Call for Applications to Licence Satellite Orbital Positions

6.  Satellite Policy Objectives and Requirements, and Application Information Requirements and Selection Process

This section describes Canada's satellite policy objectives and important requirements applicable to the orbital resources to be licensed in this process. Application information requirements and the criteria against which applications will be assessed are also included. Applicants are strongly encouraged to address these objectives, criteria and information requirements in their detailed applications in the most complete manner possible.

6.1  Satellite Policy Objectives

6.1.1  General Satellite Policy Objectives

Industry Canada is guided in this process by the telecommunications policy objectives set out in Section 7 of the Telecommunications Act. The geostationary satellite orbital positions and associated spectrum being made available through this Call for Applications are considered valuable resources for Canada in many respects. By making these resources available in this process, Industry Canada's objective is to ensure that sufficient capacity is available to satisfy the needs of Canadian satellite users for the provision of a wide range of basic and advanced communications services, while fostering the future introduction of new and innovative broadcasting and telecommunication applications and services.

With the implementation of World Trade Organization obligations, many countries, including Canada, have liberalized access to their markets for the use of foreign satellites. As guided by the Canadian telecommunications policy objectives, the licensing of orbital positions should be carried out in a manner that will enhance the competitiveness, at both the national and international levels, of Canadian telecommunications. To this end, this licensing process should foster the development of a Canadian satellite infrastructure which allows Canadian satellite operators and satellite service providers to advance their service offerings in the domestic market, and to compete in the larger market in the Americas, while recognizing the importance of delivering reliable and affordable telecommunication and broadcasting services in all regions of Canada, including the North.

Recently, the Department conducted extensive consultations with Canadian broadcasters and other stakeholders on the evolution of broadcasting systems. As a result of these consultations and other indicators, it is clear that moving forward with high-definition TV and other specialized programming, combined with the foreseen changes in the regulatory environment, will require significant new satellite capacity. These services will be expected to be delivered to all parts of Canada. This Call for Applications introduces a process to facilitate consultation between Canadian satellite users and potential applicants to identify, address and satisfy foreseeable satellite capacity and service requirements. The Department expects that several orbital positions available in this licensing process will be used to advance the Canadian broadcasting system and address the requirements of Canadian broadcasting undertakings, permitting Canadian Direct-to-Home broadcasters to expand their service offerings and achieve greater economies and operational flexibility.

Additionally, Canadian access to most of the resources available is time limited by the first-come, first-served nature of the ITU filing process. As such, satellites authorized as a result of this licensing process must be deployed in a timely manner.

6.1.2  Canadian Coverage

It is expected that the assignment of licences will lead to the deployment of new satellite facilities. It is recognized that the design, construction and launch of a new satellite is a lengthy process, typically taking up to four years to complete. Accordingly, the Department also recognizes that some applicants may wish to consider, as part of the plan to be presented in their application, the deployment of interim satellite facilities, in advance of deploying a new satellite. While it is important that orbital resources be used to deliver reliable telecommunications and broadcasting services in all regions of Canada, including the North, it is understood that the orbital positions are also well suited to providing satellite services in the Americas. The Department further recognizes that some prospective applicants may believe that an ability to participate in other markets could be essential to the viability of their satellite projects. Accordingly, where it is evident that sufficient satellite capacity is available to meet the needs of Canadian satellite users and service providers, the Department may also consider applications aimed at serving markets outside Canada.

As the capabilities of interim satellites for serving Canada may vary widely, Canadian coverage objectives in this process do not apply to the short term use of interim satellites.

6.2  Important Satellite Requirements

6.2.1  Compliance with ITU Radio Regulations

All proposed new and interim satellite networks must comply with the operational and technical provisions contained in the ITU Radio Regulations. See Section 7.2.2 for information about the post-selection demonstration that proposed satellites will meet this requirement.

6.2.2  Satellite Capacity or Other Benefits for Underserved Communities

A key component of Canada's commitment to connecting Canadians is the development and use of broadband information and communications technologies in all communities across Canada. Canadian satellites are considered an essential element in advancing the goal of broadband access to all Canadians. Furthermore, Canadians living in underserved communities, including much of northern Canada, must also be able to use the potential of broadband to better their economic and social development. To this end, the selected applicants will be required to direct a minimum of two percent of the adjusted gross annual revenue resulting from the operation of the satellites, including any revenue derived from the advanced sale or lease of satellite transponders or capacity, toward special initiatives aimed at supporting the development of broadband access in (or providing other benefits to) underserved communities.

This requirement to direct revenue may be fulfilled in many ways, ranging from the provision of capacity and associated ground segment facilities to the provision of end-to-end services or other forms of benefits such as training and skills transfer. Such special initiatives shall be developed in consultation with the Department.

6.3  Application Information Requirements and Selection Process

6.3.1  Participation in the Licensing Process

Applicants who will be issued an authorization pursuant to this licensing process will be required to operate their satellite facilities as Canadian telecommunications common carriers as defined in the Telecommunications Act or as part of a Canadian broadcasting undertaking as defined in the Broadcasting Act. To be eligible to hold a radio authorization issued pursuant to this Call for Applications, the satellite operator will be required to demonstrate compliance, and to further comply on an ongoing basis, with the applicable ownership and control requirements as set out for radiocommunication carriers in Section 10(2) of the Radiocommunication Regulations.

In this process, however, the Department will consider applications from all Canadian entities that are, or are able to become, Canadian owned and controlled telecommunications common carriers as defined in the Telecommunications Act or Canadian broadcasting undertakings licensed or able to be licensed under the Broadcasting Act. Those applicants not already operating as Canadian owned and controlled telecommunications common carriers or as licensed Canadian broadcasters must demonstrate that they have a well-developed plan for becoming Canadian owned and controlled.

As described in Section 7.2.1 of this Call for Applications, only selected applicants will be required to provide detailed information to demonstrate to the Department their compliance with eligibility requirements.

Information Requirements. Applicants must provide information indicating their status as a Canadian entity as set out in Section 10(2) of the Radiocommunication Regulations. Information must also be provided demonstrating that they are operating as licensed Canadian broadcasters or as Canadian owned and controlled telecommunications carriers. If applicants are not operating as licensed Canadian broadcasters or Canadian owned and controlled carriers, they must provide information demonstrating they have well developed plans for becoming Canadian owned and controlled broadcasters or telecommunication carriers.

In providing information to demonstrate a well developed plan, applicants should identify all intended partners or investors related to carrying out the satellite project, and indicate the nature of the relationship between the intended partners, investors and the applicant. Supporting documentation such as shareholder term sheets, agreements between partners (whether in draft or final form), and any other documents related to the project, should also be provided.

All applicants must also provide with their application an attestation (see Appendix D) indicating that they have read and understand the requirement to comply with the eligibility criteria as set out in Section 10(2) of the Radiocommunication Regulations.

6.3.2  Spacecraft under Canadian Direction or Control

Consistent with international treaties such as the ITU Radio Regulations, Industry Canada exercises authority over spacecraft that are under Canadian direction or control. Under the ITU Radio Regulations, each administration is responsible for station keeping requirements and is bound to ensure the capability of immediate cessation of radio emissions. Both for domestic and international purposes, Industry Canada exercises authority under the Radiocommunication Act to license satellites that are under the direction or control of Canadian satellite operators. The Department considers that such direction or control is typically achieved by means of the operation of satellite telemetry, tracking and command (TT&C) facilities within Canada. If such direction or control is achieved using facilities outside Canada, the command or control must be exercised from within Canada. See Section 7.2.1 for information about the post-selection demonstration that proposed satellites will meet this requirement.

6.3.3  Business Plan

It is important that the Department understand the context within which an applicant is presenting information for evaluation in this process. To this end, applicants must provide their business plans for the development of requested licences. These business plans should include, but need not be limited to, information related to the following and any associated assumptions upon which the business plan relies:

• an industry overview, including an assessment of the actual and potential market, trends and competition in Canada and beyond;
• the business strategy of the applicant, including an explanation of how the satellite will be used over its lifetime to generate revenues;
• the revenue and expense projections related to the satellite project (over the life of the satellite); assumptions respecting the revenue and expense projections should be clearly enumerated;
• product and service offerings, and how proposed offerings will meet existing and future needs in a new or improved manner, as well as demands not currently being adequately satisfied;
• the wholesale marketing of satellite capacity, and the wholesale and retail marketing and distribution plans related to value-added satellite services for service providers, communities, businesses and homes in Canada and within the service area of the satellite;
• implementation strategies to provide client services and ensure adequate support is made available throughout the service area of the satellite; and
• a human resources plan for the duration of the satellite project, demonstrating a full understanding of these requirements.

6.3.4  Project Milestones

Applicants must identify their major project milestones, with expected dates of completion, which will lead to the deployment of any proposed satellite facilities. See Section 7.2 for additional information about important implementation milestones.

Applicants are also required to clearly identify the ITU satellite network filing(s) that are the basis for their plan.

6.4  Evaluation Criteria and Associated Information Requirements

All applications will be assessed against the four criteria set out in the following subsections for the purpose of formulating advice and recommendations to the Minister.

6.4.1  Criteria 1 — Benefits to Canadians

As indicated in earlier sections, the resources being made available in this licensing process are valuable for Canadian broadcasting and telecommunications. Accordingly, applications will be assessed based on the benefits to Canadians demonstrated in the applications.

Possible benefits to Canadians from the development of the resources available in this process are expected to vary widely. Nevertheless, these benefits are expected to include, in order of importance, satisfying Canadian requirements for satellite capacity and services, securing Canadian access to the orbital resources, and any other benefits attributable to the project. Applicants are encouraged to provide information in their applications demonstrating the benefits to Canadians that would arise from the implementation of their own plans.

It is also expected that applicants, having considered the satellite objectives and requirements set out in this Call for Applications and having consulted with potential Canadian satellite users about their requirements for capacity and services, will address these objectives and requirements in their applications. Applications which demonstrate the provision of capacity in the Canadian market and address the necessities and conveniences of direct-to-consumer services will be viewed as providing strong benefits to Canadians.

Information Requirements. Applicants must provide information demonstrating how the implementation of their plans will provide benefits to Canadians.

In composite applications (i.e. where more than one licence is requested) applicants must clearly identify the benefits to Canadians attributable to each licence requested. Such applicants are also encouraged to clearly identify, if the requested licences are granted together, whether and how a composite application offers more benefits than if the applications were considered separately.

(a)  Satisfying Canadian Requirements for Satellite Capacity and Services

All applicants are required to provide a stand-alone Canadian Satellite Capacity and Services Plan for each licence requested in their application. As indicated in Section 2, these plans will be posted on the Spectrum Management and Telecommunications website for public comment.

In their Canadian Satellite Capacity and Services Plans, applicants should include, but need not be limited to, the following:

• the applicant name, Canada Gazette notice DGRB-001-06, and the licence associated with the plan;
• a description of the consultation undertaken with Canadian satellite users in the development of the plan;
• the requirements for capacity and services being addressed and the underlying assumptions concerning the regulatory environment that could affect the nature of the requirements;
• the amount and characteristics of the satellite capacity that will be available to the Canadian market over the lifetime of the satellite project; and
• a description of the mechanisms or processes the applicant will use to make capacity and services available to Canadian satellite users.

(b)  Securing Canadian Access to Orbital Resources

The Department recognizes that a reasonable amount of time is required to implement a plan for the development of an orbital position and operation of a satellite. Access to most of the resources available in this Call for Applications is time limited by the first-come, first-served nature of the associated ITU satellite filing process. The Department considers that securing Canadian access to the resources available is a fundamental benefit for Canadians to be addressed in the application. To this end, the applicant must provide information from its satellite facilities plan demonstrating credible project milestones that will lead to the timely deployment of satellites at the requested positions and the bringing into use of the associated spectrum.

(c)  Any Other Benefits to Canadians

In addition to the important benefits noted above, the Department also recognizes that other benefits can be realized by Canadians through the development of orbital positions and the consequent operation of satellite facilities. Accordingly, applicants should provide any other information they consider relevant to demonstrating the benefits to Canadians that will arise from the implementation and use of the planned satellite facilities.

6.4.2  Criteria 2 — Financial Commitment to Project

The ready availability of sufficient financial resources is important to successfully implementing a satellite project.

Information Requirements. Applicants must submit sufficient information in their applications demonstrating to the Department the ability to finance the implementation of their proposed satellites. This information should include:

• the quantity and sources of proposed financing;
• the expense and revenue projections of the applicant during the life-cycle of the proposed satellite;
• financial statements of the applicants, partners, investors, and/or parent organizations for the past three years; and
• any supporting information or documentation, such as letters of support from Chief Executive Officers of applicants, partners, investors and/or parent organizations, that would demonstrate the nature of financial commitment of participants in the satellite venture.

6.4.3  Criteria 3 — Technical Plan

While the Department will evaluate final satellite design specifications after the selection process is complete, but prior to the signing of satellite construction contracts, the Department will also assess the technical plans submitted with applications for consistency with commitments made in the application.

Information Requirements. Applicants must provide information describing the technical aspects of their proposed operational plan. Sufficient information should be provided to clearly demonstrate that the proposed deployment, operation of the satellite, and identified benefits to Canadians are technically feasible. Such information could take the form of, but need not be limited to:

• the deployment of satellite facilities;
• the frequency bands associated with all communications payloads on board the spacecraft, including for spacecraft tracking, telemetry, and control;
• frequency and transponder plans, including frequency re-use plans and on-board signal processing;
• network inter-connectivity structure associated with any interim and new satellite proposed;
• coverage diagrams clearly indicating planned coverage of proposed satellite facilities;
• anticipated signal characteristics such as encoding schemes, modulation types, earth station characteristics, etc.;
• link budget analysis for estimating the link capacity, performance and availability objectives;
• assumptions used for interference calculations; and
• other technical information which clearly supports the applicant's operational plans and specific commitments to serve Canada.

6.4.4  Criteria 4 — Technical, Operational and Institutional Competencies

Industry Canada will assess the applicant's ability to implement and sustain their proposed business and technical plans. Accordingly, applicants should demonstrate in their application a proven track record in technical, operational and institutional competencies necessary for the proposed project, or provide a well developed plan to illustrate how they intend to acquire and maintain these competencies.

Information Requirements. In general, applicants must provide information demonstrating a capability in managing satellite projects. Specifically, applicants should demonstrate competencies in procurement, coordination and the launch, and control of satellites. Capabilities related to ongoing operational requirements, such as business management, marketing and sales, should also be described. Additionally, applicants should describe, where applicable, any relationships with other institutions, such as partners, investors, resellers and customers (or their representative institutions), necessary to ensure the success of the proposed satellite project.

Such information could include but need not be limited to:

• details concerning the experience and abilities of management and staff;
• information on previous related experience in satellite, telecommunications and other businesses; and
• a description of arrangements, along with supporting documentation if available, with other organizations that would enhance the ability of the applicant to implement this satellite project.