Policy and Technical Framework Mobile Broadband Services (MBS) — 700 MHzBand Broadband Radio Service (BRS) — 2500 MHz Band

PART D — Auction Timing and Next Steps

D1. Auction Timing for 700/2500 MHz Auctions

282. In the consultation papers, Industry Canada invited comments on the following three options:

283. Comments were sought on 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 among stakeholders. Furthermore, views were requested on the most appropriate timing for both the 700 MHz and 2500 MHz band auction processes.

Summary of comments

284. There was no consensus among respondents as to the preferred option for the timing of the 700 MHz and 2500 MHz auctions. Some respondents took the opportunity to modify their initial positions through the reply comments process. The following comments reflect the respondents’ final positions upon review of the comments and reply comments submitted in response to both the 700 MHz and 2500 MHz consultations.

285. EastLink, Mobilicity, MTS Allstream, Shaw and SSi all stated a preference for holding the 700 MHz auction first, as proposed under Option 1. EastLink, Mobilicity and MTS Allstream considered that the resource implications of having to participate in both auctions at the same time would disadvantage some service providers. Mobilicity and SSi noted the current advancement of the ecosystem for equipment and devices in the 700 MHz band compared with that of the 2500 MHz band. Initially, Bell also supported holding the 700 MHz auction first; however, it changed its position to support Option 3 in its reply comments. Mobilicity stated that the 2500 MHz band is more interchangeable with AWS, and that 700 MHz is complementary; hence, the 700 MHz band should be auctioned first.

286. Mobilicity and EastLink considered that the ground rules for the 700 MHz and the 2500 MHz auctions should be developed and understood prior to the first auction.

287. TELUS was initially the only respondent to support holding the 2500 MHz auction first; however, the British Columbia Broadband Association later supported the TELUS position through its reply comments. Shaw opposed this option, noting that the ecosystem for equipment and devices in the 2500 MHz band is not developing as quickly as it is for the 700 MHz band, and that there would be no economic or technical reason to follow this option. TELUS believed that the existing 2500 MHz licensees have an advantage of a head start in addressing spectrum capacity issues, and further stated that the 2500 MHz auction should take place either before or concurrently with the 700 MHz auction.

288. Axia, Bell, Niagara Networks, Public Mobile, Rogers, SaskTel, QMI, WIND and Xplornet stated a preference for holding both auctions at the same time, as proposed in Option 3. Niagara Networks considered that this option would provide a quick and cost-effective response to the increasing demand for mobile bandwidth. Public Mobile and QMI noted that Option 3 would facilitate improved network planning and provide participants with the ability to assess their spectrum holdings in an integrated, strategic manner and yield a higher level of certainty. Rogers considered that given the complementary nature of the bands, a combined auction would be more economically efficient, and would allow bidders to make dynamic trade-offs during the bidding process based on various factors such as cost, quantity and geographic areas. SaskTel added that a combined auction would ensure the most efficient outcome and offer the best opportunity for all participants while reducing administrative costs. WIND considered that a combined auction would maximize a participant’s ability to raise finances and to plan for optimized deployment.

289. Although not their preferred option, Mobilicity and TELUS are not opposed to Option 3. Xplornet supported a combined auction of 700 MHz and 2500 MHz; however, it recommended that Industry Canada consider holding sequential auctions for urban and rural areas, where spectrum blocks at a Tier 2 or Tier 3 service area would be auctioned first, followed by an auction of spectrum blocks at a Tier 4 area, including urban and rural portions of any unbundled service area.

290. Public Mobile noted that if the auctions are held separately, the 700 MHz auction should be held first, with the second auction following no more than three months later. QMI and WIND added that if a combined auction is not the chosen option, they would also support Option 1. Axia also considered that if a combined auction were to delay the availability of any of the spectrum, then Option 1 would be preferable.

Discussion

291. Several respondents stated that other jurisdictions have conducted multiband auctions and that a combined auction would improve network planning, increase business certainty and permit dynamic trade-offs during the bidding process. A combined auction, however, would be highly complex as, unlike many other jurisdictions, Canadian auctions generally include more than one geographic area.

292. In the case of the 700 MHz and 2500 MHz auctions, the auction will be comprised of Tier 2 service areas for 700 MHz and Tier 3 (with Tier 4 in the North) service areas for 2500 MHz. A combined auction would result in a greater auction complexity for bidders that must balance auction rules with bidding strategies over two spectrum bands in multiple service areas along with their financial considerations. This additional complexity would also likely restrict the choice of auction formats. A combined auction may disadvantage some service providers that would not have the necessary resources to be as successful in a combined auction.

293. The simplicity of a single band auction would enable an auction to be held at an earlier date than a more complex combined auction. Many respondents indicated a greater urgency for acquiring spectrum in the 700 MHz band and considered that this would outweigh any benefits of a delayed combined auction.

294. Auctioning the two bands separately will result in the first auction being expedited and the second being delayed, which will allow smaller companies additional time to secure financing for the second auction.

295. Given that there was stronger demand indicated for the 700 MHz band, and because the ecosystem for equipment and devices in the 700 MHz band is more advanced compared with that of the 2500 MHz band, Industry Canada will auction the 700 MHz band prior to the 2500 MHz band. Bidders will benefit from a less complex auction while being able to take advantage of the most advanced auction formats.

296. Given that the 2500 MHz ecosystem is less developed than the 700 MHz ecosystem and that the 2500 MHz auction will be held less than a year after the 700 MHz auction, Industry Canada considers that the head start advantage that will accrue to existing 2500 MHz licensees is limited.

297. Some respondents noted the importance of having business certainty. As a result, Industry Canada will publish all decisions on auction design, opening bids and conditions of licence for licences in the 2500 MHz band prior to the start of the 700 MHz auction. This will enable companies to formulate their overall business plans prior to the first auction.

Decisions related to auction timing

D1-1: Industry Canada will proceed with an auction process for the 700 MHz band in the first half of 2013, followed by an auction process for the 2500 MHz band in early 2014.

D1-2: To mitigate uncertainty for the auction participants, the policy decisions for both bands are being published at the same time. Further, the auction design, opening bids and conditions of licence for the 2500 MHz auction will be published prior to the start of the 700 MHz auction.

D2. Next Steps

Subsequent Consultations

298. Licensing and auction frameworks – commercial spectrum. Industry Canada will initiate separate consultations on the licensing frameworks for the 700 MHz and 2500 MHz spectrum. These consultations will include, but not be limited to:

299. Tower Sharing and Roaming. Industry Canada will seek stakeholder input on proposed changes to the existing tower sharing and roaming policy in early 2012.

300. Public safety. There will be a further consultation to establish a policy framework for the use of the spectrum in the 758-763 MHz and 788-793 MHz bands (D block in the upper 700 MHz band), as well as on general issues related to public safety broadband in the 700 MHz band. It will be followed by an additional consultation regarding technical, licensing and operational matters related to public safety broadband spectrum in the 700 MHz band.

D3. Obtaining Copies

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

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

Director, Mobile Services Engineering
Engineering, Planning and Standard Branch
Industry Canada
19th Floor
300 Slater Street
Ottawa, Ontario K1A 0C8
Telephone: 613-998-3874
Fax: 613-952-5108
email: ic.spectrumengineering-genieduspectre.ic@canada.ca


Annex 1 — Respondents to the 700 MHz Consultation (SMSE-018-10)

Companies and Organizations

Federal Government

Provincial, Regional and Municipal Governments

Private Individuals


Annex 2 — 700 MHz Band Plan Options as Shown in the 700 MHz Consultation Paper (SMSE-018-10)

Option 1 Band Plan Architecture (U.S. Band Plan)
 Option 1 Band Plan Architecture (U.S. Band Plan ) [Description of Option 1]

Option 2a Band Plan Architecture (Modified U.S. Band Plan)
Option 2a Band Plan Architecture (Modified U.S. Band Plan)[Description of Option 2a]

*Use of this range is subject to the pending decision on spectrum use for broadband public safety.

**This range is designated for narrowband public safety.


Option 2b Band Plan Architecture
(Modified U.S. Band Plan)
Option 2b Band Plan Architecture Modified U.S. Band Plan)[Description of Option 2b]

*Use of this range is subject to the pending decision on spectrum use for broadband public safety.

**This range is designated for narrowband public safety.


Option 3 Band Plan Architecture
(APT Band Plan for FDD operations in the 698-806 MHz range)
Option 3 Band Plan Architecture (APT
Band Plan for FDD operations in the 698-806 MHz range) [Description of Option 3 ]

Annex 3 — List of TV Broadcasting Stations on Channel 51

The list of full power TV broadcasting stations operating in channel 51, or for which Industry Canada has received applications for broadcasting certificates, is included below:

List of TV Broadcasting Stations on Channel 51
CALL SIGN STATUS* CITY PROV MODULATION
*As of November 2011.
CICA-TV-51 Operational Penetanguishene ON Analog
CBOT-4 Operational Maynooth ON Analog
CRC-DT-1 Experimental — until 2013 Ottawa ON Digital
CHCH-DT-2 Authorized London ON Digital
MONTREAL51 Referred to the CRTC55 Montreal QC Digital
CJMT-DT Temporary Operation until December 31, 2011 Toronto ON Digital
CJMT-DT (1) Authorized Toronto ON Digital
CBWFT-DT Authorized Winnipeg MB Digital
CHNM-DT-3 Application received Kelowna BC Digital


Annex 4 — Tier Areas For Spectrum Licensing

Tier 1 (1 National Licence)
 Tier 1(1 National Licence) [Description of Tier 1]

Tier 2 (14 Large Areas)
 Tier 2 (14 Large Areas)[Description of Tier 2]

Tier 3 (59 Regional Areas)
 Tier 3 (59 Regional Areas)[Description of Tier 3]

Tier 4 (172 Localized Areas)
Tier 4 (172 Localized Areas)[Description of Tier 4]

Footnotes

  1. 55 Refer to Section B (Application Processing for Regular and Low Power Undertakings Prepared by Broadcasting Engineering Consultants) of Broadcasting Circular BC-1: AM, FM and TV Broadcasting Process, for technical processing of applications referred to the CRTC.
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