The following attributes are proposed:
- spectrum licences, which are defined as authorizations "in respect of the utilization of specified radio frequencies within a defined geographic area", as per subparagraph 5(1)(a)(i.1) of the Radiocommunication Act, will be issued;
- a licence term of 10 years, with a high expectation of renewal for subsequent additional terms of up to 10 years each;
- available on a national (Tier 1) basis;
- transferability and divisibility privileges in the secondary market, in accordance with CPC-2-1-23, Licensing Procedure for Spectrum Licences for Terrestrial Services; and
- maximum possible flexibility in determining the technologies that will be employed.
The Department seeks comments on the proposed attributes.
The conditions of licence will be clearly stipulated prior to the auction. Industry Canada proposes the following conditions for the Air-Ground Services block licences.
To date, spectrum licences auctioned by Industry Canada have 10-year licence terms.
In the United States, the FCC set the licence term for Air-Ground Services to 10 years, with the possibility of 10-year terms for licence renewal.
The Department is of the view that 10-year licence terms are sufficient and will provide bidders with greater certainty of the period in which they will be able to recover the costs associated with delivering services.
As a result, the Department offers the following proposal for public comment.
The licence will be issued for a 10-year term from the date of issuance. For subsequent terms, the Department will consult two years before the end of the licence term to deal with the specifics of the renewal process, including whether licence fees should apply. The nature and details of the renewal process will be developed through a separate consultation to be initiated by the Department in the context of the Framework for Spectrum Auctions in Canada. The renewal process developed through this consultation may apply to all long-term spectrum licences, including licences obtained through this licensing process.
It should be noted that the licence is subject to relevant provisions in the Radiocommunication Act and the Radiocommunication Regulations. As a result, the Minister has the power, at any time, to amend the terms and conditions of the spectrum licence and to suspend or revoke a radio authorization pursuant to paragraphs 5(1)(b) and 5(2) of the Radiocommunication Act.
Comments are sought on the licence term and renewal proposals.
The licensee may apply to transfer its licence(s) in whole or in part (divisibility), in both the bandwidth and geographic dimensions. The Department may define a minimum bandwidth and/or geographic dimension (such as the grid cell Footnote 4) to the proposed transfer. Systems involved in such a transfer shall conform to the technical requirements set forth in the applicable standards mentioned in previous sections. It should be noted that geographic divisibility should take into consideration the very large radio signal footprint of aircraft at high altitudes.
A subordinate licence is related to a primary licence and is conditional on the primary licence meeting all regulatory requirements, including the terms and conditions of the licence. Primary licensees may apply to the Department jointly with a third party requesting a subordinate licence. The request would be reviewed and, subject to being satisfied with the application, the Department may approve the request and issue the third party a subordinate licence. The subordinate licence would include a subset of the primary licence conditions, as well as additional terms and conditions that may vary from those on the primary licence. The primary and subordinate licence would be concurrent licences (i.e. they would both exist at the same time).
For more information, refer to Industry Canada's Client Procedure Circular, Licensing Procedure for Spectrum Licences for Terrestrial Services (CPC-2-1-23), available at http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf01875.html.
A licensee that intends to become a radiocommunication carrier must comply on an ongoing basis with the eligibility criteria in section 10(2) of the Radiocommunication Regulations. The licensee must notify the Minister of Industry of any change that would have a material effect on its eligibility. Such notification must be made in advance for any proposed transactions within its knowledge. For more information, refer to Industry Canada's Client Procedure Circular, Canadian Ownership and Control (CPC-2-0-15), available at http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf01763.html.
A licensee that intends to become a radiocommunication service provider or radiocommunication user must comply on an ongoing basis with the eligibility criteria in section 9(1) of the Radiocommunication Regulations. The licensee must notify the Minister of Industry of any change that would have a material effect on its eligibility. Such notification must be made in advance for any proposed transactions within its knowledge.
Although site-specific radio licences will not be required for each radio station, licensees must ensure that each aeronautical radio station (ground station) is installed and operated in a manner that complies with Industry Canada's Client Procedures Circular, Radiocommunication and Broadcasting Antenna Systems (CPC-2-0-03), as amended from time to time, and which can be found at http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf08777.html.
When Industry Canada requests technical information on a particular station or network, the information must be provided by the licensee to the Department according to the definitions, criteria, frequency and timelines specified by the Department. For more information, refer to Client Procedures Circular, Licensing Procedure for Spectrum Licences for Terrestrial Services (CPC-2-1-23), which can be found at http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf01875.html.
Licensees are subject to, and must comply with, the Radiocommunication Act, the Telecommunications Act, the Radiocommunication Regulations and the International Telecommunication Union's Radio Regulations pertaining to its 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. The licensees must use the assigned spectrum in accordance with the Canadian Table of Frequency Allocations and the stated spectrum policy for the provision of air-ground services.
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. Although frequency assignments are not subject to site licensing, licensees may be required to furnish all necessary technical data for each relevant site in order to support Canada-U.S. coordination. Should submission of data 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 for international coordination.
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 Public Safety 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 Public Safety Canada, may exercise the 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.
Applicants should be aware that a legislative package is being developed to ensure that law enforcement and national security agencies acting with lawful authority have effective access to communications and information. The Department continues to meet with Public Safety Canada and the Department of Justice on this initiative and will provide licensees with appropriate guidance until such time as any new legislation is enacted.
All licensees must invest, as a minimum, two percent of their adjusted gross revenues resulting from their operations in this spectrum, averaged over the duration of the licence, in eligible research and development activities related to telecommunications. 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. Businesses with less than $5 million in annual gross operating revenues are exempt from these R&D expenditure requirements.
To facilitate compliance with this condition of licence, the licensee should consult Industry Canada's Guidelines for Compliance with the Radio Authorization Condition of Licence Relating to Research and Development (GL-03), which can be found on the Spectrum Management and Telecommunications website at http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf01638.html.
Licensees operating as radiocommunication carriers must comply with the mandatory antenna tower and site sharing requirements set out in Industry Canada’s Client Procedures Circular, Conditions of Licence for Mandatory Roaming and Antenna Tower and Site Sharing and to Prohibit Exclusive Site Arrangements (CPC-2-0-17), as amended from time to time.
Licensees must submit an annual report for each year of the licence term, indicating continued compliance with all licence conditions and including the following information:
- an update on the implementation of Air-Ground Services, including coverage of civil air routes;
- existing audited financial statements with an accompanying Auditor's Report;
- Statement of Research and Development Expenditures. (Where licensees are claiming an exemption based on an adjusted gross revenue of less than $5 million, supporting financial statements must be provided.); and
- a copy of any existing corporate annual report for the licensee's fiscal year with respect to the authorization.
The reports are to be certified by an authorized officer of the company and submitted, in writing, to Industry Canada at the address below within 120 days of the licensee's fiscal year-end. Where a licensee holds multiple licences, the reports should be broken down by service area. Confidential information provided will be treated in accordance with subsection 20(1) of the Access to Information Act.
Manager, Wireless Networks
Radiocommunications and Broadcasting Regulatory Branch
300 Slater Street, 15th floor
The Department seeks comments on the proposed licence conditions for the Air-Ground Services band.
As indicated in Canada Gazette Notice No. DGTP-011-06, Consultation on Air-to-Ground Services in the Bands 849-851 MHz and 894-896 MHz, the Department proposed to make this spectrum available using an auction.
A spectrum auction is a market-based tool that allows the government to identify those entities who value the spectrum the most and who will therefore be expected to put that spectrum to the most efficient use. In this context, the Department proposes to use an auction mechanism to assign block licences A and B in the bands 849-851 MHz and 894-896 MHz.
Auctions offer several advantages, such as their ability to promote economically efficient use of spectrum; their openness and objectivity as an assignment mechanism; their procedural efficiency; and their ability to provide fair compensation to the Canadian public for the use of the spectrum resource. Auctions represent a valuable spectrum management tool for those situations where there is excess demand. Auctions also rely on market forces and result in a more timely and efficient assignment of licences than would be possible under alternative licensing procedures.
In its ongoing effort to promote reliance on market forces to provide a timely and efficient assignment of spectrum, the Department has examined various auction models for the assignment of the licences in the 800 MHz band for Air-Ground Services.
In past auctions, Industry Canada has employed the Simultaneous Multiple Round Ascending (SMRA) auction design as the method to offer large numbers of interrelated licences. These auctions were carried out electronically over the Internet, usually over a period of several weeks.
Although the SMRA is an excellent tool when there are a large number of licences, there are only two spectrum licences being offered in the Air-Ground Services. Furthermore, the Department intends to offer the licences such that the bidders will have the option of bidding on the individual licences and/or on both licences as a package. As package bidding is not supported by the Department's SMRA design, and having carefully considered other auction designs, the Department is proposing a simple, expeditious, sealed-bid, second-price auction process, known as a Vickrey auction.
A sealed-bid, second-price auction will require applicants to submit their bid for each licence or package of licences to the Department in a sealed envelope prior to the deadline for submission of bid applications. The day following the bid application deadline, departmental officials will open the sealed bids, rank them, and provisionally award a licence or licences to the highest bidder(s).
The highest bidder will be required to pay the second highest bid or, should there be only one bidder for a particular licence, the posted reserve price.
The auction will be a single-round auction in which there will be no second round. In the event of a tie, tied bidders will be requested to enter a second sealed bid in an attempt to break the tie. Should there be a third tie, bidders will be requested to enter a third sealed bid in an attempt to break the tie and so on until there is no tie.
The Department seeks comments on the use of a sealed-bid, second-price auction.