Final Policy and Licensing Procedures for the Auction of the 24 and 38 GHz Frequency Bands

3. Definition of Licences

3.1 Spectrum Licences

The authorizations that will be available for assignment will be spectrum licences which are defined in subparagraph 5(1)(a)(i.1) of the Radiocommunication Act as authorizations "in respect of the utilization of specified radio frequencies within a defined geographic area."

The attributes of these spectrum licences and the conditions attached to them are described below. The elements of the "common framework" for spectrum auctions laid out in the Framework for Spectrum Auctions in CanadaFootnote 11 document have been adopted for the licensing of 24 and 38 GHz spectrum.

3.2 Service Areas

In the consultation document the department proposed that Tier 3 service areas be used for the licensing of the 24 and 38 GHz bands. These areas are based on groupings of Statistics Canada's Census Divisions and Subdivisions. Maps of the Tier 3 service areas are provided in Appendix 1. (For full details on these service areas tiers, refer to the document Service Areas for Competitive Licensing.)Footnote 12

The majority of respondents concurred that the Tier 3 service areas would be appropriate for licensing of the 24 and 38 GHz bands. They noted that this option could satisfy a variety of business plans of both large and small players. Furthermore, the number of licences would not be so large as to make the auction unduly complex.

As such, the department has decided that Tier 3 service areas will be used for the licensing of the 24 and 38 GHz bands in this auction.

3.3 Spectrum Licence Packages

As discussed in section 2.2, the department will offer the 24 GHz spectrum as a single 400 MHz licence (Licence A) in each service area. The 800 MHz available in the 38 GHz band will be packaged as one 400 MHz licence (Licence B) and four 100 MHz spectrum licences (Licences C, D, E and F) in each service area.

3.4 Ministerial Authority

The spectrum licences that are issued pursuant to this auction will continue to be subject to relevant provisions in the Radiocommunication Act and the Radiocommunication Regulations. For example, the Minister continues to have the power to amend the terms and conditions of the spectrum licences (paragraph 5(1)(b) of the Radiocommunication Act). Such powers would be exercised on an exceptional basis and only after full consultation. As well, as noted in section 6.1 of the Framework for Spectrum Auctions in Canada document, section 40 of the Radiocommunication Regulations continues to apply. However, it is important to note that the department would reallocate spectrum assigned through auction only under extraordinary circumstances—taking into consideration that the licensee complied with the conditions of licence, has made large investments in infrastructure, and is serving an established client base. If a reallocation were contemplated, it would take place only after full consultation.

3.5 Licence Term and Renewal

The department will offer licences with a ten-year term and a high expectation of renewal at the end of the term. That is to say, the department intends to generally renew licences for subsequent ten-year terms unless a breach of licence condition occurs, a fundamental reallocation of spectrum to a new service is required (e.g., a reallocation by the International Telecommunication Union), or an overriding policy need arises (e.g., a spectrum reallocation to address a national security issue). To provide a more stable investment climate for licensees, a consultation process will commence no later than two years prior to the end of the licence term if the department foresees the possibility that it will not renew a licence or if renewal fees and/or changes to conditions of licence are contemplated.

In case of bankruptcy or insolvency of a licence holder, all applicable conditions of licence set out in this policy will continue to apply, subject to the general laws of bankruptcy and insolvency.

3.6 Transfer and Division of Licences

3.6.1 Transferability of Licences

The department proposed that auctioned licences would be transferable subject to the following stipulations. Respondents generally supported this notion of licence transferability.

  • All eligibility criteria and other conditions that apply to a licence, including those related to interference management, will continue, as applicable, should the licence be transferred. (The conditions on the licence may change if the transfer is from a radiocommunication carrier to a non-carrier, or vice versa. See sections 5.1 and 5.2.)
  • Should an auction winner transfer its licence to another party, for example, four years into a ten-year licence term, the second party will only receive a licence term equal to the remaining six years, but will be eligible for the same licence renewal provisions as the original licensee.
  • All proposed licence transfers must comply with any spectrum aggregation limits or other measures intended to preclude anti-competitive behaviour that may be in place. (It should be noted that any licence transfer may also be subject to the provisions of the Competition Act.)
  • Written notification will be required of all proposed licence transfers. The department will also request attestations or other documentation to ensure that the points above (e.g., compliance with the eligibility criteria and other conditions of licence) have been satisfactorily addressed. Once a licence transfer has been registered, the department will revoke the original licence and issue a new licence(s) in its place.
  • The department will maintain a publicly accessible database listing all auctioned licences and the respective licensee and will update the database upon a licence transfer.

Further details on the exact administrative procedures for transferring a spectrum licence will be provided in a forthcoming Client Procedures Circular.Footnote 13

3.6.2 Divisibility of Licences

The department proposed that licences be divisible, that is to say, that licensees be allowed to transfer their licences not only in whole, but also in part, in both the bandwidth and geographic dimensions, with minimal restrictions.

Respondents generally supported this notion of licence divisibility and therefore the department will implement the proposals made in the consultation document. The conditions applicable to transferred licences (discussed above) apply equally to licences which are divided.

To maintain compatibility with the department's database, licences will be divisible in the geographic dimension only in terms of spectrum grid cells.Footnote 14 Thus when an auctioned licence is divided, the minimum geographic size that any one of the new divisions may take is one Spectrum Grid cell. The individual spectrum grid cells are sufficiently small that even with this restriction, an extremely high degree of flexibility will be available to the parties involved in determining the size and shape of sub-divided portions of a licence.

As for the bandwidth dimension, the department will require compliance with the spectrum assignment plan as defined in this document and the appropriate Standard Radio System Plan (SRSP) (see section 4.2.2). Therefore, the spectrum offered in the 24 GHz band can be divided into, at most, five frequency block pairs of 40+40 MHz. The spectrum being offered at 38 GHz can be divided into, at most, eight frequency block pairs of 50+50 MHz each.

It should be noted that the division of a licence may increase the number of parties with whom other neighbouring licensees (domestic and international) must communicate when attempting to minimize the potential for interference at the boundary between service areas and/or at the band edge between spectrum blocks.

3.6.3 Transfer/Divisibility Moratorium

The department solicited views on whether the transferability and divisibility of licences should be delayed for a specific time, for example, three years following this licensing process. Such a moratorium may discourage bidding for speculative purposes and will ensure that bidders participating in the auction have a genuine desire to use the spectrum in the markets they wished to acquire.

Disadvantages to this approach also exist. Some post-auction secondary market transactions may be required to "fine-tune" the distribution of the spectrum. A moratorium on transferability and divisibility would obviously not allow such transactions to occur. As well, given that the services and technologies associated with 24 and 38 GHz spectrum are new and developing, bidders may face some uncertainty in determining the exact amount of spectrum they may require in various service areas. As more information about market opportunities and technology becomes available post-auction, secondary market transactions may lead to a more efficient allocation of the resource.

There was almost unanimous opposition in the comments received to any moratorium on transferability and divisibility. Respondents argued that a moratorium would inhibit the migration of licences to users who have a more valuable new use for the spectrum and would consequently be detrimental to licensees and consumers alike.

Furthermore, respondents contended that there are other means available to deter speculation. If a competitive environment is ensured through eligibility restrictions and/or spectrum aggregation limits and if bid payment is required as soon as possible after the close of the auction, there will be little incentive for speculative bidding.

The department has reached the conclusion that the spectrum aggregation limits outlined in sections 2.3.4 and 2.3.5 and the decision to require the entire bid payment shortly after the close of the auction (see section 7.3) render moratoria on transferability and divisibility unnecessary. Licences will be immediately transferable and divisible after assignment, subject to the conditions set out herein.

3.7 Flexibility of Use

To ensure that licensees can continue to quickly and efficiently adapt their service offerings to changing consumer demands, the department will provide licensees with the maximum possible flexibility in determining the services they will offer and the technologies they will employ. Beyond the need to conform to the applicable Canadian spectrum allocation, only those limitations required for interference management purposes (discussed in section 4 of this document) will be imposed.

3.8 Implementation of Spectrum Usage

The department solicited comments as to whether there should be a condition of licence that requires licensees to implement usage of their spectrum within a specified period in order to deter possible anti-competitive spectrum "warehousing".

Many of those respondents who addressed this issue were opposed to such roll-out requirements. However, the department continues to be of the view that the spectrum is a public resource which should be used in ways which serve the public interest. As such, licensees will be required, as a condition of licence, to demonstrate that their spectrum is being put to use within three years of the auction's close.

The department recognizes that a variety of different business plans and technologies may be employed in these bands across markets of various sizes. In order to be technology-neutral and service-neutral, the department is reluctant to specify roll-out requirements in terms of specific technical measures. In fact, there may be a number of measures that will demonstrate an acceptable level of spectrum usage. One example of what would be considered an acceptable level of spectrum usage in a large urban area would be the establishment of eight links per one million population (rounded up to a whole number) within a service area within three years.

In the event that spectrum obtained in this auction has not been put to use within three years after the close of the auction, the department may begin a process to afford the licensee the opportunity to demonstrate why its licence should not be revoked.


  1. back to footnote reference 11 Available on the department's Strategis Web site (
  2. back to footnote reference 12 Available on the department's Strategis Web site (
  3. back to footnote reference 13 This document will be made available on the department's Strategis Web site (
  4. back to footnote reference 14 Spectrum grid cells are defined in the Industry Canada (Spectrum Management) Client Procedures Circular 2–1–16 (CPC-2-1-16), Licensing Procedure for Local Multipoint Communications Systems (LMCS), (February 1, 1997), available on the Strategis Web site at Spectrum grid cells are six-sided figures with an area of 25 km2 that fit together in an interlocking pattern over the geography of Canada.
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