Final Policy and Licensing Procedures for the Auction of the 24 and 38 GHz Frequency Bands
5. Conditions of Licence
In the consultation paper the department proposed a number of licence conditions for the spectrum licences to be auctioned.
Several respondents suggested that there should be one set of licence conditions applicable to all licensees. They argued that not doing so would disadvantage auction participants who intend to provide a radiocommunication carrier service as they would have additional conditions compared to licensees who intend to use their spectrum for private use. In particular, these respondents requested the department not impose three of the proposed conditions of licence: the requirement to provide lawful interception capabilities, the investment of 2% of adjusted gross revenues in telecommunications research and development, and the filing of annual reports.
The department notes the comments of a number of respondents to the effect that the "Solicitor General's Enforcement Standards for Lawful Interception of Telecommunications" were written to apply to circuit-switched voice telephony systems and as such the standards were not readily applicable to broadband telecommunications systems. The department is concerned that broadband carriers transporting aggregated traffic may have no ability to discern what, if any, intercept target traffic may be present in the aggregate stream. Further, the department notes that telecommunications networks are moving rapidly away from a circuit-switched environment to a packet-based environment using routers rather than traditional switches. Router-based networks pose a number of challenges to the provision of lawful interception capabilities in that routers may only receive a portion of a target's traffic, a target's traffic may be simultaneously routed through several routers at different points in a network, and routers permit customers to distribute traffic across several service providers. Notwithstanding the technical complexities involved, the department recognizes that electronic interception of personal communications under lawful warrant is an indispensable technique for law enforcement. However, recognizing as well that the technical and legal requirements to support lawful intercept capabilities in new network technologies and topologies are still undefined and under development, the department will not incorporate compliance with the Solicitor General's current standard into a licence condition at this time. Applicants are nonetheless strongly advised to note that compliance with a requirement to provide lawful intercept capability may be imposed via licence condition or other legislative provision at any point in time in the future.
With regard to the proposed licence condition requiring expenditures on research and development, the department continues to believe that important public policy objectives will be achieved through such a condition. It has never been the department's practice, however, to apply this type of licence condition to licensees who were not radiocommunication carriers. For this licensing process, the department will apply the research and development expenditure condition—and the accompanying condition requiring the provision of annual reports on these research and development activities—to licensees who are radiocommunication carriers.
The conditions of licence are outlined below. As noted in section 3.4, 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.
5.1 Conditions of Licence for All Licensees
The following conditions of licence will apply to all licensees.
1. Licence Term
The term of this licence will be ten years from the date of licence issuance. At the end of this term and any subsequent terms, the licensee will have a high expectation of renewal for a further ten-year term unless a breach of licence condition has occurred, a fundamental reallocation of spectrum to a new service is required or an overriding policy need arises.
A public 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 this licence or if renewal fees and/or changes to conditions of licence are contemplated.
2. Licence Transferability and Divisibility
The licensee may transfer its licence(s) in whole or in part (divisibility), in both the bandwidth and geographic dimensions. The area transferred in the geographic dimension may be no smaller than a single spectrum grid cell.Footnote 19 The amount of spectrum transferred in the bandwidth dimension may be no smaller than the spectrum block size (40 MHz + 40 MHz in the 24 GHz band and 50 MHz + 50 MHz in the 38 GHz band) outlined in section 2 of this policy document.
For each proposed transfer of this licence, the licensee must provide a written notification to the department. The transferee(s) must also provide an attestation (or other appropriate documentation) that it meets the eligibility criteria and all other conditions of this licence.
3. Spectrum Aggregation Limit
The licensee must comply with the spectrum aggregation limits outlined in sections 2.3.4 and 2.3.5 of this policy document. The spectrum aggregation limit within a service area consists of spectrum licensed to the licensee and to its affiliates. The licensee must notify the Minister of any change which would have a material effect on its compliance with these spectrum aggregation limits. Such notification must be made in advance for any proposed transactions within its knowledge.
4. Eligibility Criteria
If the licensee is acting as a radiocommunication user or is providing service as a radiocommunication service provider other than a radiocommunication carrier, the licensee must comply on an ongoing basis with the eligibility criteria in section 9(1) of the Radiocommunication Regulations. The licensee must notify the Minister of any change which would have a material effect on its eligibility. Such notification must be made in advance for any proposed transactions within its knowledge.
If the licensee is providing service as a radiocommunication carrier, the licensee must comply on an ongoing basis with the Canadian ownership and control requirements in section 10(2) of the Radiocommunication Regulations.Footnote 20 The licensee must notify the Minister of any change which would have a material effect on its Canadian ownership and control. Such notification must be made in advance for any proposed transactions within its knowledge.
5. Radio Station InstallationsFootnote 21
For each radio station, the licensee must ensure that:
- radio stations are installed and operated in a manner that complies with Health Canada's limits of exposure to radiofrequency fields;
- where applicable, antenna structures are marked in accordance with the recommendations of Transport Canada; and,
- prior to installation of significant antenna structures, consultation with the appropriate land use authorities has taken place.
6. Laws, Regulations, and Other Obligations
The licensee is subject to and must comply with the Radiocommunication Act, the Radiocommunication Regulations and the International Telecommunications Union Radio Regulations pertaining to its licensed radio frequency bands.
The licence is issued on condition that the certifications in the Application to Participate in the Auction of the 24 and 38 GHz Frequency Bands are all true and complete in every respect.
7. Technical Considerations
The licensee must comply with the technical aspects of the appropriate Standard Radio System Plan (SRSP), as amended from time to time (see section 4 of this policy document).
8. International Coordination
The licensee must comply with the requirements of cross-border sharing and coordination arrangements established between Canada and the United States, as amended from time to time.
9. Implementation of Spectrum Usage
Within three years of the auction's close, the licensee must demonstrate to the department that the spectrum has been put into use. The establishment of eight links per one million population (rounded up to a whole number) within a service area, or some other indicator of usage which is acceptable to the department, will be required. Supporting documentation should be submitted to the:
Director, Spectrum Management Operations
Radiocommunications and Broadcasting Regulatory Branch
300 Slater Street, 15th Floor
Confidential information provided will be treated in accordance with subsection 20(1) of the Access to Information Act.
5.2 Licence Conditions for Radiocommmunication Carriers
The following additional conditions of licence will only apply to radiocommunication carriers as defined in section 2 of the Radiocommunication Regulations.
10. Research and Development
When a licence is issued to a radiocommunication carrier, the licensee must invest, as a minimum, two percent of its adjusted gross revenues resulting from its operations in the 24 and 38 GHz radio frequency bands, averaged over the term of the licence, in eligible research and development activities related to telecommunications. Eligible research and development activities are those which meet the definition of scientific research and experimental development adopted in the Income Tax Act. Adjusted gross revenues are defined as total service revenues less inter-carrier payments, bad debts, third-party commissions, and provincial and goods and services taxes collected.
If the licence is transferred to any eligible entity by a radiocommunication carrier prior to the expiration of its term, the condition of licence relating to investment in research and development will continue to apply on the initial transfer of the licence and on any subsequent transfer until the term of this licence expires. Prior to a transfer, in whole or in part, of this licence, the proposed transferee must undertake to ensure that the sum of the investment it will make in eligible research and development activities and all investments made by prior licensees in eligible research and developmentFootnote 22 activities equals, as a minimum, two percent of the aggregated adjusted gross revenues resulting from all operations in the 24 and 38 GHz radio frequency bands, averaged over the term of the licence. An attestation signed by the proposed transferee setting out the undertaking must accompany the licence transfer notification to be submitted to the department by the licensee prior to the transfer being effected.
To facilitate compliance with this condition of licence, the licensee should consult the department's Guidelines for Compliance with the Radio Authorization Condition of Licence Relating to Research and Development.Footnote 23 Further details on the exact administrative procedures for transferring a spectrum licence will be provided in a forthcoming Client Procedures Circular.Footnote 24
11. Annual Reporting
The licensee must submit an annual report for each year of the term of the licence indicating continued compliance with all licence conditions, including:
- an update on the implementation of wireless services
- this update should include the number of hub and subscriber sites installed in each licensed area;
- audited Financial Statements as required under the licensee's jurisdiction of incorporation, including an audited Statement of Research and Development Expenditures with an accompanying Auditor's Report, prepared in accordance with the same standards of reporting – to facilitate compliance with this reporting requirement, the licensee should consult the Guidelines for Compliance with the Radio Authorization Condition of Licence Relating to Research and Development published by Industry Canada;Footnote 25 and,
- a copy of any existing corporate annual report for the licensee's fiscal year with respect to the authorization.
The reports are to be submitted, in writing, within 120 days of the licensee's fiscal year end, to the:
Director, Spectrum Management Operations
Radiocommunications and Broadcasting Regulatory Branch
300 Slater Street, 15th Floor
Confidential information provided will be treated in accordance with section 20(1) of the Access to Information Act.
- back to footnote reference 19 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 http://strategis.ic.gc.ca/spectrum), as amended from time to time.
- back to footnote reference 20 See Industry Canada (April 1, 1999), Canadian Ownership and Control (CPC-2-0-15) (available on the Strategis Web site at http://strategis.ic.gc.ca/spectrum), as amended from time to time.
- back to footnote reference 21 Industry Canada (June 24, 1995), Environmental Process, Radiofrequency Fields and Land-Use Consultation (CPC-2-0-03) (available on the Strategis Web site at http://strategis.ic.gc.ca/spectrum), as amended from time to time.
- back to footnote reference 22 As reported in the prior licensees' audited Statements of Research and Development Expenditures which would have been submitted annually to the department.
- back to footnote reference 23 This document is available on the department's Strategis Web site (http://strategis.ic.gc.ca/spectrum).
- back to footnote reference 24 This document will be made available on the department's Strategis Web site (http://strategis.ic.gc.ca/spectrum).
- back to footnote reference 25 This document is available on the department's Strategis Web site (http://strategis.ic.gc.ca/spectrum).
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