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Consultation on Renewal Process for 2300 MHz and 3500 MHz Licences

Posted on Industry Canada website:

1. Intent

1. Through the release of this document, Industry Canada seeks to consult on the renewal process for licences for wireless communication services (WCS) and fixed wireless access (FWA). These services operate in the frequency bands 2305-2320 MHz and 2345-2360 MHz (2300 MHz band) and 3475-3650 MHz (3500 MHz band), respectively. Three auctions have been held to award licences in these bands: a simultaneous multiple round ascending (SMRA) auction in 2004, a two-phase residual auction in 2004 and 2005, and a sealed-bid, second-price auction in 2009. Licences awarded under these three auctions begin to expire in March 2014 and are within the scope of this renewal process.

2. Industry Canada is seeking comments concerning the renewal of these licences.

2. Mandate

3. The Minister of Industry, through the Department of Industry Act, the Radiocommunication Act and the Radiocommunication Regulations, with due regard to the objectives of the Telecommunications Act, is responsible for spectrum management in Canada. As such, the Minister is responsible for developing goals and national policies for spectrum resource use and for ensuring effective management of the radio frequency spectrum resource.

3. Legislation

4. The Minister of Industry is provided the general powers for spectrum management in Canada pursuant to section 5 of the Radiocommunication Act and sections 4 and 5 of the Department of Industry Act. The Governor in Council may make regulations with respect to spectrum management pursuant to section 6 of the Radiocommunication Act; these regulations have been prescribed under the Radiocommunication Regulations.

4. Background

4.1 Auctions of 2300 MHz and 3500 MHz Spectrum Licences

5. In September 2003, the Minister of Industry announced an auction of spectrum licences in the 2300 MHz and 3500 MHz bands. The 2300 MHz licences were defined as one paired block (15 MHz + 15 MHz), labelled Block W. The 3500 MHz licences were defined as three paired blocks (25 MHz + 25 MHz)—labelled Blocks D/H, E/J and F/K—and one unpaired block (25 MHz), labelled Block G (see Table 1). Both the 2300 MHz and the 3500 MHz bands were (and currently remain) licensed for use in Tier 4 service areas.

Table 1 – Spectrum Blocks
Spectrum Block Auction Label Lower Frequency (MHz) Upper Frequency (MHz)
D/H D 3475-3500 3575-3600
E/J E 3500-3525 3600-3625
F/K F 3525-3550 3625-3650
G G 3550-3575 N/A
W W 2305-2320 2345-2360

6. In February 2004, Industry Canada conducted an SMRA auction that awarded 392 of the 849 available licences to 22 successful bidders for a total of $11.2 million.

7. The 457 licences that remained unassigned after the February 2004 SMRA auction were made available through a two-phase residual auction process. The first phase of the auction, initiated in August 2004, resulted in the award of 144 spectrum licences, with bids totalling $876,000. The second phase of the auction, launched in January 2005, awarded 306 spectrum licences to 12 companies, with bids totalling $56.6 million.

8. In June 2009, a sealed-bid, second-price auction was held to award the 10 remaining licences (eight in the 3500 MHz band and two in the 2300 MHz band)Footnote 1. These licences were awarded to five bidders, whose bids totalled $123,970.

9. A total of 172 licences in the 2300 MHz band were awarded to 13 licensees for $18,451,686, making the weighted averageFootnote 2 of this value $0.0110 per MHz per population.

10. A total of 677 licences in the 3500 MHz band were awarded to 33 licensees for $50,422,614. The weighted average of this value is $0.0063/MHz/pop.

4.2 Incumbents in the 2300 MHz and 3500 MHz Bands

11. As indicated in the Policy and Licensing Procedures for the Auction of Spectrum Licences in the 2300 MHz and 3500 MHz Bands, revised in July 2004 (hereinafter referred to as “the Policy”Footnote 3), first come, first-served (FCFS) incumbents remain in these auctioned spectrum bands in some geographic areas. Section 5 of the Policy (“Incumbents, Transition Policy and Technical Considerations”) outlines the applicable transition requirements or coordination requirements, or both, of the incumbents and auction winners. Licensees that hold auctioned WCS or WCS spectrum must follow the provisions set out under sections 5.3.2 and 5.4.2 of the Policy when dealing with the FCFS incumbents. Licensees are reminded that the Policy is still in place, and that they are responsible for initiating the transition process, if required. No changes to the Policy are proposed at this time.

4.3 Extension of Deployment Condition and New Deployment Requirements

12. Auctioned licences include a requirement for the implementation of spectrum usage,Footnote 4 whereby the licensees are required to demonstrate that the spectrum has been put to use at a level acceptable to Industry Canada.

13. Initially, the Policy stated the following: “The licensee must demonstrate to the Department that their spectrum is being put to use at a level acceptable to the Department within five years of receipt of licence(s). The establishment of coverage to 50% of the population within the licensed service area, or some other indicator of usage that is acceptable to the Department . . . will be required.” (Note added emphasis.)

4.3.1 First Extension

14. A number of licensees requested an extension to the implementation requirement in 2009, citing both the lack of affordable and mature equipment as well as the state of technical rules governing the band in the United States as reasons for delayed deployment in the 2300 MHz band.

15. Although WiMAX (Worldwide Interoperability for Microwave Access) equipment was available for use in the 3500 MHz band, licensees advised Industry Canada that problems in compatibility between different versions of the standard resulted in their not having sufficient confidence to deploy.

16. In July 2009, Industry Canada issued a letter to licenseesFootnote 5 that recognized the extenuating circumstances affecting deployment plans and granted all 2300 MHz and 3500 MHz licensees an extension to the deployment condition until the end of year eight of their licence term.

4.3.2 Second Extension

17. In early 2012, Industry Canada received several requests from licensees in the 2300 MHz and 3500 MHz bands for a further extension to the implementation requirement and for clarification regarding an acceptable level of deployment.

18. In July 2011, Industry Canada had requested an update on the status of deployment from all licensees whose licences were awarded through the first and second auctions, noting that for some licensees, year eight of their licence term would end in March 2012. Reported deployment was still very low; as many as 98% of licences in the 2300 MHz band and 75% of licences in the 3500 MHz band were not deployed.

19. Licensees in the 2300 MHz band indicated that significant technological uncertainty remained because of circumstances in the United States.Footnote 6 For the 3500 MHz band, licensees that had not deployed stated that although WiMAX equipment was available, most preferred to deploy Long-Term Evolution (LTE) technology and were waiting for it to become commercially available.

20. After reviewing the requests, Industry Canada decided to extend the deadline to the end of each licence’s 10-year term and sent letters to all licensees in the 2300 MHz bandFootnote 7 and 3500 MHz band,Footnote 8 advising them of this decision. To increase business certainty, Industry Canada also clarified the required level of deployment. Specific deployment requirements for each Tier 4 licence area are now in place and will be used to assess the deployment condition of licence at the end of the licence term. These deployment requirements take into account the population size of the major urban centers within each tier, along with the population density. Tier 4 deployment requirements can be viewed on Industry Canada’s websiteFootnote 9 and in Annex A. The revised deployment condition of licence, effective as of March 29, 2012, applies to existing spectrum licences in both bands that were obtained through a competitive licensing process.

4.3.3 Proposed Changes to the Current Deployment Requirement

21. Some licensees have been deploying fixed links not servicing an end user directly in the bands (e.g., point-to-point microwave). Although the Policy does not prohibit this use, when the WCS and FWA spectrum was first designated, it was expected to be used primarily for the provision of broadband wireless access (BWA). Thus, the deployment requirements are currently designed for access technology, where coverage to population is an appropriate metric to ensure that the spectrum is being put to use.

22. For point-to-point or point-to-multipoint (not servicing an end user directly) deployments, an alternative metric is required. For the 2300 MHz band, the U.S. Federal Communications Commission (FCC) has established point-to-point deployment requirements of 15 links per million population by year seven of the second 10-year licence term and 30 links per million population by year nine. Industry Canada has used a similar requirement of 8 links per million populationFootnote 10 in the implementation of point-to-point links in the 24 GHz and 38 GHz bands, although the technical characteristics of spectrum above 20 GHz are significantly different from those in the 2300 MHz and 3500 MHz bands.

23. Applying such a requirement as an alternative to the existing deployment targets would enable licensees to meet the deployment conditions either by deploying wireless access services, as first envisioned in the spectrum utilization policies for the WCS and FWA bands, or by deploying other fixed services (e.g., point-to-point systems). This choice between two types of services recognizes the difficulties in securing equipment for wireless access in these bands.

24. Because this alternative deployment requirement is similar to the approach in the U.S. for point to-point systems and it has already been used for other bands in Canada; it may therefore be suitable for use in this instance.

25. Considering the similar frequency range and timelines, Industry Canada proposes to impose a deployment requirement of 15 links per million population per Tier 4 area for both the 2300 MHz and the 3500 MHz bands by the end of the term. This requirement for non-FWA fixed services is an alternative to the requirement for access technology (also known as percentage of population with coverage).

26. It is proposed that this condition will apply to the current licence term upon the release of the decision. The proposed wording of the condition of licence is as follows:

  • The licensee must demonstrate to Industry Canada that its spectrum is being put to use at a level acceptable to the Department by the end of the licence term. Licensees must demonstrate coverage at the level indicated on Industry Canada’s Spectrum Management and Telecommunications website: Tier 4 Deployment Requirements for 2300 and 3500 MHz Licences,

(1) Industry Canada seeks comments of the proposed wording of the condition of licence related to deployment. Comments are also sought on the following proposals that:

A. deployments of fixed links not servicing an end user directly should be considered as an alternative method to meet WCS and FWA spectrum deployment licence conditions; and

B. when a requirement is considered for fixed links not servicing an end user directly should be set at 15 links per million population, per Tier 4 area at the end of the licence term.

When proposing an alternative deployment requirement for either WCS or FWA, provide a rationale for each band.

Note that the questions intended for respondents’ comments will continue on page 14 of this consultation.

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