the Department and other bidders with adequate information on the identity of all bidders, applicants are required to fully disclose the beneficial ownership for every entity that owns, directly or indirectly, 10% or more of the applicant's voting shares, non-voting shares, partnership interests, or any other beneficial interests, as the case may be. The Department will make the information available to the public so that all bidders have knowledge of the real identity of the other bidders. This information will be used, along with other documentation submitted by applicants, to determine the type of relationship, if any, that may exist between entities. The relationships will be disclosed to other bidders and made public at the time that the list of qualified bidders is posted on the Spectrum Management and Telecommunications Web site.
  2. Agreements between applicants and other entities regarding the possible or actual transfer or use of a licence after the auction will not be publicly available. However, as outlined in Section 6.2 of the Policy, the Department will maintain a publicly accessible database listing all auctioned licences and respective licensees. The Department will update the database upon a licence transfer, and, in the event that the Department introduces spectrum leasing, any leasing arrangements.
  3. The Department believes that bidders should have knowledge of the real identity of the other bidders, as well as any Affiliate or Associated Entity relationships that may exist, in order that the auction remains an open and fair process. Therefore, once the Department has reviewed the documentation submitted by applicants, and has identified those entities that have Affiliate or Associated Entity relationships, this information will be disclosed to other bidders and to the public, at the time that the list of qualified bidders is posted on the Spectrum Management and Telecommunications Web site.
  4. As outlined in Section 7.2 of the Policy, only one member of an Affiliate or Associated Entity will be permitted to become a qualified bidder in the same service area. This is based on the principle that only competitors should be permitted to participate in the auction. As further detailed in Section 7.2.1 the Department defines an Affiliate, for the purposes of this policy, to mean a person who controls the entity, in any manner that results in control in fact, whether directly through the ownership of securities or indirectly through a trust, agreement or arrangement, the ownership of a body corporate or otherwise. In Section 7.2.2 the Department defines Associated Entities as any entities who enter into any partnerships, joint ventures, agreements (including agreements in principle) to merge, consortia or any arrangements, agreements or understandings of any kind, either explicit or implicit, relating to the licences being auctioned or relating to the post-auction market structure. The Department will use the above definitions in determining whether or not an Affiliate or Associated Entity relationship exists. The Department will disclose entities that are Associated Entities and Affiliates, but will not identify why particular bidders have been designated as such.

Question 45:

Please confirm our understanding, pursuant to section 7.3.1 and Appendix 4 of the Policy, that applicants are not required to identify, in their application to participate in the auction, the specific service areas for which they intend to bid for licences?

Answer:

Applicants are not required to identify the specific service areas for which they intend to bid in their application to participate in the auction, unless they and one of their Affiliates or Associated Entities are bidding in the auction. As described in Section 7.2 of the Policy, only one member of an Affiliate or Associated Entity will be permitted to become a qualified bidder in the same service area. The Department must be notified in writing at the time of application which specific Tier 4 service areas each member of an Affiliate or Associated Entity will apply to bid on.

As outlined is Section 8.3 of the Policy "each of the 848 licences have been assigned a specific number of eligibility points ("points") that are approximately proportionate to the population covered by the licence. In their application each applicant must indicate, the total number of "points worth" of licences on which they wish to bid in any round. This number defines the initial level of bidder eligibility points of an applicant and is also used to determine the financial deposit that must be submitted with the application. Bidder eligibility points may not be increased."

Question 46:

Will the Department publish a list of Affiliates and Associate Entities? If so, please advise when. (Reference Section 7.2.2/3).

Answer:

The Department believes that bidders should have knowledge of the real identity of the other bidders, as well as any Affiliate or Associated Entity relationships that may exist, in order that the auction remains an open and fair process. Once the Department has reviewed the documentation submitted by applicants, and has identified those entities that have Affiliate or Associated Entity relationships, the relationships will be disclosed to other bidders, and to the public, at the time that the list of qualified bidders is posted on the Spectrum Management and Telecommunications Web site.

10.5.5  Responses to Clarification Questions Related to Qualified Bidders

Question 47:

'Qualified Bidders' may participate in Mock Auctions and a WebCast presentation. (Reference Section  7.4.)

What restrictions will there be on participation in these events by representatives of the Qualified Bidders?

Answer:

As defined in Section 7.4 of the Policy, qualified bidders are applicants who have submitted acceptable application materials. As described in Section 8.12 of the Policy, applicants are requested to designate up to three individuals who will have the authority to place bids on behalf of the applicant. The Department encourages all designated bidders to participate in the mock auction. Mock auctions will be run exclusively for qualified bidders to allow bidders to better familiarize themselves with the auction system.

The Department is planning to provide on-line, on-demand audio/video Internet streaming presentations (Webcasts) to further explain the licensing policies and procedures. These presentations will be made available to the public at large.

610.5.6  Responses to Clarification Questions Related to the Publication of the Amendments and Supplements

 Question 48:

"...bidders may submit written questions." (Reference Section 7.7)

Please clarify whether:

  1. the identity of entities submitting questions will be released;
  2. whether the identity of the authors of specific questions will be identified;
  3. whether questions will be published in the order submitted, or rearranged under subject headings.

Answer:

While the Department does not intend to publish the identity of the authors' questions, requests for such information will be subject to the Access to Information Act and the Privacy Act.

The written questions, and their answers, are grouped into like subjects and may be answered either individually or as a group.


10.6 Auction Design and Rules

10.6.1  Bid Increments

In Section 8.6 of the Policy which explains how the bid increments will be calculated, it is noted that the new bid price for the next round would be rounded up to the nearest two significant digits. The auction software will in fact round the new bid price up to three significant digits (e.g. a bid increment of 567,894 would be rounded up to 570,000 and a bid increment of 718.75 would become 719).

10.6.2  Responses to Clarification Questions Related to Auction Design and Operation

Question 49:

In the examples provided please confirm that there is an error in Question 1. (i.e. Since the actual activity (288) level exceeds the required activity level (300)...). (Reference Section 8.5)

Answer:

There is indeed an error in Example 1 of Section 8.5 of the Policy. The final sentence in the example should read: "Since the actual activity (300) level exceeds the required activity level (288), Bidder X will maintain its full 480 eligibility points for the next round."

Question 50:

"full information on the bids placed by all bidders will be made available each round." (Reference Section 8.2.)

Please clarify:

  1. Exactly what information will be released at the end of each round?
  2. The form in which this information will be released.
  3. Whether the information from the end of any particular round will be available throughout the auction in the form of history data files?

Answer:

At the end of each round, the following information will be published for each licence: the standing high bidder; the bid amount; and the identity of all the bidders placing bids. In addition, information on bidders' eligibility points, activity, the total dollar amount of all standing high bids, remaining/used waivers and any withdrawals, made in that round will be provided. Also, overall measures of aggregate eligibility, and aggregate activity will be published.

Designated bidders will be able to monitor current and historical round results by reviewing and/or downloading the results from the Previous Round Results section on the Auction Management System Web site. The Department will also publish current and historical round result summary information and complete round result data files on the Department's Bid Tracking Web site.

Further information on the file formats of the downloadable round result files is available at http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf08951.html in the document entitled Round Result File Formats.

The following questions are closely related and will be answered together.

Question 51:

No information is given in the Procedures about the length and timing of auction rounds.

  1. When will this information be made available?
  2. What discretion will the auctioneer have to alter the length and timing of rounds?
  3. Will bidders be permitted to submit requests for changes to the length and timing of rounds during the auction for review of the auctioneer?

Question 52:

If no definitive decision has yet been taken with regard to the length and timing of rounds, can you give an indication of likely length and timing of rounds, for guidance purposes only?

Answer:

As with past spectrum auctions, the Department expects to run between 4 and 8 rounds per day. The rounds will typically last between 30 minutes - 60 minutes with an equal amount of time between rounds for the analysis of the round results. The exception will be during the first week of bidding, in which the Department expects the rounds to be longer (approximately two hours), so as to afford all bidders the opportunity to become more familiar with the auction process.

The bidding schedule for the first week of the auction will be sent to all auction applicants as part of the Bidder Information Document. All future weekly schedules will be announced on the Thursday of the preceding week. Qualified bidders will receive this announcement via the Important Message from Industry Canada section of the Auction Management System Web site. This announcement will also be made available on the Spectrum Management and Telecommunications Web site. Bidders will have until 12 p.m. Eastern Time the following day to send any requests for modifications to the proposed schedule and supporting information to the Auction Manager for consideration.

The Auction Manager has the discretion to alter the length and timing of rounds.

Question 53:

Please clarify when technical information about the number, format and structure of auction data files will be made available. Is it correct to assume that these will be similar to those used for the PCS auction? Will sample data files be provided?

Answer:

The technical information is currently available on the file formats of the downloadable round result files is at http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf08951.html in the document entitled Round Result File Formats. The format and structure of auction data files will be the same as those used for the 24/38 GHz and PCS auctions.


10.7 Post-Auction Procedures

10.7.1  Responses to Clarification Questions Related to Eligibility Documentation

Question 54:

Please define "expeditiously". (Reference Section 9.4.)

Answer:

The Department will endeavour to review the documentation associated with the provisional winners' ownership and control structures in a timely manner to ensure that all required documentation has been received. As noted in Section 9.6 of the Policy, the time required to make a determination by the Department whether the Canadian ownership and control requirements have been met may take several months to complete, depending on the complexity of the provisional winners' ownership and control structures and the responsiveness of the winners in providing any required additional documentation.

10.7.2    Bid Forfeiture and Related Penalties

Upon review of the calculation of forfeiture penalties, the Department believes a portion of the current calculations to be distorted and, as such, wishes to replace the following text, under Section 9.3 of the Policy:

"If the licence is not sold in a subsequent licensing process, then the selling price will be deemed to be zero and the penalty will be calculated accordingly. An additional amount of (a) 3% of the original forfeited bid; or (b) $100,000 for each forfeited bid will be charged, regardless of the eventual selling price."

with

"If the licence is not sold in a subsequent licensing process, then the selling price will be deemed to be zero and the penalty will be calculated accordingly. An additional amount of the greater of (a) 3% of the original forfeited bid; or (b) $10,000 for each forfeited bid will be charged, regardless of the eventual selling price."

10.7.3 Responses to Clarification Questions Related to Enforcement of Aggregation Limits

Question 55:

"However at the end of the auction, holders of FCFS licences who have successfully bid on spectrum that puts them over the 100 MHz limit will be required to divest some of their holdings to meet the 100 MHz limit." (Section 3.4)

  1. Provide the period of time that such divestiture must take place.
  2. If there is not a prescribed time limit, please explain why not.
  3. What are the penalties for not complying within the timeframes?
  4. When will the divested spectrum become available through FCFS?

Answer:

The divestiture must occur prior to the issuance of the licence(s). The penalty for not complying with the requirement to divest some of their holdings is the forfeiture of the right to the licence(s) acquired during auction. Further details concerning bid forfeitures and related penalties can be found under Section 9.3 of the Policy.

The Minister will exercise its discretion in determining when the divested spectrum would become available in a licensing process. It is important to note that no spectrum would become available should a provisional winner divest its FCFS FWA spectrum holdings (assigned on a grid cell basis) for the Tier 4 service area licence, if the FCFS FWA spectrum holdings are encompassed by that Tier 4 service area.  Divested FCFS FWA grid cell licences would only become available in the post-auction FCFS process, in the event that an entity divests FCFS FWA spectrum in a service area that is not assigned during the auction.

For example, Entity A has several FWA grid cell licences that were assigned on a FCFS basis. All of these grid cell licences are located in one Tier 4 service area, Tier 4-200. Entity A participates in the 2300 MHz and 3500 MHz auction, and at the auction's close, is the provisional winner of 100 MHz of spectrum, in Tier 4-200. Entity A is required to divest some of its spectrum holdings, to meet the spectrum aggregation limit.  If Entity A divests its FCFS FWA grid cell licences, retaining the 100 MHz of spectrum from the auction, since the FCFS FWA grid cell licences are encompassed by Tier 4-200, the grid cell licences divested will not be available for licensing. If Entity A divests FCFS FWA grid cell licences in a service area that is not assigned during the auction, this spectrum will become available via the post-auction FCFS process.

10.7.4 Responses to Clarification Questions Related to Post-Auction Licensing Procedures

The following questions relate to Section 9.7. Post-Auction Licensing Procedures

The Department indicates that "thirty days following the auction, licenses which received little or no bidding and remain unsold may be made available on a First Come, First Served (FCFS) basis. Licenses that received significant bidding activity but remain unsold through either withdrawn bids or forfeitures (see Section 9.3) may be made available via a future re-auction." (Emphasis added)

The following questions are closely related and will be answered together.

Question 56:

Will this later spectrum only be available through re-auction? If so, provide time frames.

Question 57:

Provide all reasons why this later spectrum will not be available on a first come first serve basis.

Question 58:

Provide the Department's definitions of "little bidding" versus "significant bidding" in the context of Section 9.7

Question 59:

Will there be reserve bids and if so, please provide them.

Question 60:

Will both WCS & FWA spectrum be made available through this proposed re-auction and FCFS process?

Answer:

The Minister will exercise its discretion when determining the appropriate licensing process for unassigned licences, following the auction of the 2300 MHz and 3500 MHz bands. The Department will be guided more by the principles of supply and demand, than levels of bidding activity (e.g. 'little' or 'significant'), using a First-Come, First-Served (FCFS) process where the Department is of the view that there is sufficient spectrum to meet anticipated demand, or a competitive licensing process, such as an auction, where anticipated demand exceeds supply, as outlined in Section 3 of the Guidelines on the Licensing Process and Spectrum Release Plan, RP-020 document.

Details concerning future licensing processes for unassigned spectrum licences following the auction of the 2300 MHz and 3500 MHz bands will be made available at an appropriate time, prior to those licensing processes.

Should unassigned spectrum be available in a re-auction process, it is likely that minimum opening bids would be used rather than reserve bids.

All unassigned spectrum licences from the auction of the 2300 MHz and 3500 MHz bands, be they WCS or FWA, will be considered by the Department for a future licensing process in accordance with RP-020.

Question 61:

If there is bidding in an area, is it possible that after the auction closes, the Department will consider or assess that only "little bidding" has taken place on that area and declare that it will be placed in the first come first serve process? How will the bidder which believed it was successful be compensated?

As described in Section 8.14 of the Policy, the standing high bidders on each licence, at the auction's close, will be declared the provisional winners of those licences. Since these licences are not unsold, they will not be made available through another licensing process unless the provisional winner forfeits on those licences. The determination of provisional winners is irrespective of the level of bidding activity received on a licence.

Question 62:

Will the consideration of a re-auction involve a public process or will the Department make this decision absent a public consultation?

Answer:

The Department, when considering a re-auction, will advise of its intentions by way of a Canada Gazette Notice. The Department may conduct a public consultation should the Department consider it in the public interest.

Question 63:

Regarding the statement that the former spectrum "may" be made available on a FCFS basis, please provide the following:

  1. When that decision will be made by Industry Canada.
  2. The factors that will be taken into consideration when making that decision.
  3. The earliest date that Industry Canada will accept FCFS applications.

Answer:

The Department's decision to assign unsold licences on a FCFS basis will be made following the close of the auction of the 2300 MHz and 3500 MHz bands. The Department will not accept FCFS applications until it has established both a process for accepting applications and a period for determining interest. This process will be treated in accordance with the Guidelines on the Licensing Process and Spectrum Release Plan, RP-020, in which the principles of spectrum supply and demand are discussed.

The Department will exercise its discretion in determining when such a licensing process will occur, however, as stated in Section 9.7 of the Policy, the earliest date for a post-auction licensing process would be 30 days following the close of the auction.

The following questions are closely related and will be answered together.

Question 64:

Provide an estimated date as to when the Client Procedures Circular (CPC) outlining the details of the first come first serve process will be available. (Section 9.7.2)

Question 65:

Advise whether it will be before the auction commences. (Section 9.7.2)

Question 66:

Will the CPC pertain to WCS and FWA?  If not, identify the other bands that will be included. (Section 9.7.2)

Answer:

The Department expects the publication of a Client Procedures Circular (CPC), outlining the details of the FCFS process, will occur following the close of the auction of the 2300 MHz and 3500 MHz bands. The existing CPC 2-1-19 will be revised to consider both FWA and WCS as well as the spectrum policies outlined in 1998 (i.e. SP 3400-3700 MHz), Gazette Notices of 2003 (i.e. DGTP-02-03 and DGTP-06-03 respectively), and Guidelines on the Licensing Process and Spectrum Release Plan, RP-020.

Question 67:

The Department indicated that first come first serve post-auction licenses "will have similar attributes and conditions as the licenses available during the auction. Specifically they will be issued for a 10 year term and with the exception of the eligibility criteria, will carry the same terms and conditions as the auctioned licenses." (emphasis added) (Reference Section 9.7)

Please explain why the eligibility criteria will not apply, and the degree of its non-application. For example:

Will non-Canadian carriers be permitted to acquire this spectrum?

Will non-Canadian "service providers" or "users" be permitted to acquire spectrum through this mechanism?

Indicate all other areas where the license conditions between the auction and the FCFS spectrum will differ.

Answer:

The eligibility criteria, as outlined in Section 3.3 of the Policy, states that all entities are eligible to apply and participate in the auction. However, successful bidders must be eligible to become radiocommunication carriers as described in section 10(2) of the Radiocommunication Regulations, and as such, must meet the related ownership and control requirements. The Department believes that such a restriction will effectively allow the assignment of licences during the auction, on a primary basis, to those entities most able to provide services to Canadians, by being eligible to become radiocommunication carriers.

At the close of the auction, as stated in Section 9.7 of the Policy, the requirement that licensees be eligible to become radiocommunication carriers will be removed on post-auction licensing of unassigned licences. As such, radiocommunication carriers, radiocommunication service providers and radiocommunication users will be eligible for any post-auction licensing of unassigned spectrum. The Department believes it important that unassigned licence(s) be put to use, and that changing the post-auction eligibility criteria would be in the public interest. Radiocommunication carriers must meet the related ownership and control requirements for successful bidders in the auction, as noted above, and radiocommunication service providers and radiocommunication users must meet the eligibility criteria as described in Section 9(1) of the Radiocommunication Regulations.

Licences assigned in a post-auction licensing process will carry all of the other terms and conditions as the auctioned licences.

Question 68:

In the event of two parties submitting a FCFS application on the same day, advise which party will be granted the spectrum, and the reasons why. (Section 9.7.2)

Answer:

The process will be outlined in the CPC. The Department will attempt to accommodate each applicant where possible. If, however, the Department determines that demand for unassigned licence(s) in an area exceeds supply, the Department may consider using an auction or other competitive process.

The following questions are closely related and will be answered together.

Question 69:

Advise whether FCFS applications can be submitted in advance of the auction commencing or concluding. If not, why not? (Section 9.7.2)

Question 70:

Are FCFS applications publicly available at the time the application is made?  If not, when with they become public? (Section 9.7.2)

Answer:

It is important to differentiate between FWA spectrum currently available in rural and remote areas, on a FCFS licensing basis, and any unassigned licences, following the close of the 2300 MHz and 3500 MHz bands auction, that may be made available on a FCFS basis. Please note that the FCFS FWA spectrum currently available is by grid cells only, whereas any unassigned FWA or WCS licences, following the close of the auction, would be available for licensing by grid cell, as well as by Tier 4 service area.

As outlined in Section 4.1.3 of the Policy, licensing of FWA spectrum, in rural and remote areas, on a FCFS basis will continue until one month prior to the commencement of the auction, based on the restructured band and additional licensing guidelines outlined in Gazette Notices DGTP-006-03 and DGTP-002-03. At that point, all licensing activity for new FWA system applications in the band 3475-3650 MHz will cease. Anyone having been issued a licence or a written approval-in-principle will be treated as an FWA incumbent licensee. The list of these FWA incumbent licensees will be made available to the public in advance of the auction.

Applications for unassigned post-auction licences will not be accepted until the Department has determined both the licensing process and the associated dates.

Question 71:

Will parties be able to submit multiple FCFS application exceeding the 100 MHz spectrum limit, given they may not succeed in receiving all of the spectrum requested. (Section 9.7.2)

Answer:

The spectrum aggregation limit of 100 MHz will remain in place for the duration of the auction and will continue to apply for two years following the close of the auction. The Department, therefore, will not accept multiple FCFS applications exceeding the 100 MHz spectrum limit. In developing the post-auction CPC for the FCFS process the Department may consider some of the principles outlined in the existing the 1998 FCFS FWA policy (i.e. SP 3400-3700 MHz).

Question 72:

"FWA spectrum acquired through the post-auction FCFS process (see Section 9.7) will count towards the spectrum aggregation limit for a period of two years after the close of the auction".

Explain fully what will occur after the two year period.

Answer:

Unless announced otherwise, after the two year period, the aggregation limit will cease automatically for all licences assigned before, during and after the 2300 MHz and 3500 MHz bands auction process.

Question 73:

What maximum period of time will be required by the Department to complete its Ownership and Control determination for a given carrier?

Answer:

As outlined in Section 9.6 of the Policy, the time required to make a determination by the Department whether the Canadian ownership and control requirements have been met may take several months to complete, depending on the complexity of the provisional winners' ownership and control structures and the responsiveness of the winners in providing any required additional documentation.

Question 74:

Will the 10 year license period commence after the Ownership and Control determination or at some other time? Please provide details.

Answer:

As outlined in Section 9.6 of the Policy, licences will be issued following the payment of the sum of standing high bids (and the sum of their penalties, if any) and, a determination by the Department that the Canadian ownership and control requirements have been met. The 10 year licence term will commence upon the issuance of the licence.

10.8 Appendices in the Policy

10.8.1 Calculation of Eligibility Points

Please note that there is an error in the eligibility points listed for property 4-159 (Merritt) in Appendix 7 of the Policy. The eligibility point value for this property is 1 point, not 10, as currently listed.

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