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

7. Promoting Competition

7.1 Possible Need to Promote Competition

As described in Section 4.1, until recently, the Canadian wireless market was comprised primarily of three large service providers, Bell, Rogers and TELUS, as well as a number of regional providers, e.g. SaskTel Mobility and of several Mobile Virtual Network Operators (MVNOs). The Department has acted to encourage a competitive telecommunications marketplace, as it believes that competition stimulates innovation and investment in the industry, which can lead to lower prices, better services and more choice for consumers and businesses.

In 2007, in pursuit of these objectives, the terms of the Advanced Wireless Services (AWS) auction included a spectrum set-aside exclusively for eligible bidders. A number of new entrants responded by acquiring this set-aside, and other spectrum. Some of these new entrants, Public Mobile, Mobilicity, Wind Mobile, Videotron and others have already launched service resulting in a more competitive wireless marketplace, but with unknown impact as of yet on consumer prices and services.

The following questions examine the need for possible measures to promote competition in the Canadian wireless services market(s).

7-1. The Department seeks comments on the current state of competition and its anticipated evolution, including the impact on consumers in the Canadian wireless services market:

  1. in general;
  2. in terms of its contributions and interaction to the broader Canadian telecommunications service market;
  3. in comparison with the wireless markets of other jurisdictions.

7-2. Provide views, and any supporting evidence, on the impacts of government measures adopted in the AWS auctions, including the impacts on consumers and on the state of competition. In particular, what has been the impact, if any, of such measures on industry concentration, barriers to entry or expansion of services, and the availability of new or improved service offerings and pricing plans?

7-3. In light of the current conditions in the Canadian wireless service market(s), is there a need for specific measures in the 700 MHz and/or 2500 MHz auction to increase or sustain competition?

7-4. The Government of Canada has undertaken a consultation on potential changes to the foreign investment restrictionsFootnote 31 that apply to the telecommunications sector. How would the adoption of any of these proposed changes impact your responses to the questions above?

Provide supporting evidence and rationale for all responses.

7.2 Specific Mechanisms Applicable to the 700 MHz and 2500 MHz Auctions

Industry Canada will use an auction mechanism to award spectrum in both the 700 MHz and the 2500 MHz bands. Auctions are a transparent, fair and efficient spectrum assignment mechanism. The Framework for Spectrum Auctions in Canada Footnote 32 notes that there are various measures available in an auction to promote a competitive marketplace if required, notably spectrum caps and set-asides.

Developments in the 700 MHz and 2500 MHz bands demonstrate that both are suitable for the deployment of advanced mobile/broadband networks and services to meet growing consumer demands. In the recent consultation DGSO-001-10 – Decisions on the Transition to Broadband Radio Service (BRS) in the Band 2500-2690 MHz and Consultation on Changes Related to the Band Plan, it is noted that BRS comprises a wide range of applications, primarily data, multimedia, Internet Protocol (IP)-based applications and broadband Internet access using post third-generation (3G) technologies.

Those participating in the 700 MHz and 2500 MHz auctions may see a benefit in acquiring a combination of spectrum in both bands to complement existing networks and/or deploy new networks and services, whereas others may not. Consequently, the Department will consider the issue of promoting competition (discussed below) in the context of both bands. Measures involving spectrum in both the 700 MHz and 2500 MHz bands could be adopted either in a combined auction format or separately if the two auctions are conducted individually.

Spectrum Aggregation Limits and Spectrum Set-Asides

Recognizing that there are various mechanisms in an auction process that can be used to promote competition, the Department has intervened in the past by using mechanisms such as spectrum aggregation limits (spectrum caps) and spectrum set-asides to foster competition. The same options could be considered should the Department decide that specific measures are necessary to promote competition in the wireless service market.

Spectrum Aggregation Limits (Spectrum Caps)

Spectrum aggregation limits (spectrum caps) restrict the amount of spectrum that any eligible bidder and its affiliates can purchase in a particular geographical region.

A spectrum cap was set for the 2001 PCS auction, effectively allowing for the entry of two new licensees. The cap had been applied to the combination of cellular (800 MHz), PCS (at 2 GHz) and other similar high-mobility radiotelephony services in the 800 MHz range, such as enhanced specialized mobile radio (ESMR), in order to ensure that new entrants had access to sufficient spectrum to effectively compete with the existing carriers. The cap was subsequently removed in 2004 due, in large part, to the opening of several other mobile bands and the convergence occurring with similar services and technologies.

Spectrum caps have also been used to prevent excessive concentration of spectrum at the time of opening new bands for competitive services. Such an aggregation limit was employed in the auction of the 2.3 GHz and 3.5 GHz bands and remained in effect for a period of two years following the close of the auction.

Setting the right cap amount is essential. If the limit is too low, there may not be enough spectrum to satisfy the business needs of some companies. If it is set too high, it might fail to fulfill the goal of preventing spectrum concentration. Another factor to be considered when applying a spectrum cap is how it should be applied, e.g. whether the cap should apply only to the spectrum being auctioned, to spectrum that is held across one or more bands, or whether it should apply differently across various bidders. How it is applied could limit the efficient allocation of the spectrum.

Possible options for implementation of a spectrum cap may include:

  1. spectrum to be auctioned in individual bands (700 MHz separately from 2500 MHz);
  2. a combination of spectrum to be auctioned in both bands (700 MHz and 2500 MHz); and
  3. a combination of spectrum to be auctioned as well as existing spectrum holdings in all or a subset of bands available for commercial mobile systems (Cellular, PCS, AWS, BRS), e.g. spectrum holdings below 1 GHz.

Industry Canada recognizes that different licensed service areas for Cellular, PCS, AWS and BRS may create difficulties for the possible implementation of spectrum caps involving more than one spectrum band.

Spectrum Set-aside

A spectrum set-aside occurs where eligibility to bid for a specific block is limited to entities that meet predefined criteria. A set-aside was used in the 2008 AWS auction where only new entrants, defined as participants holding less than 10% of the national wireless market, were permitted to bid on three (3) of the available eight (8) blocks of spectrum. Restrictions were also imposed to ensure that the set-aside spectrum would not be transferred to companies that did not meet the "new entrant" criterion for a period of five (5) years from the date of issuance.

A set-aside mechanism is established in the context of specific block(s) sizes and geographic dimension of the licences. Ideally, where there is more than one set-aside block, they should be side by side so that eligible bidders could acquire contiguous spectrum, both spectrally and geographically. Having a set-aside block(s) ensures that one or more designated entities will be assigned spectrum; however, qualified entities still have to bid competitively among themselves for the set-aside spectrum. The size of the set-aside is also a consideration in that it should be a sufficient amount of spectrum so that a designated entity could provide competitive services to Canadians. Restrictions on secondary market transactions and transferability on set-aside spectrum may need to be imposed for a specific time frame to limit opportunities for economic arbitrage of spectrum.

Should the Department decide to implement one of these measures, it will need to determine who should be subject to the spectrum aggregation limit or who will be eligible to access the set-aside spectrum during the auction, for example, solely the bidder, or also the bidders' affiliates and associated entities.

The following questions seek comments as to which mechanisms could be used to promote competition. With regard to the 700 MHz band, the possible market measure decisions could be influenced by pending decisions on specific band plans (Section 5.1), on spectrum for public safety systems (see Section 5.2), tier sizes (Section 5.3) and open access requirements (Section 9).

7-5. If the Department determines that there is a need for measures to promote competition, which of the above mechanisms would be most appropriate and why should this mechanism be considered over the other? Comments should also indicate if further restrictions should apply so that policy objectives are met, for example, over a given time period?

In light of your response above, and recognizing that pending decisions on the specific band plan, spectrum for public safety system, tier sizes and open access requirements could influence your response:

7-6. (a) If the Department were to implement spectrum aggregation limits (caps):

  1. Should the cap apply to the 700 MHz band only or be broader?
  2. What should the size of the cap be?
  3. Should bidders and their affiliates or associates share the cap?
  4. How long should the cap remain in effect?

(b) If the Department were to implement a set-aside in the 700 MHz auction:

  1. Who should be entitled to bid in the set-aside block(s) and should the entitled bidders be restricted to bidding on the set-aside only?
  2. How much spectrum should be set-aside and which block(s) should be set-aside?
  3. If the set-aside were to include multiple blocks of spectrum, should they be contiguous?
  4. What restrictions should be put in place to ensure that policy objectives are met (for example, should trading of the set-aside spectrum be restricted for a given time period)?

7-7. Are there other mechanisms that should be considered and, if so, how should these be applied?

7-8. The Government of Canada has undertaken a consultation on potential changes to the foreign investment restrictions that apply to the telecommunications sector. How would the adoption of any of the proposed changes affect your responses to the questions above?

Provide supporting evidence and rationale for all responses.

Note: The possible implementation of a set-aside regarding the 2500 MHz spectrum to be auctioned will be dealt with in a separate consultation.

8. Promoting Service Deployment in Rural Areas

One of the objectives of the Telecommunications Act is to promote the availability of reliable and affordable telecommunications service to all regions of Canada. However, Canada's geography and widely dispersed population can render it difficult to make a business case for the deployment of advanced, innovative services in some rural and remote areas of the country. Consequently, some sparsely populated areas of the country may not have access to the advanced broadband services needed to prosper in today's digital economy.

Several government initiatives have been developed to promote and advance the availability of advanced services, or broadband connectivity in rural and remote areas.

As a component of Canada's Economic Action Plan, the Broadband Canada: Connecting Rural Canadians program aims to support the provision of essential broadband connectivity infrastructure to Canadians in remote and rural areas by providing an incentive to Internet service providers to extend their networks. The program aims to extend broadband service to as many unserved and underserved Canadian households as possible. In addition, the CRTC recently approved the use of deferral accounts towards investments for deployments of broadband services in unserved communities. Footnote 33.

The recent Consultation Paper on a Digital Economy Strategy for Canada sought views on how the government can best ensure that rural and remote communities are not left behind in terms of access to advanced networks and on suggested priority areas are for attention in these regions.

Industry Canada continues to seek advice and consider options for promoting deployment in rural, remote and low-density areas, both within specific auction processes, and within a broader policy context, noting that the challenges encountered in such areas can vary based on a number of factors, including geography, population density and the state of the marketplace.

Through other consultations initiated by Industry Canada, some respondents have identified access to spectrum as an impediment to the deployment of advanced services in rural areas. Since 1999, the Department has used auctions to assign spectrum in situations where spectrum demand exceeds supply. In addition to the auction process, there exist several options for stakeholders to access spectrum in rural or remote areas. For example, a spectrum licensee may apply to transfer its licence(s) in whole or in part (divisibility), in both the bandwidth and geographic dimensions. This creates an opportunity for those interested in providing service in rural areas to approach current licensees to discuss a mutually beneficial commercial arrangement for access to spectrum already licensed. There has been some secondary market activity in the PCS, 2500 and 3500 MHz bands, as well as in the 24  and 38 GHz bands in the past where the Department approved applications for licence transfers and divisions, as well as subordinate licence applications. Upon receipt of an application signed by both interested parties, the Department verifies that the licensee and transferee meet the eligibility criteria and all other conditions of licence, technical or otherwise, prior to consideration for ministerial approval. Upon approval, the necessary changes to the related licences are implemented.

Within an auction process, an opportunity exists where parties wishing to serve various rural or remote communities within a tier area can form a bidding consortium and enter the auction with the goal of obtaining a licence and then having each consortium member provide service to a portion of the licensed tier area.

In the Consultation on the Revisions to the Framework for Spectrum Auctions in Canada and Other Related Issues, some stakeholders provided comments in favour of the development of a smaller tier that separates rural and urban areas. They suggested that this would reduce barriers to the provision of rural service. However, most argued that Tier 4 should be the smallest subdivision, further noting that smaller tier sizes would not facilitate a viable and sustainable business case and would increase the complexity of frequency coordination issues.

Another option for accessing spectrum is outlined in RP-19. This policy allows for new parties who propose services in areas that are unserved or underserved to apply for a licence for spectrum already licensed to a cellular incumbent. Where mutually agreeable arrangements cannot be established between the two parties, new parties may apply through the RP-19 process for consideration. In addition, some PCS spectrum remains available for licensing on a first-come, first-served basis.

The superior propagation characteristics of the 700 MHz spectrum band make this spectrum well suited for broadband services in rural areas. This is due in part to the cost efficiencies resulting from fewer required towers to cover a given area. In the context of this specific spectrum band, the Department is seeking views on whether a need exists to promote service deployment in rural areas. Within their responses, stakeholders may wish to comment on the feasibility of options such as roll-out licence conditions specifically targeting deployment in rural areas, as well as the use of a geographical tier structure that would divide rural areas from urban.

8-1. In the above context, the Department seeks comments on challenges and specific problems affecting the deployment of broadband mobile services to low-density rural and remote areas.

8-2. Is there a need for further regulatory measures or changes to existing regulatory rules (e.g. RP-19) to facilitate service deployments in rural and remote areas that remain unserved and/or underserved?

8-3. Should the Department decide that measures are necessary, comments are sought on specific measures that could be adopted within the 700 MHz spectrum auction process to ensure further deployment of advanced mobile services in rural and remote areas (e.g. roll-out conditions, tier structure, etc.).

Rationale and supporting evidence that substantiate your responses should be provided.

9. Open Access

The next generation wireless networks (3G and 4G) are based on broadband IP connectivity. Based on the open IP standard, the new architecture enables the expansion of the wireless industry ecosystem. New participants (hardware and application developers, content providers, third party service providers) are now able to develop, market and make available a range of products and services directly to wireless end-users.

The latest generation of mobile devices include portable general use computers (smartphones, pads, notebooks, etc.) and modems to connect computers to the Internet (USB modems, embedded wireless modules, etc). Users of these advanced devices have an expectation to be able to use their mobile broadband devices with the same degree of flexibility and access as using a personal computer connected to the Internet.

Requirements for open platforms for devices and applications have been included in the FCC rules applicable to Block C (746-757/776-787 MHz) in the Upper 700 MHz band:

  • Open platforms for devices – referring to the ability of device manufacturers to develop and of users to procure the devices of their choosing, as long as the wireless network is not negatively impacted.
  • Open platforms for applications – referring to the ability of application developers to create and of users to download, install and use the applications of their choice, while complying with certain technical conditions related to the management of the wireless network.

Adopting an open access policy similar to that used in the United States would enable service providers and users in Canada to take advantage of economies of scale due to the larger U.S. market. Moreover, such policies could enable Canadians to participate more actively in the new digital economy as consumers, innovators and content creators.

On the other hand, recent advances in technology have already enabled more powerful end-user devices (smartphones) and more capable networks, with increased capacity and throughput speeds, which may preclude the need for such intervention. Higher capacity access to the Internet provides a platform for a wider range of applications so it is implicit that investments to increase network capacity may already benefit and reward innovative and creative ideas for applications. Furthermore, the user experience for mobile subscribers is continually improving, and users may now expect and demand additional flexibility in using a wide range of novel devices and applications. As a result, some of the open access provisions, as described above, may already be a part of the wireless industry marketplace. For example:

  • users today are able to acquire handset or terminal devices within the GSM family of standards (GSM/GPRS/EDGE/HSPA) from third party retailers and then purchase wireless services from carriers with compatible networks; and
  • many of the new devices currently retailed by wireless service providers are based on certain open platforms enabling flexibility in the development, distribution and use of third party developed applications.

9-1 The Department seeks comments on whether there is a need for government intervention to promote open access, by increasing access by users to handsets and/or applications.

9-2. If government intervention is needed, which of the following options should be implemented?

Option 1: Mandated open access requirements across all future commercial mobile bands

Option 2: Mandated open access requirements for the entire commercial mobile spectrum in the 700 MHz band.

Option 3: Mandated open access requirements for the "C Block" (746-757/776-787 MHz) as in the United States.

Please provide supporting arguments for your responses, and any additional comments related to provisions of open platforms for devices and applications.

10. Auction Timing

In parallel with the preparatory work to auction spectrum in the 700 MHz band, the Department has also begun preparatory work towards the eventual auction of spectrum in the 2500-2690 MHz range for BRS. The most recent consultation entitled DGSO-001-10 – Decisions on the Transition to Broadband Radio Service (BRS) in the Band 2500-2690 MHz and Consultation on Changes Related to the Band Plan Footnote 34 and comments received are available on Industry Canada's website. High-capacity broadband mobile services could be offered in this band due to its good radio propagation characteristics and the prospect of relatively low-cost equipment. The 2500-2690 MHz band is the only band identified by the ITU on a global basis for IMT next generation mobile services.

In moving forward with the implementation of auctions of the spectrum in the 700 MHz and 2500 MHz bands, the Department must consider stakeholder requirements with regard to both bands. For example, consideration of the extent to which stakeholders perceive 700 MHz and 2500 MHz spectrum to be substitutes and/or complements of each other, and the extent to which these perceptions may vary across stakeholders.

In this regard, the Department is seeking views on the most appropriate timing for auction processes for both the 700 MHz and 2500 MHz bands.

10-1. The Department is considering three options to proceed with the 700 MHz and 2500 MHz bands auction processes:

Option 1: to conduct an auction for licences in the 700 MHz band first, followed by an auction for licences in the 2500 MHz band approximately one year later;

Option 2: to conduct an auction for licences in the 2500 MHz band first, followed by an auction for licences in the 700 MHz band approximately one year later;

Option 3: to conduct one combined auction for licences in both the 700 MHz and 2500 MHz bands, which would be six months later than the first auction in the case of separate auctions.

Industry Canada is seeking views on the merits or disadvantages of proceeding with each of the various options stated above. The Department seeks to understand the magnitude of interdependencies between the two bands from a business/operational perspective. Specifically, comments are sought as to the extent spectrum in these bands is interchangeable or complementary from both a technological and a strategic perspective. In addition, views on the business and financial capabilities of participating in a joint auction for both bands are sought. Comments should include the rationale for selecting one option rather than another.

11. Next Steps

Following a decision on the questions raised in this consultation paper, including a possible joint auction of the 700 MHz and 2500 MHz spectrum, Industry Canada will initiate a consultation on the licensing framework for the auctioning of this spectrum. This will include, but will not be limited to:

  1. auction design, rules and attributes;
  2. discussion regarding opening bids;
  3. implementation details of government intervention to enhance competition, if applicable; and
  4. licence conditions.

12. Submitting Comments

Respondents are requested to provide their comments in electronic format (WordPerfect, Microsoft Word or Adobe PDF) to the following e-mail address:, along with a note specifying the software, version number and operating system used.

In addition, respondents are asked to number their paragraphs for ease of referencing. Submissions should also include an executive summary using a standardized report format (maximum 5 pages, double-spaced, in 12-point font).

Written submissions should be addressed to Manager, Mobile Technology and Services, DGEPS, Industry Canada, 300 Slater Street, Ottawa, Ontario K1A 0C8.

All submissions should cite the Canada Gazette, Part I, the publication date, the title and the notice reference number (SMSE-018-10). Parties should submit their comments no later than , to ensure consideration. After the close of the comment period, all comments received will be posted on Industry Canada's Spectrum Management and Telecommunications website at

The Department will also provide interested parties with the opportunity to reply to comments from other parties. Reply comments will be accepted until .

Following the initial comment period, the Department may, at its discretion, if needed to clarify significant positions or new proposals request additional information. In such a case, the reply comment deadline would be extended.

13. Obtaining Copies

All spectrum-related documents referred to in this paper are available on the Spectrum Management and Telecommunications website at

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

Manager, Mobile Technology and Services
Engineering, Planning and Standard Branch
Industry Canada
300 Slater Street
Ottawa, Ontario K1A 0C8
Telephone: 613-990-4722
Fax: 613-952-5108


Footnote 1

For further details, refer to Radio Systems Policy RP-14 - Radio Systems Policy RP-003 and RP-005 Relevant to the Level of Usage of Mobile Systems and also the Definition of a Cellular Mobile Radio Service as originally set out in October, 1982.

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Footnote 2

Cisco, Hyperconnectivity and the Approaching Zettabyte Era, June, 2010.

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Footnote 3

Broadcasting Public Notice CRTC 2007-53:

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Footnote 4

Not including the guardband blocks A and B in the Upper 700 MHz (4 MHz).

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Footnote 5

Asia-Pacific Telecommunity website:

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Footnote 6

All statistics are taken from the 2010 CRTC Communications Monitoring Report.

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Footnote 7

The CRTC defines Bell Group of companies as: Bell Canada Inc., Northwestel Mobility Inc., Bell Mobility Inc., Télébec, NorthernTel Limited Partnership, Skyterra (Canada) Inc., Virgin Mobile Canada and Latitude Wireless Inc.

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Footnote 8

For the purpose of the illustrations in this section, Bell includes: Bell Mobility, Bell Alliant, Northwestel Mobility, Northern Tel Ltd Partnership and Latitude Wireless Inc.

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Footnote 9

Weighted by population if the Service Area is divided between multiple service providers.

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Footnote 10

CRTC Monitoring Report 2010

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Footnote 11

National Broadband Plan - Connecting America, 2010:

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Footnote 12

Auction 44: Lower 700 MHz band (2002):

Auction 49: Lower 700 MHz band (2003):

Auction 73: 700 MHz band (2008):

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Footnote 13

GSA Digital Dividend Update - April 2010:

Reproduced from the FCC website:

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Footnote 14

Reproduced from the FCC website:

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Footnote 15

Pending the decision on spectrum use for broadband public safety (see Section 5.2).

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Footnote 16

Duplexing direction for guardbands A and B (757-758 MHz/787-788 MHz and 775-776 MHz/ 805-806 MHz respectively) are specified as per FCC Title 47, Part 27, subsection 27.50 and public safety blocks are specified in FCC Title 47, Part 90, Subsection 90.531.

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Footnote 17

3GPP TS 36.104  v9.4.0 (2010-06): 3GPP Technical Specification Group Radio Access Network; Evolved Universal Terrestrial Radio Access (E-UTRA); Base Station (BS) radio transmission and reception (Release 9).

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Footnote 18

The duplexing direction of the D Block must be compatible with the duplexing directions for public safety systems in adjacent blocks.

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Footnote 19

Pending the decision on spectrum use for broadband public safety (see Section 5.2).

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Footnote 20

Pending the decision on spectrum use for broadband public safety (see Section 5.2).

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Footnote 21

At this time, the Department is not seeking comments on the definition of public safety services, the definition of interoperability, or the categories of use described above in the context of wireless broadband. These items may be addressed in a further consultation addressing specific public safety aspects.

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Footnote 22

Governance, licensing structure, financing, technical and operational, etc.

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Footnote 23

Service Areas for Competitive Licensing:

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Footnote 24

Public Notice CRTC 2000-127 - Call for Comments on a Licensing Framework for Low-power Community Television Undertakings in Urban Areas, and in Other Markets Not Covered by Existing Policy (

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Footnote 25

As defined by Statistics Canada.

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Footnote 26

SAB-001-10, Low-power Licensed Radiocommunication Devices, Including Wireless Microphones, in the Band 698-806 MHz (

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Footnote 27

R&O and FNPRM FCC 10-16 (

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Footnote 28

Details regarding ITU regional structures are found on the ITU website (

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Footnote 29

Although 790-960 MHz was identified for IMT in Region 3, Bangladesh, China, Korea (Rep. of), India, New Zealand, Papua New Guinea, Philippines and Singapore also identified the band 698-790 MHz to align with Region 2. The frequency arrangements for the respective regions are found in the document ITU-R M.1036-2.

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Footnote 30

The frequencies 764 MHz and 794 MHz are subject to change pending decisions made in this consultation.

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Footnote 31

For details, refer to Opening Canada's Doors to Foreign Investment in Telecommunications: Options for Reform (

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Footnote 32

For details, refer to (

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Footnote 33

Telecom Decision CRTC 2010-637, Follow-up to Telecom Decision 2008-1 – Proposal by Bell Aliant Regional Communications, Limited Partnership and Bell Canada to dispose of the funds remaining in their deferral account, , as amended by Telecom Decision CRTC 2010-805, Bell Canada – Applications to review and vary certain determinations in Telecom Decision 2010-637 concerning the use of high-speed packet access wireless technology and the deferral account balance, ;

Telecom Decision CRTC 2010-638, Follow-up to Telecom Decision 2008-1 – Proposal by MTS Allstream Inc. to dispose of the funds remaining in its deferral account, ; and

Telecom Decision CRTC 2010-639, Follow-up to Telecom Decision 2008-1 – Proposal by TELUS Communications Company to dispose of the funds remaining in its deferral accounts, .

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Footnote 34

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