Decisions on a Band Plan for Broadband Radio Service (BRS) and Consultation on a Policy and Technical Framework to License Spectrum in the Band 2500-2690 MHz

Part B – Consultation on a Policy and Technical Framework on New BRS Licences (Continued)

3. Spectrum Packaging for Licensing (Continued)

3.2 Block sizes

The amount of spectrum assigned to wireless operators helps to determine their ability to deliver high-quality services to consumers and manage the bandwidth required to handle increasing traffic volume from the uptake of mobile Internet services. The 2500 MHz frequency band offers a substantial amount of spectrum (190 MHz) to provide aggregated bandwidth.

At this time, there are at least three technology options for the deployment of new networks by BRS spectrum licence holders, namely FDD-based Long-Term Evolution (LTE), TDD-based LTE, or TDD-based WiMAX. It is also expected that new user devices will be able to operate in multi-bands using multi-modes.

While it is possible for some technologies (e.g. LTE and WiMAX) to operate with relatively narrow channels (e.g.MHz), these technologies will deliver greater efficiencies when operating with wider channels of 20 MHz or more. In other words, the wider the channel, the greater the data speeds and spectral efficiencies. For this reason, industry experts have recommended that regulators license "4G" spectrum "in as wide radio channels as possible."Footnote 16 In light of the efficiencies associated with wider channels, the ITU has recommended that IMT-Advanced radio interface technologies provide support for "scalable bandwidth up to and including 40 MHz."Footnote 17 Accordingly, while LTE will support channel widths of up to 20 MHz, LTE-Advanced will support channel widths of up to 40 MHz.Footnote 18 The need to license relatively wide contiguous blocks of spectrum is underscored in an environment where globally harmonized mobile spectrum is scarce.

The Department recognizes that different bidders will have different spectrum requirements. For example, some may wish to acquire large contiguous blocks of spectrum, whereas others may prefer small blocks of spectrum. If blocks sizes are too small, it might increase the risk of band fragmentation for bidders wishing to acquire large contiguous blocks. On the other hand, certain auction designs can facilitate the building of contiguous blocks. It should be noted that smaller block sizes may provide the market with the flexibility to meet the diverse needs of various bidders. In addition, there may be different spectrum requirements in the paired spectrum versus the unpaired spectrum blocks. Furthermore, the size of blocks could affect the auction process, including the auction design.

Consultation:

In preparation for the future licensing of the 2500 MHz spectrum, the Department seeks comments on the following:

1-1 Should the block sizes be uniform in size?

  1. If a uniform size is preferred, what size should be considered?
  2. If a mix of block sizes is preferred, what combinations and arrangements should be considered?

1-2 In the specific geographic regions discussed above and shown in Appendix A, which block size option(s) should be adopted and why is this option(s) preferred over the other options? Should the combinations and arrangements of block sizes be the same or different in different areas? Provide supporting rationale.

Provide comments separately for paired and unpaired spectrum blocks.

3.3 Tier Sizes for BRS Spectrum

Licences for spectrum in the 2500 MHz band will be established in accordance with the Service Areas for Competitive LicensingFootnote 19 document, which outlines the general service areas that are proposed for an auction. The defined geographic areas have been categorized under "service area tiers" that are based on Statistics Canada's Census Divisions and Subdivisions. The definition of the service areas within these tiers and accompanying maps and data tables are available on Industry Canada's website.

As different wireless services and applications are best suited to different service areas, four tiers of service areas have been established. Tier 1 is a single national service area. Tier 2 consists of 14 large service areas covering all of Canada. There are eight Tier 2 service areas that have provincial/territorial boundaries, and six that are within Ontario and Quebec. Tier 3 contains 59 smaller regional service areas and Tier 4 comprises 172 localized service areas. The population associated with each service area is based on Statistics Canada census information.

In general, Tier 1 and Tier 2 licences have typically been used for mobile services, whereas Tier 3 and Tier 4 have been typically used for licensing fixed services. AWS spectrum was licensed using a mixture of Tier 2 and Tier 3 service areas.

In DGSO-001-10, the Department decided that Tier 3 service areas would be used for the conversion of eligible MCS and MDS authorizations to BRS spectrum licences, except where two MCS licensees (Inukshuk and SSI) hold MCS spectrum licences with geographic service areas in northern Canada that are equivalent to Tier 4 service areas. Inukshuk's licence has already been converted to a Tier 4 BRS licence. SSI's MCS licences will be converted to two Tier 4 BRS licences.

Licensing the 2500 MHz spectrum based on larger geographic areas would provide more flexibility for bidders and may result in fewer neighbouring service providers, translating into less coordination between licensees and more effective use of radio spectrum. Moreover, large service areas could foster larger regional mobile services, which could reduce the number of roaming arrangements between licensees.

Larger geographic service areas would also enable the development of efficient large-scale networks due to economies of scale. Wireless mobile networks are capital-intensive. Considerable capital and operational costs are required for items not directly related to the provision of wireless coverage in the field (research and development, network interconnection(s), operation and support systems, marketing, etc.). These costs need to be supported from services marketed to a sufficiently large subscriber base. Furthermore, a large or national footprint may be an asset when marketing high mobility services.

Licensing based on smaller tier sizes provides additional flexibility to bidders, who can concentrate on the geographic markets of most interest, or aggregate smaller service areas into larger regions corresponding to their business needs. This may result in potential lower costs for bidders if the smaller markets (rural and remote areas) are unbundled from the high-density, high-revenue areas. It may also enable smaller local service providers to afford the less costly licences and provide services in their communities.

As part of this consultation, the Department seeks comments on which tier size or combination of tier sizes should be used for licensing spectrum in the 2500 MHz band.

With respect to the development of Tier 3 service areas, a situation exists where both Lloydminster, Alberta, and Lloydminster, Saskatchewan, fall within the Edmonton Tier 3 service area (3–44). In its comments in response to DGSO-001-10, SaskTel argued that this service area should be amended so as to include Lloydminster, Saskatchewan, within a Saskatchewan Tier 3 service area. In Service Areas for Competitive Licensing,Footnote 20 the Department explained why it had intentionally made this and three other minor deviations from provincial border lines in its establishment of Tier 4 (and thus Tier 3) boundaries. The Department stated that minor deviations were made around provincial borders to reflect certain wireline service areas and to avoid having a service area boundary cut through a population centre, so as to minimize potential interference problems. The Department considers that this rationale continues to be valid and, therefore, although there are exceptional circumstances surrounding the conversion of SaskTel's licence to BRS, the tier areas established in Service Areas for Competitive Licensing will not be modified. The Department, however, encourages discussions between affected licensees to facilitate the provision of BRS service in these areas.

The questions below seek comments on tier sizes. Comments pertaining to tier sizes as they relate to the promotion of service deployment in remote and rural areas are not considered within Section 3.3 and should be addressed within the responses to Section 4.2 of this consultation.

Consultation:

2-1 The Department seeks comments on whether the licensing of 2500 MHz spectrum should be based on uniform tier sizes across all spectrum blocks, or on a mixture of tier sizes.

2-2 Based on your answer above, if a uniform tier size is preferred, what tier size should be adopted? If a mixture of tiers is preferred, please indicate the proposed tier(s) for each spectrum block.

Provide supporting arguments for your responses to the above questions.

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