Decision on the Renewal of 24 and 38 GHz Spectrum Licences and Consultation on Spectrum Licence Fees for 24, 28 and 38 GHz Bands

Part B: Licence Fees – Further Consultation

1. Background

Licences in the 28 GHz frequency band have annual radio authorization fees as established in Canada Gazette Notice DGRB-004-96Radio Authorization Fees for Local Multipoint Communication Systems in the 28 GHz Range (LMCS). These fees are based on a set fee for a 500 MHz block. Industry Canada notes that the fee needs to be more flexible with respect to the amount of spectrum being licensed.

First come, first served licences in a portion of the 38 GHz frequency band have annual radio authorization fees as established in Canada Gazette Notice DGRB-004-97Radio Authorization Fees for Fixed Radio Systems in the 38.4-40.0 GHz Frequency Bands. The fees are applicable to stations licensed on a grid-cell basis in the sub-bands 38.4-38.7 GHz, 39.1-39.4 GHz and 39.8-40.0 GHz.

As per Canada Gazette Notice DGRB-001-08Consultation on the Renewal of 24 and 38 GHz Spectrum Licences and Spectrum Licence Fees for 24, 28 and 38 GHz Bands, the Department consulted on a proposed fee for the 24, 28 and 38 GHz licences.

The discussion was based on setting a renewal fee for 24 and 38 GHz licences. As the Department has decided to extend the term of the original licence by five years, this second consultation on the proposed licence fees will be used to determine the annual licence fee for first-come, first-served licences in the previously auctioned spectrum in the 24 and 38 GHz bands that was unassigned or returned, as well as in the 28 GHz LMCS spectrum. The proposed fee will also be applied as a renewal fee for auctioned licences at the end of the extended licence term.

In accordance with subsection 4(1) of the User Fees Act, the Department is providing a second opportunity for stakeholders to comment on the proposed fee.

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2. Proposed Fee for First-Come, First-Served Licences

2.1 General Principles for Establishing Fees

In general, fees established by the Department for spectrum authorizations have as their goal to:

  • promote the efficient allocation of resources (i.e. to eliminate the excess demand that often exists with "free goods" by subjecting programs to a market test of supply and demand);
  • earn a fair return for the Canadian public for the privilege of access to, or exploitation of, public resources.

The consultation paper, DGRB-001-08, which can be found at http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf08935.html, included a discussion on the setting of a licence fee and provided a comparison of domestic and international fees and the revenue and cost elements.

There was general agreement that the same fee should be charged for first-come, first-served licences in the unassigned spectrum in the 24 and 38 GHz bands and the 28 GHz LMCS spectrum. Some comments received were against the proposal to apply the proposed fee as a renewal fee, and advocated an extension with no fees or the application of fees based on cost recovery.

2.2 Recommendation

Industry Canada continues to believe that the proposed annual fee of $0.003205 per 100 MHz per populationFootnote 2 with a minimum fee of $150 per licence is fair and provides a reasonable assessment of the economic value of the spectrum. However, the proposed fee is being restated on a per MHz per population basis to ensure flexibility in issuing licences in the future, particularly in the 28 GHz band where a decision has yet to be made on the band plan.

Because the Department has decided to grant a five-year extension with no applicable fees, the fee will be applied only to licences issued on a first-come, first-served basis at this time. However, the fee will be applied as a renewal fee at the end of the extended term. This decision to apply the fee to first-come, first-served licences is based on Industry Canada's analysis as described in the consultation paper DGRB-001-08Consultation on the Renewal of 24 and 38 GHz Spectrum Licences and Spectrum Licence Fees for 24, 28 and 38 GHz Bands, and on the comments received during the consultation.

Comments are sought on the proposed annual fee of $0.00003205 per MHz per population with a minimum fee of $150 per licence for licences issued on a first-come, first-served basis applicable to returned and unassigned spectrum resulting from the 24/38 GHz auction and to LMCS 28 GHz spectrum.

The Department also seeks comments on the application of the proposed annual fee as a renewal fee for licences at the end of this extended term.

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3. Service Standards

Industry Canada also invited comments on the service standards proposed for this licensing process: the existing microwave application service standards of four weeks from receipt of an application, not including coordination with a foreign administration or agency, and typically 10 weeks if coordination is required. In addition, the Department proposed negotiation on a specific in-service date due to the complexity of some applications.

In general, comments received indicated that the proposed service standards, along with a negotiable in-service date, are adequate and that, in the past, the Department has been timely in responding to licence applications.

Service standards for this licensing process will be four weeks from receipt of a completed application, not including coordination with a foreign administration or agency, and typically 10 weeks if coordination is required.

When requested, a specific in-service date may be negotiated with the Department.

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4. Submitting Comments

Stakeholders are invited to submit any concerns, suggestions or proposals regarding the proposed fee and the related service standards to the Department no later than April 30, 2009. Respondents are requested to submit their comments electronically to: ic.spectrumoperations-operationsduspectre.ic@canada.ca.

Written submissions should be addressed to:

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

All submissions should cite Canada Gazette, Part I, the publication date, the title and notice reference number DGRB-004-09.

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5. Obtaining Copies

All spectrum-related documents referred to in this paper are available on the Spectrum Management and Telecommunications website at http://www.ic.gc.ca/spectrum.

For further information concerning the process outlined in this document or related matters, contact:

Manager, Emerging Networks
Radiocommunications and Broadcasting Regulatory Branch
Industry Canada
300 Slater Street, 15th floor
Ottawa, Ontario K1A 0C8
Telephone: 613-990-4411
Fax: 613-991-3514
E-mail: ic.spectrumoperations-operationsduspectre.ic@canada.ca

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Annex A – Conditions of Licence

The following conditions apply to spectrum licences in the 24 and 38 GHz bands.

1. Licence Term

The term of this licence will expire as indicated above. The process for issuing licences after this term and any issues relating to renewal will be determined by the Minister of Industry following a public consultation.

2. Licence Transferability and Divisibility

The licensee may apply in writing to transfer its licence in whole or in part (divisibility), in both the bandwidth and geographic dimensions. Departmental approval is required for each proposed transfer of a licence, whether the transfer is in whole or in part. The transferee(s) must also provide an attestation and other supporting documentation demonstrating that it meets the eligibility criteria and all other conditions, technical or otherwise, of the licence.

The Department may define a minimum bandwidth and/or geographic dimension (such as the grid cell) for the proposed transfer. Systems involved in such a transfer shall conform to the technical requirements set forth in the applicable standard.

The licensee may apply to use a subordinate licensing process.

For more information, refer to Client Procedures Circular, Licensing Procedure for Spectrum Licences for Terrestrial Services (CPC-2-1-23), as amended from time to time.

3. Eligibility Criteria

A licensee operating as 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.

A licensee operating as 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.

For more information, refer to Client Procedure Circular, Canadian Ownership and Control (CPC-2-0-15), as amended from time to time.

4. Radio Station Installations

While site-specific radio licences will not be required for each radio station, licensees must ensure that each radio station is installed and operated in a manner that complies with Client Procedures Circular, Radiocommunication and Broadcasting Antenna Systems (CPC-2-0-03), as amended from time to time.

5. Provision of Technical Information

When the Department 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, as amended from time to time.

6. Compliance with Legislation, Regulations and other Obligations

The licensee is subject to, and must comply with, the Radiocommunication 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 relation to this licence are all true and complete in every respect. The licensee must use the assigned spectrum in accordance with the Canadian Table of Frequency Allocations and the applicable Industry Canada policies, procedures and standards, as amended from time to time. The licensee must also abide by applicable provisions of other statutes and rulings of other statutory bodies, such as the Canadian Radio-television and Telecommunications Commission (CRTC) or the Competition Bureau.

7. Technical Considerations

The licensee must comply on an ongoing basis with the technical aspects of the appropriate Radio Standards Specifications and Standard Radio System Plans, as amended from time to time.

8. International and Domestic Coordination

The licensee must comply with the current and future agreements established with other countries. While frequency assignments are not subject to site licensing, the licensee may be required to furnish all necessary technical data for each relevant site.

The licensee will use its best efforts to enter into mutually acceptable sharing agreements that will facilitate the reasonable and timely development of their respective systems, where applicable, and to coordinate with other licensed users in Canada and internationally where applicable.

9. 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.

The licensee 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.

10. Research and Development (R&D)

All licensees operating as radiocommunication carriers must invest, as a minimum, 2 percent of their adjusted gross revenues resulting from their operations in this spectrum, averaged over the term of the licence, in eligible research and development activities related to telecommunications. Eligible research and development activities are those which 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 research and development expenditure requirements, except where they have affiliations with licensees that hold other licences with the research and development condition of licence and where the total annual gross revenues of the affiliated licensees are greater than $5 million.

To facilitate compliance with this condition of licence, the licensee should consult the Department's Guidelines for Compliance with the Radio Authorization Condition of Licence Relating to Research and Development (GL-03).

11. Mandatory Antenna Tower and Site Sharing

Licensees operating as radiocommunication carriers must comply with the mandatory antenna tower and site sharing requirements set out in Client Procedures Circular CPC-2-0-17, Conditions of Licence for Mandatory Roaming and Antenna Tower and Site Sharing and to Prohibit Exclusive Site Arrangements, as amended from time to time.

12. Implementation of Spectrum Usage

The licensee must demonstrate to the Minister of Industry, by the end of the extended term, that the spectrum has been put into use. The establishment of eight links per one million population (rounded up to a whole number) within a service area, or some other indicator of usage which is acceptable to the Minister of Industry, is required.

13. Annual Reporting

Licensees must submit an annual report for each year of the licence term, including the following information:

  • a statement indicating continued compliance with all conditions of licence;
  • an update on the implementation and spectrum usage within the area covered by the licence;
  • existing audited financial statements with an accompanying Auditor's Report;
  • a report of the Research and Development Expenditures for licensees operating as radiocommunication carriers whose annual gross operating revenues exceed $5 million (the Department reserves the right to request an audited Statement of Research and Development expenditures with an accompanying Auditor's Report);
  • supporting financial statements where licensees are claiming an exemption based on an annual gross revenue of less than $5 million; and
  • a copy of any existing corporate annual report for the licensee's fiscal year with respect to the authorization.

All reports and statements must be certified by an officer of the company and submitted, in writing, within 120 days of the licensee's fiscal year end, to the address below. Where a licensee holds multiple licences, the reports should be broken down by service area. Confidential information provided will be treated in accordance with section 20(1) of the Access to Information Act.

Manager, Emerging Networks
Radiocommunications and Broadcasting Regulatory Branch
Industry Canada
300 Slater Street, 15th floor
Ottawa, Ontario K1A 0C8

14. Amendments

The Minister of Industry continues to have the power to amend the terms and conditions of spectrum licences (paragraph 5(1)(b) of the Radiocommunication Act).


Footnotes

  1. 1 See the Department of Justice's website at http://laws-lois.justice.gc.ca/eng/acts/U-3.7/(back to footnote reference 1)
  2. 2 Statistics Canada census population data. (back to footnote reference 2)
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