Consultation on a Policy and Technical Framework for the 700 MHz Band and Aspects Related to Commercial Mobile Spectrum

SMSE-018-10

Spectrum Management and Telecommunications

Contents


1. Intent

Through the release of this paper, Industry Canada is hereby initiating a consultation on a policy and technical framework to auction spectrum in the band 698-806 MHz (also known as the 700 MHz band) as announced in Canada Gazette Notice No. SMSE-018-10. Comments are sought on general policy considerations related to commercial mobile broadband spectrum use, competition issues and on the use of the 700 MHz band. In addition, the Department is seeking comments on spectrum use for public safety broadband applications.

Noting that the Department will consult on licensing measures for the band 2500-2690 MHz in a separate consultation, this paper also seeks views on whether government measures are required to promote competition, in the context of spectrum being made available in both bands.


2. Policy Objectives

The Minister of Industry, through the Department of Industry Act, the Radiocommunication Act and the Radiocommunication Regulations, with due regard to the objectives of the Telecommunications Act, is responsible for spectrum management in Canada. As such, the Minister is responsible for developing national policies and goals for spectrum utilization and ensuring effective management of the radio frequency spectrum resource.

Industry Canada is committed to ensuring that Canadian consumers, businesses and public institutions continue to benefit from the availability of new, advanced and affordable telecommunications services in all regions of the country. Such services directly impact the adoption and use of digital technologies and, more generally, the competitiveness and productivity of the Canadian economy. In pursuing these objectives, the Department has acted to encourage a competitive telecommunications marketplace, as it believes that competition stimulates innovation and investment by the industry, which can lead to lower prices, better services and more choice for consumers, businesses and public sector users.

In developing a policy and licensing framework to make additional spectrum available, the Department takes into consideration the need to provide spectrum access for new services and technologies, including broadband, the impact of such a framework on all stakeholders and the Spectrum Policy Framework for Canada (SPFC) policy objective to maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum.


3. Background

Cellular mobile radio services (CMRS)Footnote 1 were launched in Canada in the early 1980s when the Department of Communications (now Industry Canada) issued licences for 40 MHz of spectrum in the Cellular band. In response to tremendous growth in demand for mobile telephony services, additional spectrum was designated for CMRS in 1989 (in the Cellular band), in 1995 (in the PCS band), and in 2001 (auction of additional PCS spectrum). The Advanced Wireless Service (AWS) auction in 2008 made available an additional 105 MHz to the commercial mobile industry in three different bands: AWS, PCS and 1670-1675 MHz. As a result of the AWS auction, several new facilities-based wireless service providers have recently launched or announced their planned launch of wireless services.

Recent advances in wireless communication technology and electronics miniaturization enable a far richer experience for the end-users of mobile wireless services, including mobile multimedia applications. The next generation of mobile broadband networks will support higher data throughput rates, lower latencies and more consistent quality of service. This will increase the range of applications and devices that can benefit from mobile broadband connectivity, generating a corresponding increase in demand for mobile broadband service by consumers, businesses, public safety agencies, health-care facilities, education institutions, energy associations and other public sector users. Widely quoted industry reports mention an increase in demand for mobile data traffic of multiple orders of magnitude over the next 3-5 years Footnote 2.

Sufficient spectrum to enable wireless network expansion and new broadband technologies will be needed to allow the continued growth of wireless broadband, leading to lower prices and improved quality of service for end-users, as well as enhanced opportunities for innovation and investment. To this end, the Department is making available spectrum in the 700 MHz band for commercial mobile systems.

The 700 MHz spectrum is attractive due to lower costs associated with system deployments, as service provisioned over lower frequencies can reach subscribers at a greater distance from the base station. In addition, by taking advantage of wide radio channels, broadband radio technologies (such as LTE) can accommodate further increases in distance between subscribers and base stations and/or increased data communication speeds. As a result, deployment of broadband radio systems in the 700 MHz band will have an important role in increasing the penetration of broadband wireless services in regions with low population density.

The Digital Dividend

In recent years, global interest for new spectrum to accommodate emerging mobile technologies has increased significantly. The demand for spectrum has spurred discussions internationally and, as a result, at the World Radio Conference in 2007 (WRC-07), the International Telecommunication Union (ITU) identified spectrum for International Mobile Telecommunications (IMT) in the band 698-862 MHz.

In many parts of the world, portions of this band are currently being used for over-the-air television broadcasting. For decades, television broadcasting has been delivered using analog technology. With the advances in digital transmission technology, television broadcasting can now be delivered more efficiently (i.e. using less spectrum), thereby freeing up spectrum that can be repurposed for other services and applications. This spectrum, also known as the Digital Dividend, offers an excellent balance between transmission capacity and distance coverage, and will allow new licensees in this band to offer next generation mobile broadband services, which are currently being sought by consumers. In Canada, United States, and many countries in the Americas, the frequency range above 806 MHz is already used for mobile communications. In these countries the Digital Dividend refers to the frequency range 698-806 MHz.

In order to fully benefit from an internationally harmonized band, including the advantages of widely available equipment and the ease of international roaming, Canada has often adopted harmonized spectrum allocations on a global and/or regional basis, especially with the United States. Over the years, harmonization with the U.S. has presented several advantages, including cross-border roaming. Harmonization with other international frequency arrangements is also often considered, while taking into account specific aspects of the Canadian market and services.

Status in Canada

In 1997, Canada adopted the Advanced Television Systems Committee (ATSC) Digital Television standard for terrestrial transmission to replace the NTSC (National Television System Committee) standard used for analog TV broadcasting in the UHF and VHF bands. In anticipation of the digital TV (DTV) transition in Canada, the Department published the first DTV Transition Allotment Plan in 1998, provisioning the introduction and operation of DTV undertakings alongside existing NTSCundertakings.

The DTV allotment plan relocates all UHF high power broadcasting undertakings into the frequency range 470-698 MHz. As a result, the frequency range 698-806 MHz, often referred to as the "700 MHz band," will become available for other services and applications. The final Post-Transition DTV Allotment Plan was released in December 2008.

In  2007, the Canadian Radio-television and Telecommunications Commission (CRTC) established the deadline Footnote 3 of , to end all over-the-air analog TV broadcasting. In early 2010, the CRTC confirmed the deadline of , for the transition of full-power analog transmitters operating in the 31 identified mandatory markets and for those operating on channels 52-69 outside of the mandatory markets. The broadcasters outside the mandatory markets who choose not to convert to digital must either move their service(s) to a channel outside the 52 to 69 range or must cease operation of their analog transmitter(s).

In June 2004, the Department issued the Spectrum Utilization Policy SP-746, Mobile Service Allocation Decision and Designation of Spectrum for Public Safety in the Frequency Band 746-806 MHz, which established the mobile service as a co-primary service with the broadcasting service in the band 746-806 MHz. SP-746 also designated the bands 764-770 MHz (TV channel 63) and 794-800 MHz (TV channel 68) for public safety. In June 2009, SP-768 MHz, Narrowband and Wideband Public Safety Radiocommunication Systems in the Bands 768-776 MHz and 798-806 MHz, was released, designating the bands 770-776 MHz (TV channel 64) and 800-806 MHz (TV channel 69) for public safety. Also included in SP-768 was a new band plan specifying the bands 768-776 MHz and 798-806 MHz for narrowband and wideband public safety communications, aligning the spectrum with the United States. SP-768 also indicated that the use of the spectrum designated for public safety in the bands 764-768 MHz and 794-798 MHz would be subject to a future consultation.

Status in the United States

In the United States, the transition from analog-to-digital TV was completed in June 2009. For the auction leading up to the transition, the 700 MHz band was considered as two distinct bands: the Upper 700 MHz Band (UHF TV Channels 60-69), which is comprised of 60 MHz, and the Lower 700 MHz Band (UHF TV Channels 52-59), which is comprised of 48 MHz. The Lower and Upper 700 MHz bands were auctioned in multiple stages between September 2002 and March 2008. It should be noted that in the Upper 700 MHz band, there is 24 MHz of spectrum designated for public safety which was not a part of the auction process. The total amount of spectrum auctioned so far by the U.S. Federal Communications Commission (FCC) in the 700 MHz band consists of 58 MHz of paired and 12 MHz of unpaired spectrum Footnote 4.

The final auction in March 2008, entitled Auction 73, received high interest from the mobile industry. The proceeds of Auction 73 were the largest of any U.S. auction of wireless spectrum to date. The FCC had established various goals for the auctions, such as promoting open access and facilitating national public safety interoperability. To this end, it used a series of measures, including open access as a condition of licence (C Block, 746-757/776-787 MHz) and the requirement of a public safety/private partnership (D Block, 758-763/788-793 MHz) between a commercial licensee and a single public safety licensee, with the objective of developing a nationwide, shared interoperable broadband network for use by public safety users in cases of emergencies. The D Block, however, was not licensed since auction bids did not meet the reserve price. In recent months, there has been much discussion in the United States regarding the terms and conditions to license the D Block and whether it will be auctioned as initially anticipated or if it will be granted to public safety service through the Public Safety Spectrum Trust (PSST).

Since the end of the auction process, U.S. licensees in the commercial portion of the 700 MHz band have announced the launch, by the end of 2010, of broadband mobile services based on the Long-Term Evolution (LTE) technology.

Status in other regions

In September 2010, the Asia-Pacific Telecommunity (APT) Footnote 5 announced that two harmonized frequency arrangements for IMT in the 698-806 MHz frequency band were adopted in that region. The first band plan consists of a 45 + 45 MHz block for frequency division duplex (FDD) use only (with a centre gap of 10 MHz), and the second band plan allows for time division duplex (TDD) use in the entire 698-806 MHz band.

Other Consultations

As noted above, the Department is committed to ensuring that Canadian consumers, businesses and public institutions continue to benefit from the availability of new and advanced telecommunications services in all regions of the country. Such services directly impact the adoption and use of digital technologies and, more generally, the competitiveness and productivity of the Canadian economy. These objectives are also found in other consultations that the Department has initiated.

In May 2010, the Government of Canada launched an online public consultation entitled Improving Canada's Digital Advantage – Strategies for Sustainable Prosperity, aimed at creating a digital economy strategy for Canada. Comments received through this consultation process are available on Industry Canada's website at http://www.ic.gc.ca/eic/site/028.nsf/eng/Home.

Also, public consultation on foreign investment restrictions in the telecommunications sector entitled Opening Canada's Doors to Foreign Investment in Telecommunications: Options for Reform was launched in June 2010. Submissions were accepted until , and are available for viewing on the Department's website at http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf09919.html.

A consultation process is currently under way towards the repurposing of the 2500 MHz band to allow flexible use, including mobile broadband services. The document, Decisions on the Transition to the Broadband Radio Service (BRS) in the Band 2500-2690 MHz and Consultation on Changes Related to the Band Plan, and comments received from respondents are available on Industry Canada's departmental website at http://www.ic.gc.ca/spectrum.

The results of these consultations and the related decisions will be taken into consideration as part of this consultation.


4. Commercial Mobile Services

4.1 Overview of the Canadian Mobile Market

The wireless sector plays an increasingly important role in Canada's overall telecommunications industry. In Canada, as in other countries, consumers are increasingly using mobile broadband services to access the Internet, demanding the latest devices and applications. Canada already has good coverage of wireless networks, with 99% of Canadians having access to wireless services, and 96% able to access advanced wireless networks that support smartphones, wireless tablets and wireless USB modems. As technology continues to advance, notably with the introduction of next generation services and enhanced mobile video, Canadian industry will face continued pressure to upgrade networks and services.

The importance of wireless is demonstrated by the relative growth compared to traditional services. Footnote 6. While the annual growth in revenue in the wireline segment has remained relatively constant for the last five years, averaging just 0.7%, growth in the wireless segment has averaged 11.4% in the same period. In 2009, wireless revenues increased 5.4% to $16.8 billion, while wireline revenues declined slightly, from $24.2 billion to $24.1 billion. This growth in wireless can also be seen in the changes to the subscriber base. There were 23.8 million residential and business wireless subscribers in 2009, a 7.8% increase over the 2008 level of 22.1 million.

The Canadian market has primarily been served by three large facilities-based providers, Rogers Communications, which had 39% of the wireless revenues in 2009, followed by TELUS Communications Company (28%), the Bell Group Footnote 7 (28%), and other providers, principally MTS Allstream and SaskTel. In terms of subscribers, of the total, Rogers had 37%, the Bell Group 30%, and TELUS 28%. In the past year, four new service providers have begun to offer mobile service using spectrum acquired as part of the AWS auction in 2008. Wind Mobile launched in December 2009, while Mobilicity, Public Mobile and Videotron commenced operations in 2010. Two more providers, Shaw and Bragg Communications Inc. are also expected to launch service in the near future. Data is not yet available on the impact of new entrants on the market and on their respective market shares.

4.2 Stakeholder Holdings, Demand and Business Considerations

The development of innovative devices and applications and the corresponding adoption by consumers are driving spectrum demand and the need for increased investment in broadband networks. Industry developments reveal a continuing trend of increased use of bandwidth-intensive mobile broadband services and applications.

Spectrum Holdings

Some of the bands currently available for commercial mobile service are listed below.

  • Cellular: 824-849 MHz/869-894 MHz (50 MHz)
  • 1670-1675 MHz (5 MHz)
  • Advanced Wireless Services (AWS): 1710-1755 MHz/2110-2155 MHz (Total 90 MHz)
  • Personal Communication Systems (PCS): 1850-1915 MHz/1930-1995 MHz (Total 130 MHz)
  • Broadband Radio Services (BRS): 2500-2690 MHz (190 MHz)

The following charts serve to demonstrate the distribution of major holdings for commercial mobile spectrum in the Cellular, PCS and AWS bands. In order to simplify this illustration, holdings are presented based on Tier 2 service areas. The percentage of total holdings represents spectrum assigned to each entity Footnote 8 in Canada and is regionally weighted by population of the assigned service areas, where applicable. It should be noted that TELUS provides business-oriented mobile telephone and data services based on iDEN technology in the 806-821/ 851-869 MHz band. This service is based on site specific radio licensing and is not included in the charts in the following pages. The 1670-1675 MHz band is also not represented in the charts below.

Figure 4.1 — Cellular Holdings (50 MHz : 824-849 MHz/869-894 MHz)
(a) Percentage of Total Holdings
(weighted by population)
(b) Total Holdings by MHz, by ServiceArea Footnote 9
Note: "Others" includes members of the Canadian Alliance of Publicly-owned Telecommunications Systems (CAPTS), the Ontario Telecommunication Association (OTA), and the Association des compagnies de téléphone du Québec (ACTQ) and other small licensees.

(Representing 100% of the total spectrum available in the band)

Figure 4.2 — PCS Holdings (130 MHz : 1850-1915 MHz, 1930-1995 MHz)
(a) Percentage of Total Holdings
(weighted by population)
(b) Total Holdings by MHz, by Service Area Footnote 9
Note: "Others" includes members of the Canadian Alliance of Publicly-owned Telecommunications Systems (CAPTS), the Ontario Telecommunication Association (OTA), and the Association des compagnies de téléphone du Québec (ACTQ), Globalive Wireless Management Corp, Blue Canada Wireless Inc., Bragg Communications Inc., Public Mobile Inc., Novus Wireless Inc., and other small licensees.

(Representing 99% of the total spectrum available in the band)

Figure 4.3 — AWS Holdings (90 MHz : 1710-1755 MHz and 2110-2155 MHz)
(a) Percentage of Total Holdings
(weighted by population)
(b) Total Holdings by MHz, by Service Area Footnote 9
Note: "Others" include Celluworld Inc., 2203733 Ontario Inc. and 7140282 Canada Inc. (transferred from Rich Telecom Corp.)

(Representing 100% of the total spectrum available in the band)

Figure 4.4 — BRS Holdings (190 MHz : 2500-2690 MHz)
(a) Percentage of Total Holdings
(weighted by population)
(b) Total Holdings by MHz, by Service Area Footnote 9
Note: Holdings by Bell and Rogers demonstrate joint holdings under Inukshuk Internet Inc.
Others include Cablevision TRP-SDM Inc., Val Gagné Communications Association and SSI Micro. Holdings assume full conversion of existing MCS and MDS authorizations.

(Representing 52% of the total spectrum available in the band)

Figure 4.5 — Summary of Holdings for Cellular, PCS, AWS and BRS spectrum
Percentage of Total Holdings (weighted by population)

 

Figure 4.6 — Summary of Holdings and Available Cellular, PCS, AWS, BRS and 700 MHz spectrum (Total 544 MHz)
Percentage of Total Holdings (weighted by population)

Note: 700 MHz band is based on a maximum of 84 MHz of spectrum available.

In 2008, 90 MHz of AWS spectrum was offered through auction with specific blocks of spectrum set-aside explicitly for eligible bidders. As a result, 45% of the total 90 MHz of AWS spectrum was licensed to eligible new entrants, while the three largest wireless service providers, Rogers, Bell Mobility Inc. and TELUS (TCC) hold approximately 55% of the spectrum (weighted by population).

More detailed information on specific service providers' spectrum holdings in regard to these bands is available on the Spectrum Direct website at http://www.ic.gc.ca/eic/site/sd-sd.nsf/eng/home.

As a result of the AWS auction, several companies have recently launched service in the wireless market sector as new facilities-based wireless service providers or have announced plans to do so. This new entry, mainly in large metropolitan centres, along with the reactions by established wireless service providers to it, appears to have spurred competition in terms of service offerings, pricing plans and product differentiation. These changes appear to have improved the accessibility and affordability of wireless services to certain consumer segments.

Drivers for spectrum demand

Globally, the popularity of accessing the Internet by wireless devices at broadband speeds continues to grow. Computer laptops, notebooks and netbooks can access mobile Internet service by means of a USB wireless modem, wireless module, or data card. Mobile handsets, especially the new generation of smartphones, are the predominant devices, using mobile broadband data services Note10. Referencing Strategy Analytics February 2010 as its source, the CRTC reported that a record 54 million smartphones (of a global total of 337 million mobile phones) were sold worldwide in the fourth quarter of 2009, representing a growth of 32% over the same period in 2008 (compared to 15% growth in the overall number of mobile handsets shipped worldwide in 2009).

The U.S. National Broadband Plan released in 2010 notes that mobile broadband represents the convergence of two disruptive technologies – Internet computing and mobile communications — and may be more transformative than either of these previous breakthroughs Note11. In response to the explosive growth predicted in wireless broadband usage, carriers must offer more services to more consumers, thus creating an increased demand for spectrum, such as the 700 MHz band.

Consistent with this expectation that demand for the 700 MHz spectrum will exceed supply, the Department will make the 700 MHz spectrum available through an auction, as opposed to a first come, first served (FCFS) process, which is still used where Industry Canada believes that the spectrum supply is adequate to meet demand or where a reasonable accommodation of all applications can be managed.

4-1. What is the general need for additional commercial mobile spectrum at this time and what do you anticipate the future needs to be?

It should be noted that alternate spectrum access arrangements (other than a competitive licensing process) could also be used to meet anticipated demand, for example, the use of licence-exempt spectrum, the trading/leasing of spectrum licences, or the use of Radio Systems Policy RP-019, Policy for the Provision of Cellular Services by New Parties, etc.

In the case where no additional spectrum is available, licensees typically employ spectrally efficient technologies and deployment methods, which, to the extent possible, could increase the ratio of available capacity to the amount of spectrum utilized.

The Department is seeking specific spectrum usage information from current commercial mobile licensees and entities interested to acquire commercial mobile spectrum:

4-2. Provide general deployment information on the current use of your existing holdings in each mobile spectrum band. In the case where current holdings are not being used, provide information on its planned use, including timelines.

4-3. Indicate your need for additional spectrum for commercial mobile service applications and how much spectrum is required.

  1. What deployment timelines are being considered?
  2. What types of applications/uses are envisioned?
  3. To what degree will your business' anticipated spectrum needs be addressed by having access to the 700 MHz and/or 2500 MHz spectrum?

4-4. Do you plan to use 700 MHz spectrum acquired in the auction with, or on behalf of, another entity, which may participate in the auction? If yes, with which entity?

4-5. Provide comments on the extent to which alternate spectrum access arrangements have been investigated/considered to respond to your need for additional spectrum. In addition, provide specific efficiency measures investigated or implemented for current holdings.

Your comments to the above questions will be considered proprietary and will remain confidential. Responses to these questions must be submitted separately (e.g., in an appendix) and clearly marked as "Confidential."

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