Archived—Spectrum Licensing Policy for Cellular and Incumbent Personal Communications Services (PCS)

4. Licence Fees

Certain respondents expressed the view that Industry Canada had not sufficiently addressed in its proposal the market value of the licences and has overestimated the fair economic value of the spectrum in question. The Department did not receive quantified alternative values nor suggestions on how one could be derived. The Department notes that there are few market indicators for spectrum in Canada today. In the absence of a functioning market with observable transactions, it is difficult to make determinations on the fair economic value of the spectrum. In the interest of advancing the supported elements of the proposed reforms, Industry Canada will implement a fee rate based on the total renewal fees paid by the cellular and incumbent PCS licensees for the fiscal year 2003/2004. This is in keeping with the Treasury Board's External Charging Policy on user fees. This fee rate will be established by the Minster through a fee order under the Industry Canada Act.

The Department will implement the new fee over a seven-year time frame after which time the full measure of the new fee becomes payable. Implementation will be graduated based on the difference between licence fees payable at March 31, 2003 and the final amount payable. This graduated implementation will apply to both licensees seeing an increase in their current annual licence fees and to those seeing a decrease in their fees including situations where partitioning and disaggregation take place. The fee will be charged on an annual basis, payable in full by March 31 of each year. Also, as proposed the Department will impose a minimum annual spectrum licence fee of $1,000.00.

4.1 Conditions of Licence

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

4.1.1 Licence Conditions Common to All Cellular and Incumbent PCS Licensees

1. Licence Term

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

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

2. Licence Transferability and Divisibility

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

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

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

3. Spectrum Aggregation Limit

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

4. Eligibility Criteria

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

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

5. Radio Station Installations

For each radio station, licensees must ensure that:

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

6. Provision of Technical Information

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

7. Laws, Regulations, and Other Obligations

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

8. Technical Considerations

Cellular

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

PCS

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

9. International and Domestic Coordination

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

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

10. Research and Development

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

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

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

11. Annual Reporting

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

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

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

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

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

12. System Access Fees or Network and Licensing Charges

Licensees are not required nor permitted to levy charges to their subscribers on behalf of Industry Canada. In particular, charges which appear to be for spectrum management purposes, such as System Access Fees or Network and Licensing Charges, are not mandated by Industry Canada.

4.1.2 Conditions Applicable to PCS Licensees Only

1. Displacement of Incumbent Microwave Licensees

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

2. Lawful Interception

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

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

3. PCS Resale

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

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

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

4.1.3 Condition Applicable to Cellular Licensees Only

Cellular Analogue Resale and Roaming

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

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

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

5. Contact

For further information concerning the policy or any related matter, you may contact:

Manager
Operational Policies
Radiocommunications and
Broadcasting Regulatory Branch
Phone: 613-998-3780
Fax: 613-991-3514

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