Consultation on a Licensing Framework for Broadband Radio Service (BRS) — 2500 MHz Band
151. In DGRB-005-09, Consultation on Transition to Broadband Radio Service (BRS) in the Band 2500-2690 MHz,Footnote 23 Section 6, Industry Canada stated that all conditions of licence and authorizations (i.e. MCS, BRS and MDS broadcasting certificates) are subject to change following the consultation on the policy and licensing framework for the auction of available and liberated spectrum in the band 2500-2690 MHz in order to allow for licence conditions to be aligned and consistent with future licences issued in this frequency band. Therefore, effective the auction closing date, Industry Canada is proposing that certain conditions of licence for existing 2500 MHz BRS licences be updated to harmonize with the conditions of licence of auctioned licences. The remaining conditions of licence that are not updated, for example, the licence term and the deployment requirements, will remain consistent with the conditions initiated in the June 2010 Decisions on the Transition to Broadband and Radio Service (BRS) in the Band 2500-2690 MHz and Consultation on the Changes Related to the Band Plan.Footnote 24
152. In DGRB-005-09, Section 9.2, Industry Canada also indicated that it will consult on a licence fee for BRS licences; the consultation may take place after the auction of available spectrum. Until such time, the existing fees will continue to apply.
153. 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.
154. Industry Canada proposes that the six following conditions of licence be modified for existing 2500 MHz BRS licensees:
155. Treatment of Existing Spectrum Users: Existing BRS licensees would be required to comply with all displacement/transition polices and the obligations to protect grandfathered stations in Manitoba. For information regarding existing licensees in the 2500 MHz band, see Section 3.4 of this document.
156. The proposed wording for the condition of licence is as follows:
7-1 Industry Canada is seeking comments on the proposed wording of the condition of licence related to the existing BRS licensees’ treatment of existing spectrum users.
157. Spectrum Aggregation Limit: The competitive measures, as outlined in Section 6 regarding the 2500 MHz spectrum auction, would be harmonized for existing BRS licensees.
158. As stated in SMSE-002-12, Decision C2-4, in areas where existing 2500 MHz BRS licensees have spectrum licence holdings in excess of the spectrum aggregation limit of 40 MHz in the 2500 MHz band, the licensee would not be required to divest any such holdings in order to meet the aggregation limit. However, such licensees will not be eligible to bid for additional licences in the auction process or otherwise obtain additional licences in licence areas where the aggregation limit has been met or exceeded. As per SMSE-002-12, Decision C2-5, licensees planning to transfer any of their existing spectrum licence holdings in order to increase their eligibility to bid in the related licence areas must do so prior to submitting an application to participate in the auction process. Information regarding licensees planning to reduce 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.
159. 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 will be competing in the applicable 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.
160. 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.
161. Industry Canada proposes the following wording for this condition of licence:
7-2 Industry Canada is seeking comments on the proposed wording of the condition of licence related to the spectrum aggregation limit for existing BRS licensees.
162. Licence Transferability and Divisibility: It is proposed that this condition of licence be harmonized with that for auctioned spectrum as outlined in Section 6.
163. Industry Canada is proposing the following wording for the condition of licence on transferability and divisibility for existing BRS licensees:
164. 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 reasons including furtherance of the policy objectives related to the 2500 MHz band.
165. 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.
166. Licence transfers may also be subject to the provisions of the Competition Act.
7-3 Industry Canada is seeking comments on the proposed wording of the condition of licence related to transferability and divisibility for existing BRS licensees.
167. Eligibility: The same amendments to the eligibility condition of licence that are being proposed for new licensees would apply to existing BRS licensees.
7-4 Industry Canada is seeking comments on the proposed wording of the condition of licence related to eligibility criteria for existing BRS licensees.
168. Technical Considerations, and International and Domestic Coordination: Industry Canada proposes that the wording for this condition of licence be harmonized with that for auctioned spectrum as outlined in Section 6. 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.
169. Industry Canada proposes the following wording for this condition of licence:
7-5 Industry Canada is seeking comments on the proposed condition of licence related to technical considerations, and international and domestic coordination for existing BRS licensees.
170. Lawful Intercept: Industry Canada is proposing changes to the lawful intercept condition of licence for existing BRS licences 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. Forbearance may be granted where Industry Canada deems it warranted. Greater detail regarding the proposed change is outlined in Section 6.
171. Industry Canada proposes the following wording for this condition of licence:
7-6 Industry Canada is seeking comments on the proposed wording of the condition of licence related to lawful intercept requirements for existing BRS licensees.
172. The following section outlines the general process for submitting an application to participate in the 2500 MHz auction, as well as the general requirements and rules that apply prior to, during and post auction.
173. To participate in an auction, all applicants must submit a completed application form, along with a financial deposit, details of the applicant’s beneficial ownership, information on any affiliations and associations as discussed in Section 5 of this document, and other corporate documentation as required. Industry Canada will make the relevant information available to the public prior to the auction, so that all bidders have knowledge of the identity of the other bidders.
174. In areas where an existing licensee has spectrum licence holdings in excess of the spectrum aggregation limit set out in SMSE-002-12, Decision C2-4, the licensee will not be required to divest any such holdings in order to meet the spectrum aggregation limit. However, such licensees will not be eligible to bid for additional licences or otherwise obtain additional licences in licence areas where the aggregation limit has been met or exceeded.
175. Licensees planning to transfer any of their existing spectrum licence holdings in order to increase their eligibility to bid in the related licence areas must do so prior to submitting an application to participate in this auction process (SMSE-002-12, Decision C2-5). The submission date will be provided in the licensing framework.
176. Licensees planning to return any of their existing spectrum licence holdings to Industry Canada in order to increase their eligibility to bid in the related licence areas must do so by October 4, 2013. In the event that Industry Canada decides to offer the returned licences as part of the 2500 MHz auction process, an addendum to the licensing framework for the 2500 MHz auction will be published in order to inform prospective participants of any additional licence offerings (SMSE-002-12, Decision C2-6).
177. Opening bids are the prices for the spectrum licences at the start of the auction, and the minimum amount that will be accepted for each licence. The proposed opening prices are based on the population in each service area and adjusted by their relative value. The proposed opening bid prices are for spectrum blocks of 20 MHz, irrespective of whether the block is a paired block of 10 + 10 MHz or an unpaired block of 20 MHz.Footnote 26 They can be found in Table 5 below.
178. The determination of the proposed opening bid prices takes into account recent market transactions for spectrum licences in Canada, recent prices paid for 2500 MHz spectrum licences assigned in international auctions and technical considerations. Service areas were grouped into four price levels according to Statistics Canada’s 33 defined census metropolitan areas (CMAs) and their population estimates. Based on relative values for these groups, service areas with a population greater than 2 million (3-25 Toronto, 3-13 Montréal and 3-52 Vancouver) were priced at $0.14/MHz/pop; for service areas that provide coverage to a CMA with a population between 1 million and 2 million, a rate of $0.10/MHz/pop was applied; and for service areas that provide coverage to a CMA with a population less than 1 million, a rate of $0.065/MHz/pop was applied. For all other service areas (those that do not provide coverage to a CMA), a base rate of $0.051/MHz/pop was applied.
179. The total amount of the proposed opening bids for all spectrum blocks is $251,853,000.
|Service Area #||Service Area Name||Available Spectrum
|$/MHz/pop||Opening Bid ($)|
|Total for a national licence||$66,905,000|
|Total for all blocks||$251,853,000|
|3-01||Newfoundland and Labrador||120||0.065||665,000|
|3-02||Prince Edward Island||120||0.051||143,000|
|3-03||Mainland Nova Scotia||120||0.065||1,017,000|
|3-05||Southern New Brunswick||120||0.065||223,000|
|3-06||Western New Brunswick||120||0.051||221,000|
|3-07||Eastern New Brunswick||120||0.065||466,000|
|3-08||Bas du fleuve / Gaspésie||60||0.051||300,000|
|3-15||Ottawa / Outaouais||60||0.100||2,883,000|
|3-27||Guelph / Kitchener||60||0.065||900,000|
|3-28||Listowel / Goderich / Stratford||120||0.051||137,000|
|3-30||London / Woodstock / St. Thomas||60||0.065||1,077,000|
|3-32||Windsor / Leamington||120||0.065||504,000|
|3-35||Sault Ste. Marie||120||0.051||135,000|
|3-45||Medicine Hat / Brooks||120||0.051||194,000|
|3-51||Okanagan / Columbia||60||0.065||537,000|
|3-56||Thompson / Cariboo||120||0.051||183,000|
8-1 Industry Canada is seeking comments on the proposed opening bids as presented in Table 5.
180. The proposed eligibility points associated with the licences being made available in the 2500 MHz auction are based on the population per service area and the estimated value of the spectrum. The population data below are based on Statistics Canada’s 2011 census.
181. Proposed points per service area for paired and unpaired spectrum in the 2500 MHz band are listed in Table 6. The proposed eligibility points are for blocks of 20 MHz, irrespective of whether the block is a paired block of 10 + 10 MHz or an unpaired block of 20 MHz.Footnote 27
182. One eligibility point has been assigned per 50,000 in population for each 20 MHz block of spectrum (either paired or unpaired) in a service area. The eligibility points per spectrum block were then adjusted to reflect the estimated value of the spectrum licences as indicated by the opening bid price base rate.
183. There are 1,320 eligibility points associated with a 20 MHz national licence, which comprises 61 service areas covering the country.
|Service Area #||Service Area Name||Population||Eligibility Points
per 20 MHz Block
|3-01||Newfoundland and Labrador||514,641||13|
|3-02||Prince Edward Island||140,204||3|
|3-03||Mainland Nova Scotia||786,567||20|
|3-05||Southern New Brunswick||172,374||4|
|3-06||Western New Brunswick||217,152||4|
|3-07||Eastern New Brunswick||360,416||9|
|3-08||Bas du fleuve / Gaspésie||295,519||6|
|3-10||Chicoutimi / Jonquière||368,261||9|
|3-15||Ottawa / Outaouais||1,441,718||57|
|3-27||Guelph / Kitchener||696,136||18|
|3-28||Listowel / Goderich / Stratford||134,384||3|
|3-29||Niagara - St. Catherines||368,119||9|
|3-30||London/Woodstock / St. Thomas||832,870||21|
|3-32||Windsor / Leamington||389,729||10|
|3-35||Sault Ste. Marie||132,309||3|
|3-45||Medicine Hat / Brooks||190,930||4|
|3-51||Okanagan / Columbia||415,214||11|
|3-56||Thompson / Cariboo||179,949||4|
8-2 Industry Canada is seeking comments on the proposed eligibility points for spectrum licences in the 2500 MHz band, as outlined in Table 6 above.
184. In order to enhance the integrity of the auction, Industry Canada requires that all bidders submit a pre-auction financial deposit with their auction application. The deposit is to be in the form of a certified cheque or money order payable to the Receiver General for Canada, or an irrevocable standby letter of credit.
185. Similar to previous auctions, Industry Canada proposes to determine the value of the pre-auction financial deposit based on the licences on which the applicant wishes to be eligible to bid. Each licence has been assigned a specific number of eligibility points that are approximately proportionate to the population covered by the licence and adjusted for value, as proposed in Table 6 above. For spectrum licences to be auctioned in the 2500 MHz band, Industry Canada proposes that the financial deposit be equal to $50,000 per eligibility point.
186. An individual bidder wanting to be eligible to bid on the equivalent of one national paired block would have to submit a deposit covering 1,320 points, which would equate to $66,000,000 (i.e. $50,000 x 1,320). Financial deposit(s) will be returned to any applicant that is found not to be a qualified bidder and to any applicant that provides written notification to Industry Canada of its withdrawal from the process prior to the auction’s commencement. Financial deposits will be returned to unsuccessful bidders once the auction has closed.
8-3 Industry Canada is seeking comments on the proposed pre-auction deposits as outlined above.
187. Within 10 business days following the close of the auction, each provisional licence winner will be required to submit 20 percent (20%) of its winning bids. This payment will be non-refundable. The remaining portion of the winning bids will be due within 30 business days of the auction’s close.
188. Following the conclusion of the auction, winning bidders that fail to comply with the specified payment schedule or fail to come into compliance with the eligibility requirements of the Radiocommunication Regulations, will forfeit their right to the licence. Furthermore, non-compliant bidders will be subject to a penalty in the amount of the difference between the forfeited bid and the eventual revenue from bids or fees of the licence(s) (determined by a subsequent licensing process) if that revenue is lower than the forfeited bid.
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