Industry Minister Removes Limits on Spectrum Holdings for Cell Phone Companies

OTTAWA, August 27, 2004 — The Honourable David Emerson, Minister of Industry, today announced a decision rescinding the mobile spectrum cap policy, which limited the amount of radio spectrum that cellular telephone companies could hold.

"Today's decision reflects the maturity of the market, and clarifies the market framework for the industry," said Minister Emerson. "Over 94 percent of Canadians have access to cell phone service today. Canada's mobile telephone system is highly developed and cell phone users have a variety of service options."

Extensive consultations by Industry Canada, regarding both the mobile spectrum cap policy and a proposal to make additional spectrum available to the wireless industry, began in October 2003 and concluded in March 2004. A majority of respondents indicated that the spectrum cap should be lifted, and that Industry Canada should make additional spectrum resources available for use by the wireless industry in the near future.

The mobile spectrum cap policy was introduced in 1995 to encourage innovation and help new entrants become established in the wireless industry. Canada now has close to 14 million cell phone subscribers and a modern wireless infrastructure capable of delivering a wide range of voice, data and media services. The Canadian Radio-television and Telecommunications Commission (CRTC) provides an overview of the telecommunications market in its report to the government, Status of Competition in Canadian Telecommunications Markets, 2003. The CRTC report depicts a mobile market with strong growth relative to other telecommunications markets.

Industry Canada will continue to monitor the wireless industry for spectrum concentration and manage the licensing of spectrum resources with other mechanisms at its disposal. The Competition Bureau and the CRTC also have roles in ensuring a competitive telecommunications market.

A notice rescinding the spectrum cap policy will also be published in an upcoming edition of the Canada Gazette, and will be made available on the Industry Canada Web site.

The Canada Gazette Notice and documents related to this decision will be available on the Industry Canada Web site, http://www.ic.gc.ca/spectrum, within 10 days.

For more information, please contact:

Ian Jack
Senior Communications Advisor
Office of the Honourable David Emerson
Minister of Industry
613-995-9001

Media Relations
Industry Canada
613-943-2502


Backgrounder

Announcement to Rescind the Mobile Spectrum Cap Policy

The Minister's decision to remove the mobile spectrum cap completes a public consultation process, called Consultation on Spectrum for Advanced Wireless Services and Review of the Mobile Spectrum Cap Policy, that began in October 2003 and concluded in March 2004.

The mobile spectrum cap policy limited the amount of radio frequencies a cellular telephone licensee could hold. It was introduced in 1995 and is consistent with the Telecommunications Act policy objective of fostering increased reliance on market forces for the provision of telecommunications services.

In 1985, the department licensed cellular carriers to offer mobile telephone service across Canada. In 1995, Industry Canada made additional spectrum available and the number of carriers increased. As part of that licensing process, a spectrum cap was introduced to ensure that new entrants had access to sufficient spectrum to effectively compete with the existing cellular carriers. The spectrum cap applied to frequency assignments for 800 MHz Cellular, Personal Communications Systems (PCS) at 2 GHz and other similar high-mobility radiotelephony services in the 800 MHz range such as enhanced specialized mobile radio (ESMR).

The spectrum cap is generally recognized as having provided new entrants with the opportunity to become established in the Canadian market. The Canadian cellular industry today provides a wide range of services, and has extended coverage to over 94 percent of the population.

Some of the national carriers are at the spectrum cap limit. In the near future, the wireless industry will require access to significantly more spectrum. Industry Canada has proposed to release at least 100 MHz of new spectrum for advanced wireless services. Commensurate with the opening of new spectrum, a full review of the spectrum cap policy was required to allow access to the new spectrum by the existing carriers. As a result of this review, and consistent with industry input, the government has decided to rescind the policy.

In managing the radio frequency spectrum, the department will continue to monitor the wireless industry to ensure equitable access to new spectrum and guard against any undue spectrum concentration. If necessary, other regulatory measures could be considered when licensing new spectrum.

Other regulators, including the Competition Bureau and the Canadian Radio-television and Telecommunications Commission (CRTC), will continue to play a key role in maintaining a competitive marketplace. The Competition Bureau evaluates mergers and acquisitions under the provisions of the Competition Act, and the CRTC retains oversight of all telecommunications carriers under the provisions of the Telecommunications Act.

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