Consultation on a Licensing Framework for Broadband Radio Service (BRS) — 2500 MHz Band
103. Industry Canada proposes that the following conditions apply to licences issued through the auction process for spectrum in the 2500 MHz band. Some updated conditions of licence are being proposed for existing 2500 MHz licences in order to harmonize them with licences to be auctioned (see Section 7).
104. It should be noted that licences are subject to the 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 spectrum licences pursuant to paragraph 5(1)(b) of the Radiocommunication Act. The Minister may do so for a variety of reasons, including furtherance of the policy objectives related to the band. Such action would normally only be undertaken after consultation.
105. Licence Term: Traditionally, spectrum licences auctioned by Industry Canada have been issued for a 10- year licence term. This duration was deemed to provide enough certainty in the marketplace to secure the investments necessary to acquire spectrum and build related networks. The revised Framework for Spectrum Auctions in Canada, published in March 2011, states that Industry Canada is now adopting a flexible approach in determining licence terms (up to 20 years) based on the specific spectrum being offered and subject to a public consultation preceding the specific auction or renewal process.
106. This decision was based on the recognition that licence terms in excess of 10 years would create greater incentive for financial institutions to invest in the telecommunications industry and for the industry itself to further invest in the development of network infrastructure, technologies and innovation.
107. The 2500 MHz band has the potential to facilitate the offering of high-capacity broadband services to Canadians. Given that the use of this band for mobile services is globally harmonized, there is little risk that there will be any usage changes to this spectrum in the foreseeable future. It is also unlikely that any developments in technology would result in a change to another use that is incompatible with mobile broadband.
108. In light of the above, Industry Canada is proposing that auctioned spectrum licences in the 2500 MHz band have a licence term of 20 years. The proposed condition of licence is as follows:
6-1 Industry Canada is seeking comments on its proposal to issue spectrum licences in the 2500 MHz band with a 20-year licence term.
109. Spectrum Aggregation Limit: Where competitive measures have been put in place, such as a limitation on the amount of spectrum held by a licensee, a condition of licence to that effect is typically applied to the licence in question. With respect to spectrum in the 2500 MHz band, the competitive measures announced in SMSE-002-12 are:
- Decision C2-1: With the exception of licensees in the Northwest Territories, Yukon and Nunavut, all licensees are subject to a spectrum aggregation limit of 40 MHz in the 2500 MHz band, excluding the restricted bands at 2570-2575 MHz and 2615-2620 MHz. This amount represents the total spectrum licence holdings, including both paired and unpaired spectrum, by each licensee in each licence area.
- Decision C2-2: The spectrum aggregation limit shall remain in effect in the 2500 MHz band for a period of five years after the issuance of licences. Therefore, no transfer of licences or issuance of new licences will be authorized if it allows a licensee to exceed the spectrum aggregation limit during this period.
110. The wording for the proposed condition of licence is as follows:
111. In certain areas, existing 2500 MHz licensees hold licences in excess of the spectrum aggregation limit of 40 MHz in the 2500 MHz band. Taking into consideration previous decisions related to the requirement to return spectrum during the MCS/MDS transition to BRS, existing licensees would not be required to divest additional 2500 MHz spectrum in these areas. As stated in SMSE-002-12, Decision C2-4, these licensees would not be permitted to acquire additional spectrum in those areas where the aggregation limit has been met or exceeded, but will be permitted to transfer existing 2500 MHz spectrum licence holdings thereby reducing their spectrum licence holdings prior to the auction in order to be eligible to participate. Information regarding licensees planning to transfer existing spectrum licence holdings in order to increase their eligibility to bid in the related licence areas is provided in Section 8.1, Application to Participate.
112. If the proposal in Section 5 is adopted, associated entities requesting that the spectrum aggregation limit be applied individually rather than jointly, would be required to demonstrate to the satisfaction of Industry Canada that they will be competing in the applicable service area.
113. Where licensees establish an agreement to share spectrum such that another entity has control over the use of the spectrum, a subordinate licence is required. This requirement applies to all spectrum sharing arrangements. Subordinate licences may not count towards the licensee’s aggregation limit if the licensees demonstrate to the satisfaction of Industry Canada that they meet the criteria with respect to competing in the applicable service area. For further information on the application of the spectrum aggregation limit as it relates to associated entities and subordinate licences, see Section 5 of this document.
114. At any time, at the request of Industry Canada, the licensee will be required to provide updated information demonstrating ongoing compliance with this condition of licence.
6-2 Industry Canada is seeking comments on the proposed wording of the condition of licence related to the spectrum aggregation limit.
115. Licence Transferability and Divisibility: In general, licences obtained through an auction may be transferred in whole or in part (either in geographic area or in bandwidth) to a third party, subject to the conditions stated on the licence and other applicable regulatory requirements.
116. As noted above, where competitive measures have been put in place, either to limit the amount of spectrum held by a licensee (spectrum aggregation limit), or to restrict the eligibility of access to a specific spectrum band (set-aside), the ability to transfer and divide the licence in question will be similarly restricted. With respect to spectrum in the 2500 MHz band, transfers are not permitted where they will result in a licensee exceeding the spectrum aggregation limit. However, Industry Canada may consider requests to exchange spectrum licences under certain conditions.
117. Industry Canada is proposing the following wording for the condition of licence on transferability and divisibility:
118. Licensees must apply to Industry Canada for the issuance of subordinate licences prior to the implementation of any spectrum sharing agreements or any agreement that provides for another party to operate the licensee’s spectrum. For further information on these requirements, refer to Client Procedures Circular CPC-2-1-23, Licensing Procedure for Spectrum Licences for Terrestrial Services, as amended from time to time. These requirements are subject to revision and amendment for a variety of reasons including furtherance of the policy objectives related to the 2500 MHz band.
119. Generally, a subordinate licence will count towards the spectrum aggregation limit in a service area in addition to licences held directly and those held by associates or affiliates. However, the proposed transferee may apply to have the subordinate licence(s) excluded from the calculation of its spectrum licence holdings for the purposes of the spectrum aggregation limit, if it can demonstrate as part of its application that it will compete with its associated entities in the service area. For further information on the application of the spectrum aggregation limit as it relates to associated entities that hold subordinate licences, see Section 5 of this document.
120. Licence transfers may also be subject to the provisions of the Competition Act.
6-3 Industry Canada is seeking comments on the proposed wording of the condition of licence related to transferability and divisibility.
121. Eligibility: Generally, spectrum licences contain an eligibility condition of licence, which reads as follows: The licensee must comply on an ongoing basis with the eligibility criteria for a radiocommunication carrier, including compliance with subsection 10(2) of the Radiocommunication Regulations. The licensee must notify the Minister of Industry of any change that would have a material effect on its eligibility. Such notification must be made in advance for any proposed transaction within its knowledge. For further information, refer to Industry Canada’s Client Procedures Circular CPC-2-0-15, Canadian Ownership and Control, as amended from time to time.
122. On June 29, 2012, the Jobs, Growth and Long-term Prosperity Act (Bill C-38) received royal assent, whereby amendments were made to the Telecommunications Act, to lift the foreign investment restrictions for telecommunications companies that hold less than a 10-percent share of the total Canadian telecommunications market. Amendments are reflected in section 16 of the published version of the Telecommunications Act.
123. Industry Canada will update Client Procedures Circular CPC-2-0-15, Canadian Ownership and Control, in order to clarify the effects on spectrum licence holders operating under the Radiocommunication Act and Radiocommunication Regulations.
124. The proposed wording for the condition of licence for spectrum in the 2500 MHz band now refers to the "applicable" subsection of the Regulations, as follows:
6-4 Industry Canada is seeking comments on the proposed wording of the condition of licence related to eligibility criteria.
125. Treatment of Existing Spectrum Users: For information regarding existing licensees in the 2500 MHz band, see Section 3.4 of this document.
126. The proposed wording for the condition of licence is as follows:
6-5 Industry Canada is seeking comments on the proposed wording of the condition of licence related to the treatment of existing spectrum users.
127. Radio Station Installations: Radiocommunication and broadcasting services are important for all Canadians and are used daily by the public, safety and security organizations, government, wireless service providers, broadcasters, utilities and businesses. In order for radiocommunication and broadcasting services to work, antenna systems, including masts, towers and other supporting structures, are required. There is a certain measure of flexibility in the placement of antenna systems, which is constrained to some degree by the need to achieve acceptable coverage for the service area, the availability of sites, technical limitations and safety. In exercising its mandate, Industry Canada believes that it is important that antenna systems be deployed in a manner that considers the local surroundings.
128. Section 5 of the Radiocommunication Act states that the Minister of Industry may, taking into account all matters that the Minister considers relevant for ensuring the orderly development and efficient operation of radiocommunication in Canada, issue radio authorizations and approve each site on which radio apparatus, including antenna systems, may be located. Furthermore, the Minister may approve the erection of all masts, towers and other antenna-supporting structures. Accordingly, proponents must follow the procedures outlined in Client Procedures Circular CPC-2-0-03, Radiocommunication and Broadcasting Antenna Systems, when installing or modifying an antenna system. Also, the installation of an antenna system or the operation of a currently existing antenna system that is not in accordance with these procedures may result in its alteration or removal and other sanctions against the operator as per the Radiocommunication Act.
129. Industry Canada is therefore proposing the following wording for this condition of licence:
6-6 Industry Canada is seeking comments on the proposed wording of the condition of licence related to radio station installations.
130. Provision of Technical Information: Spectrum licences are issued for a specific geographic area and, as such, associated technical information for each radiocommunication installation is not required for the issuance of a spectrum licence. However, technical information associated with radiocommunication installations covered by the spectrum licence is required by Industry Canada to carry out certain spectrum management responsibilities. To provide this capability, Industry Canada requires information to maintain an up-to-date technical database of radiocommunication installations. Industry Canada therefore proposes that such a condition of licence be applied:
131. The proposed wording for the condition of licence is as follows:
6-7 Industry Canada is seeking comments on the proposed wording of the condition of licence related to the provision of technical information.
132. Compliance with Legislation, Regulation and Other Obligations: Licensees must comply with the requirements set out for use of the radio frequency spectrum in general and for the specific frequency band being licensed. In some cases, these requirements are legislative. The proposed wording for the condition of licence is as follows:
6-8 Industry Canada is seeking comments on the proposed wording of the condition of licence related to compliance with legislation, regulation and other obligations.
133. Technical Considerations, and International and Domestic Coordination: Industry Canada will work with the Radio Advisory Board of Canada to develop applicable Radio Standards Specifications (RSS) and Standard Radio System Plans (SRSP) in relation to the 2500 MHz band. Spectrum licence holders are also subject to applicable international coordination agreements and arrangements between Canada, the United States and other foreign administrations.
134. Industry Canada proposes the following wording for this condition of licence:
6-9 Industry Canada is seeking comments on the proposed wording of the condition of licence related to technical considerations, and international and domestic coordination.
135. Lawful Intercept: Certain spectrum licences contain a lawful intercept condition of licence that requires the licensee to maintain interception capabilities so that information can be provided when required by a warrant. The current condition of licence reads as follows:
136. Industry Canada is proposing changes to the lawful intercept condition of licence in order to bring the wording in line with current technologies. The proposed change is to remove the text "circuit-switched voice telephony" from the lawful intercept condition, as networks are no longer limited to circuit switched technology. This proposed change does not affect existing spectrum licences issued under other licensing processes; with the exception of existing BRS licences (see Section 7). Forbearance may be granted where Industry Canada deems it warranted.
137. The condition of licence refers to standards for lawful interception, entitled the Solicitor General’s Enforcement Standards for Lawful Interception of Telecommunications. Public Safety Canada is currently responsible for these standards, which were last revised in 1995. Public Safety Canada has informed Industry Canada that it is proposing modifications to the standards. Industry Canada is proposing to simply refer to the requirement to provide for and maintain lawful interception capabilities, in accordance with the enforcement standards in effect at the time of licence issuance and as amended from time to time. For further information on proposed changes to the Solicitor General’s Enforcement Standards, please contact Public Safety Canada via the General Enquiries line at 1-800-830-3118.
138. In consideration of the above, the proposed wording of the condition of licence is as follows:
6-10 Industry Canada is seeking comments on the proposed wording of the condition of licence related to lawful intercept requirements.
139. Research and Development: Currently, many long-term licences are subject to a condition of licence which requires licensees to invest a percentage of their adjusted gross revenues in research and development (R&D).Footnote 19 In 2009, Industry Canada initiated DGRB-001-09, Consultation on Revisions to the Framework for Spectrum Auctions in Canada, in which comments were sought on the continued need for the R&D condition of licence. The resultant decision paperFootnote 20 stated that Industry Canada’s decision with regard to the R&D condition of licence would be the subject of a separate paper to be issued at a later date. In addition, the Consultation on Transition to Broadband Radio Service (BRS) in the Band 2500-2690 MHz proposed that conditions of licence for BRS licences be consistent with existing licences for similar services (e.g. Cellular, Personal Communication Services and Advanced Wireless Services). Therefore, until such a time as a decision is released, Industry Canada proposes that the R&D condition of licence apply to licences in the 2500 MHz band as stated below, but may be amended during the licence term.
140. The proposed wording of this condition of licence is as follows:
6-11 Industry Canada is seeking comments on the proposed condition of licence related to the research and development requirement.
141. General Deployment Requirement: In accordance with SMSE-002-12, a general deployment requirement will apply to licensees in the 2500 MHz band. Decision C2-7 states that: A general rollout obligation applicable to all 2500 MHz licences will continue to apply. Industry Canada will consult on the details of the general deployment requirement (e.g. population coverage required and time frame).
142. This condition will apply to all licences issued through this process, regardless of the amount of spectrum that licensees hold. The objective of this general rollout requirement is to ensure that the 2500 MHz spectrum is deployed in a timely manner. As well, such a condition will serve to deter the acquisition of spectrum licences by speculators and those whose intent is to prevent access to the spectrum by their competitors.
143. Similar conditions of licence have been applied to previously auctioned spectrum licences in order to encourage the deployment of systems and to dissuade speculative spectrum acquisition. The intent is to encourage either the deployment of spectrum or the transfer of the spectrum licence where another entity may have a use for it. Prior to the AWS auction, deployment was required to 50% of the population in the licence area or to a level acceptable to Industry Canada. In the AWS auction, different levels were set for each licence area based on the population of the major urban centres for that particular licence area. It is proposed that the AWS levels be used as deployment requirements for the 2500 MHz licences. It is further proposed that these levels be required within 10 years of the licence issuance to allow market forces to determine the best pace of deployment, while providing an opportunity to intervene if the spectrum is left unused for an extended period of time.
144. Where a licence is transferred during the initial 10 years, the requirement for the new licensee to deploy will continue to be based on the initial licence issuance date.
145. The proposed wording of the condition of licence is as follows:
|Tier 3||Service Area Name||Minimum Population
CoverageTable note *
|3-01||Newfoundland and Labrador||30%|
|3-02||Prince Edward Island||30%|
|3-03||Mainland Nova Scotia||40%|
|3-05||Southern New Brunswick||50%|
|3-06||Western New Brunswick||30%|
|3-07||Eastern New Brunswick||30%|
|3-08||Bas du fleuve / Gaspésie||15%|
|3-15||Ottawa / Outaouais||50%|
|3-27||Guelph / Kitchener||50%|
|3-28||Listowel / Goderich / Stratford||15%|
|3-30||London / Woodstock / St. Thomas||50%|
|3-32||Windsor / Leamington||50%|
|3-35||Sault Ste. Marie||50%|
|3-45||Medicine Hat / Brooks||30%|
|3-51||Okanagan / Columbia||40%|
|3-56||Thompson / Cariboo||40%|
6-12 Industry Canada is seeking comments on the application of the general deployment condition of licence as stated above. Specifically, comments are sought on:
- (a) the population coverage, as specified in Table 4, for each licence service area; and
- (b) the proposed time frame.
146. Mandatory Antenna Tower and Site Sharing: Industry Canada proposed changes to the mandatory antenna tower and site sharing conditions of licence through a separate process announced in Canada Gazette notice DGSO-001-12.Footnote 21 The related decisions will be announced separately. The proposed wording of the condition of licence is as follows:
6-13 Industry Canada is seeking comments only on the proposed wording of the condition of licence related to mandatory antenna tower and site sharing.
147. Mandatory Roaming: Industry Canada proposed changes to the mandatory roaming condition of licence through a separate process announced in Canada Gazette notice DGSO-001- 12.Footnote 22 The related decisions, including the applicability of the mandatory roaming condition to the 2500 MHz band, will be announced separately. If the condition is applied, the proposed wording is as follows:
6-14 Industry Canada is seeking comments only on the proposed wording of the condition of licence related to mandatory roaming.
148. Annual Report: Currently, spectrum licences include a requirement to submit an annual report to Industry Canada to provide some basic information on spectrum use and existing company reports. This provides valuable information without requiring extensive report generation by the licensees. It is proposed that this requirement apply to 2500 MHz licensees.
149. The proposed wording of the condition of licence is as follows:
The licensee must submit an annual report for each year of the licence term, which includes the following information:
- a statement indicating continued compliance with all conditions of licence;
- an update on the implementation and spectrum usage within the area covered by the licence;
- existing audited financial statements with an accompanying auditor’s report;
- a report of the research and development expenditures for licensees operating as radiocommunication carriers as set out in these conditions of licence. Industry Canada reserves the right to request an audited statement of research and development expenditures with an accompanying auditor’s report;
- supporting financial statements where licensees are claiming an exemption based on an annual gross revenue of less than $5 million; and
- a copy of any existing corporate annual report for the licensee’s fiscal year with respect to the authorization.
All reports and statements are to be certified by an officer of the company and submitted, in writing, within 120 days of the licensee’s fiscal year end to the address below. Confidential information provided will be treated in accordance with subsection 20(1) of the Access to Information Act.
Manager, Emerging Networks
Spectrum Management Operations Branch
300 Slater Street, 15th Floor
Ottawa, Ontario K1A 0C8
150. Where a licensee holds multiple licences, spectrum implementation reports should be broken down by service area. This information, including the extent of implementation and spectrum usage, is important for analyzing each licensee’s individual performance against its conditions of licence. In addition, it allows Industry Canada to monitor the effectiveness of these conditions in meeting the policy objectives regarding the band and the department’s intent that the spectrum be deployed in a timely manner for the benefit of Canadians.
6-15 Industry Canada is seeking comments on the proposed condition of licence related to the requirement for annual reporting.
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