Consultation on a Licence Renewal Process for Advanced Wireless Services and other Spectrum

1. Intent

1.  Through the release of this document, Innovation, Science and Economic Development Canada (ISED) is consulting on the renewal process for advanced wireless services (AWS) and other spectrum licences that were assigned by auction in 2008 and will begin to expire in December 2018. The decisions made as a result of this consultation will apply to the following spectrum bands:

1. advanced wireless services 1710-1755 MHz / 2110-2155 MHz (AWS-1)
2. personal communications services (PCS) extension bands 1910-1915 MHz / 1990-1995 MHz (G Block) and
3. the band 1670-1675 MHz (I Block)

2. Mandate

2.  The Minister of Innovation, Science and Economic Development, 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 polices for spectrum resource use and for ensuring effective management of the radio frequency spectrum resource.

3. Legislation

3.  The Minister of Innovation, Science and Economic Development 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. Policy objectives

4.  In developing policies and licensing frameworks to make additional spectrum available, ISED is guided by the policy objectives of the Telecommunications Act, and the Spectrum Policy Framework for Canada (SPFC), which seeks to maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum resource. These objectives, along with the enabling guidelines outlined in the SPFC, continue to provide relevant direction to ISED in the delivery of its mandate to manage Canada's spectrum resource.

5.  Through the Innovation and Skills Plan and its focus on people, technologies and companies, the Government of Canada is committed to promoting innovation‑led growth across all sectors of the Canadian economy. Today's economy is digital. The ubiquity of digital technologies and services across sectors is a defining feature of this digital economy. This spectrum supports the development of Canada's digital economy and the aims of the Innovation and Skills Plan by enabling Canadians to participate in the digital economy. This spectrum also allows Canadian companies to take advantage of the latest technologies to better compete globally. Consequently, ISED's objectives for the renewal of the licences are to:

• foster innovation and investment
• support sustained competition so that consumers and businesses benefit from greater choice and
• facilitate deployment and timely availability of services across the country, including rural areas

5. Background

6.  The frameworks for the spectrum under consideration are the Policy Framework for the Auction for Spectrum Licences for Advanced Wireless Services and other Spectrum in the 2 GHz Range (Policy Framework) (DGTP-007-07) published on November 28, 2007 and the Licensing Framework for the Auction for Spectrum Licences for Advanced Wireless Services and other Spectrum in the 2 GHz Range (Licensing Framework) published December 22, 2007. ISED responded to the clarification questions submitted by stakeholders in regards to both the AWS policy and the condition of licence decisions and posted Responses to Questions for Clarification on the AWS Policy and Licensing Frameworks on February 27, 2008.

7.  ISED auctioned 292 spectrum licences in Tier 2 and 3 service areas. Of the 105 MHz of spectrum made available, 40 MHz was set aside exclusively for new entrants to bid on. The other 65 MHz was available to all bidders. The AWS-1 licences, (1710-1755 MHz and 2110-2155 MHz) were defined as three blocks of 10+10 MHz and 3 blocks of 5+5 MHz (see figure 1). G Block licences, (1910-1915 MHz and 1990-1995 MHz) were defined as one block of 5+5 MHz, and the I Block licences, (1670-1675 MHz) were defined as one block of 5 MHz. The auction was completed in July 2008, with ISED awarding 282 of the 292 licences to 15 successful bidders and generating total revenue of $4.25 billion.

6. AWS-1

8.  AWS-1 supports third‑generation (3G) and fourth‑generation (4G) systems and is also expected to support future technologies such as fifth‑generation (5G) wireless systems. The AWS-1 spectrum has an established equipment ecosystem in both Canada and the United States and is widely deployed.

9.  The AWS band plan is described in figure 1. ISED adopted the use of Tier 2 and 3 service areas as shown in table 1.

Figure 1 — AWS band plan

10.  Currently, 8 licensees hold a total of 265 licences within the AWS-1 band. The deployment requirements for each AWS-1 licence are based on the population of urban centres within the particular Tier 2 and Tier 3 service area as outlined in appendix C of the Licensing Framework.

7. G Block

11.  The G Block has seen some deployment in Canada. Initially G Block deployment in Canada was limited only to 2G code division multiple access (CDMA) equipment. Developments in the United States led to the deployment of 4G Long‑Term Evolution (LTE) equipment in 2012 with a limited ecosystem. The March 2015 3rd Generation Partnership Project (3GPP) Release 12 standard enables non‑contiguous carrier aggregation of the G Block with other PCS spectrum. This allows licensees with additional PCS spectrum to make more efficient use of the G Block and generate higher data speeds by aggregating the spectrum with their other PCS holdings.

12.  LTE deployment in the U.S. began in 2012 and use of this spectrum for LTE in Canada is now occurring. Currently, there are 12 licences held by 5 licensees and 2 licences held by ISED. The Tier 3 deployment requirements for this spectrum are the same as the Tier 3 deployment requirements for the AWS-1 band and are outlined in appendix C of the Licensing Framework.

8. I Block

13.  The I Block licences were auctioned in a single 5 MHz block and given the flexibility to employ either frequency division duplexing (FDD) or time division duplexing (TDD) technology in the band. If FDD is deployed, the I Block could be paired with another block of spectrum, and used for either base or mobile transmissions.

14.  The I Block licences were auctioned using Tier 2 service areas and are subject to the same deployment requirements as the AWS-1 band. The deployment requirements are outlined in appendix C of the Licensing Framework.

15.  ISED notes that currently four licensees hold a total of six licences within the I Block and eight are held by ISED. In the U.S., the Federal Communications Commission (FCC) awarded a nationwide licence in the band in 2003. To our knowledge, there has been no deployment using this spectrum and no commercial mobile broadband devices exist for this band.

9. Renewal eligibility

16.  The licences were auctioned for a 10‑year term. The licences expire over a span of two years with the majority of licences expiring in December 2018 and the last of the licences expiring in March 2020. The renewal decision developed through this consultation will address all auctioned licences, including AWS-1, G Block and I Block.

17.  As stated in the Framework for Spectrum Auctions in Canada (FSAC), licensees will have a high expectation of renewal 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.

18.  ISED is not planning any fundamental reallocation of this spectrum, nor does it see any overriding policy need that would preclude renewal of these licences. Accordingly, ISED proposes to renew the licences where the licensee can demonstrate that they are in compliance with all licence conditions, including deployment. It is proposed that deployment will be considered met where the licensee can demonstrate that they are actively providing commercial mobile wireless services with their licence to at least the levels set out in appendix C of the Licensing Framework. Licences with deployment below that level will not be eligible for a new long‑term spectrum licence under the renewal process.

19.  Licensees are reminded that commercial arrangements with third parties for the use of the spectrum can be an effective way for licensees to increase deployment in their licence area. These arrangements would require ISED approval through an application for a subordinate licence.

10. Conditions of licence for new licences issued under the renewal process

20.  It should be noted that all spectrum licences are subject to the relevant provisions in the Radiocommunication Act and the Radiocommunication Regulations. For example, the Minister of Innovation, Science and Economic Development 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.

21.  It is also important to note that ISED recognizes that the current rate of wireless technology development is ever evolving and these developments, such as cognitive radio and dynamic spectrum access, are expected to provide opportunities for increased efficiency for spectrum access. As a result, it is expected that although long‑term spectrum licences will continue to provide priority access to spectrum, future consultations will likely explore the possibility of providing for opportunistic access to licensed spectrum.

Licence term

22.  In the Framework for Spectrum Auctions in Canada, published in March 2011, ISED adopted a flexible approach in determining licence terms, which allows for licence terms up to 20 years. This decision was based on the recognition that licence terms in excess of 10 years would create greater incentive to invest in the telecommunications industry and for the industry itself to further invest in the development of network infrastructure, technologies and innovation. Longer terms are particularly appropriate when the use is unlikely to change. Auctioned licences also typically have a high expectation of renewal.

23.  It is expected that bands that are used to provide commercial mobile services will evolve from the current 3G and 4G technologies to 5G technologies. ISED recognizes that the use cases are still emerging and 5G standards, equipment, and deployment plans are still under development. However, longer licence terms would be favourable for attracting the financial investments required to deploy 5G services and it is considered unlikely that any developments in technology would result in a change to another use that is incompatible with the current use of these frequency bands.

24.  The AWS-1, G Block and I Block auctioned licences were issued for a 10-year term. The recent 700 MHz, 2500 MHz and the AWS-3 licences, as well as the cellular and PCS licences that were issued through a renewal process, all had 20-year licence terms. Given that the AWS-1 band and G block are well established, and are unlikely to have any usage changes in the foreseeable future, a licence term of 20 years is feasible and would give a strong incentive for companies to expand their networks. Given that the I Block ecosystem is far less developed, a shorter licence term may be warranted.

25.  In consideration of the discussion above, and noting that the Minister of Innovation, Science and Economic Development retains the discretion to amend terms and conditions of licence at any time, ISED proposes that a licence term of 20 years apply to the new AWS-1 and G Block licences. A 20-year term allows for investment certainty in the development of network infrastructure, technology and innovation to provide services to Canadians. For the I Block, a licence term of 10 years is proposed.

Deployment requirement

26.  ISED believes that the spectrum is a public resource that should be used in ways that serve the public interest. Canada's SPFC policy objective is to maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum resource. Specifically, deployment requirements are conditions of licence that encourage the delivery of service in all regions of Canada in a timely manner for the benefit of Canadians.

27.  Generally, most deployment requirements can usually be met by serving the major urban areas within the licence area. This encourages service providers to use the spectrum to benefit Canadians, in a timely manner, while allowing for significant flexibility of individual business cases.

28.  The original deployment targets for the AWS-1, G Block and I Block licences are set out in appendix C of the Licensing Framework. For many licences, the deployment levels exceed the minimum requirements. However, even on licences where the deployment levels were met in the initial term, there remains unused spectrum in many populated areas outside the major population centers.

29.  Recently, in the 2015 AWS-3 licensing process, ISED increased the deployment condition of licence. Similarly, a renewal licence term provides an opportunity to ensure deployment to additional communities.

30.  One option would be to apply the deployment requirements as stated in the 2014 AWS-3 Licensing Framework, which required licensees to deploy to a percentage of the population within each Tier 3 service area of the licence within eight years. The percentage of coverage required would be higher than the levels set for the AWS-1 licensing process as Tier 2 licensees would be required to deploy to each Tier 3 area within their licence area (see annex B).

31.  Another option is to increase the requirements more substantially by requiring licensees to deploy to a percentage of each Tier 4 area within the Tier 2 or 3 licence areas within eight years of the issuance of a new licence (see annex C).

32.  Both of these options would foster competition and support ISED's objective to see the benefits of the spectrum usage in each service area, beyond large and medium population centres. This aligns with ISED's goal to ensure that the spectrum is used for the economic and social benefit of Canadians.

33.  Given the lack of equipment ecosystem for the I Block, ISED is considering whether or not the deployment options discussed above should apply to renewed I Block licences as well. However, as a minimum, renewed I Block licences would be required to maintain the current deployment requirements listed in appendix C of the Licensing Framework.

Other conditions of licence

34.  ISED is also seeking comments on the remaining proposed conditions of licence contained in annex A, which would apply to new licences issued under the renewal process for AWS-1, G Block and I Block spectrum. The conditions of licence are based on existing policies and procedures developed through consultation.

11. Fees for renewed spectrum licences

35.  The FSAC states that for licences issued through a renewal process, licence fees that reflect some measure of market value will apply. A separate consultation will be launched to determine the spectrum licence fees that will apply to the spectrum licences issued through this renewal process. Any fees would only apply after a consultation process.

12. Next steps

36.  ISED will review the comments received and publish its decision. A follow‑up consultation will discuss a licensing framework for licences not renewed.

13. Submitting comments

37.  Respondents are requested to provide their comments in electronic format (Microsoft Word or Adobe PDF) to the following email address: ic.spectrumauctions-encheresduspectre.ic@canada.ca and to specify question numbers for ease of referencing.

38.  Written submissions should be addressed to:

39.  All submissions should cite the Canada Gazette, Part I, the publication date, the title and the notice reference number (SLPB-002-17). Parties should submit their comments no later than July 25, 2017, to ensure consideration. Soon after the close of the comment period, all comments received will be posted on the Spectrum Management and Telecommunications website.

40.  ISED will also provide interested parties with the opportunity to reply to comments from other parties. Reply comments will be accepted until August 14, 2017.

41.  All comments and reply comments will be published. Those making submissions are responsible for ensuring that they do not contain confidential or private information.

42.  After the initial comment period, ISED may, at its discretion, request additional information if needed to clarify significant positions or new proposals. Should additional information be requested, the reply comment deadline may be extended.

14. Obtaining copies

43.  All spectrum related documents referred to in this paper are available on Innovation, Science and Economic Development's Spectrum Management and Telecommunications website.

44.  For further information concerning the proposals outlined in this consultation or related matters, contact:

Telephone: 613-223-1230
Fax: 343-291-1269
Email: ic.spectrumauctions-encheresduspectre.ic@canada.ca

Annex A — Proposed conditions of licence

1.  The following conditions are proposed for the renewed AWS, G Block and I Block spectrum licences. These conditions of licence are proposed to align with the decisions taken in other processes and the proposals within this consultation as described in section 10.

2.  It should be noted that the licences are subject to the relevant provisions in the Radiocommunication Act and the Radiocommunication Regulations, as amended from time to time. For example, the Minister continues to have the power to amend the terms and conditions of spectrum licences, under section 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.

1. Licence term

3.  The term of this licence is 20 years (AWS-1 and G Block). The term of this licence is 10 years (I Block). At the end of this licence term, the licensee will have a high expectation that a new licence will be issued for a subsequent term through a renewal process 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.

4.  The process for issuing licences after this term and any issues relating to renewal, including the terms and conditions of the new licence, will be determined by the Minister of Innovation, Science and Economic Development following a public consultation.

2. Eligibility

5.  The licensee must comply on an ongoing basis with the applicable eligibility criteria in subsection 9(1) of the Radiocommunication Regulations. The licensee must notify the Minister of Innovation, Science and Economic Development of any change that would have a material effect on its eligibility. Such notification must be made in advance for any proposed transactions within its knowledge.

3. Licence transferability, divisibility and subordinate licensing

6.  This licence is transferable in whole or in part (divisibility), in both bandwidth and geographic dimensions, subject to Innovation, Science and Economic Development Canada's (ISED) approval. A subordinate licence may also be issued in regard to this licence. ISED's approval is required for each proposed subordinate licence.

7.  The licensee must make the Transfer Request in writing to ISED. The Transfer Request will be treated as set out in Client Procedures Circular CPC-2-1-23, Licensing Procedure for Spectrum Licences for Terrestrial Services, as amended from time to time.

8.  The licensee must apply in writing to ISED for approval prior to implementing any Deemed Transfer, which will be treated as set out in CPC-2-1-23. The implementation of a Deemed Transfer without the prior approval of ISED will be considered a breach of this condition of licence.

9.  Should the licensee enter into any agreement that provides for a Prospective Transfer with another holder of a Licence for commercial mobile spectrum (including any Affiliate, agent or representative of the other licence holder), it must apply in writing to ISED for review of the Prospective Transfer within 15 days of entering into the Agreement, which will be treated as set out in CPC-2-1-23. Should ISED issue a decision indicating that the Prospective Transfer is not approved; it will be a breach of this condition of licence for a licensee to remain in an agreement that provides for the Prospective Transfer for a period of more than 90 days from the date of the decision.

10.  In all cases, the licensee must follow the procedures as outlined in CPC-2-1-23.

11.  All capitalized terms have the meaning ascribed to them in CPC-2-1-23.

4. Radio station installations

12.  The licensee must comply with Client Procedures Circular CPC-2-0-03, Radiocommunication and Broadcasting Antenna Systems, as amended from time to time.

5. Provision of technical information

13.  The licensee must provide, and maintain, up‑to‑date technical information on a particular station or network in accordance with the definitions, criteria, frequency and timelines specified in Client Procedures Circular CPC-2-1-23, Licensing Procedure for Spectrum Licences for Terrestrial Services, as amended from time to time.

6. Compliance with legislation, regulations and other obligations

14.  The licensee is subject to, and must comply with, the Radiocommunication Act and the Radiocommunication Regulations, as amended from time to time. The licensee must use the assigned spectrum in accordance with the Canadian Table of Frequency Allocations and the spectrum policies applicable to this band, as amended from time to time. The licence is issued on condition that all representations made in relation to obtaining this licence are all true and complete in every respect.

7. Technical considerations and international and domestic coordination

15.  The licensee must comply on an ongoing basis with the technical aspects of the appropriate Radio standards specifications (RSS) and Standard radio system plans (SRSP), as amended from time to time. Where applicable, the licensee must use its best efforts to enter into mutually acceptable agreements with other parties for facilitating the reasonable and timely development of their respective systems, and to coordinate with other licensed users in Canada and internationally.

16.  The licensee must comply with the obligations arising from current and future frequency coordination agreements established between Canada and other countries and shall be required to provide information or take actions to implement these obligations as indicated in the applicable SRSP. Although frequency assignments are not subject to site licensing, the licensee may be required through the appropriate SRSP to furnish all necessary technical data for each relevant site.

8. Lawful interception

17.  The licensee operating as telecommunication common carrier using the spectrum for voice telephony systems must, from the inception of service, provide for and maintain lawful interception capabilities as authorized by law. The requirements for lawful interception capabilities are provided in the Solicitor General's Enforcement Standards for Lawful Interception of Telecommunications (Rev. Nov. 95) – SGES. These standards may be amended from time to time.

18.  The licensee may request the Minister of Innovation, Science and Economic Development to forbear from enforcing certain assistance capability requirements for a limited period of time. The Minister, following consultation with Public Safety Canada, may exercise the power to forbear from enforcing a requirement or requirements where, in the opinion of the Minister, the requirement is not reasonably achievable. Requests for forbearance must include specific details and dates indicating when compliance to the requirement can be expected.

9. Research and development (R&D)

19.  The licensee must invest, as a minimum, 2% of its adjusted gross revenues resulting from the use of this licence, averaged over the term of the licence, in eligible research and development (R&D) activities related to telecommunications. Eligible R&D activities are those that meet the definition of scientific research and experimental development adopted in the Income Tax Act, as amended from time to time. Adjusted gross revenues are defined as total service revenues, less inter‑carrier payments, bad debts, third party commissions, and provincial goods and services taxes collected. The licensee is exempt from R&D expenditure requirements if it, together with all affiliated licensees that are subject to the R&D condition of licence, has less than $1 billion in annual gross operating revenues from the provision of wireless services in Canada, averaged over the term of the licence. For this condition of licence, an affiliate is defined as a person who controls the carrier, or who is controlled by the carrier or by any person who controls the carrier, as per subsection 35(3) of the Telecommunications Act.

10. Deployment requirement

20.  Licensees will be required to demonstrate to the Minister of Innovation, Science and Economic Development that this spectrum has been put to use as specified in section 10 and annex C of this consultation, within eight years of the issuance of the new licence.

21.  Where a licence is transferred during the first eight years, the requirement for the new licensee to deploy will continue to be based on the issuance date of the new licence.

11. Mandatory antenna tower and site sharing

22.  The licensee must comply with the mandatory antenna tower and site sharing requirements set out in Client Procedures Circular CPC-2-0-17, Conditions of Licence for Mandatory Roaming and Antenna Tower and Site Sharing and to Prohibit Exclusive Site Arrangements, as amended from time to time.

12. Mandatory roaming

23.  The licensee must comply with the roaming requirements set out in CPC-2-0-17, as amended from time to time.

13. Annual reporting

24.  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 statement indicating the annual gross operating revenues from the provision of wireless services in Canada and, where applicable, the annual adjusted gross revenues resulting from the use of this licence, as defined in these conditions of licence
• a report of the R&D as set out in these conditions of licence (ISED may request an audited statement of R&D expenditures with an accompanying auditor's report, at its discretion)
• supporting financial statements where a licensee is claiming an exemption based on–together with all affiliated licensees that are subject to the R&D condition of licence–it having less than $1 billion in annual gross operating revenues from the provision of wireless services in Canada, averaged over the term of the licence
• a copy of any existing corporate annual report for the licensee's fiscal year with respect to the authorization and
• other information related to the licence as specified in any notice updating the reporting requirements as issued by ISED

25.  All reports and statements must be certified by an officer of the company and submitted, in writing, within 120 days of the licensee's fiscal year‑end. Confidential information provided will be treated in accordance with section 20(1) of the Access to Information Act.

26.  Reports are to be submitted to ISED at the following address:

27.  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 ISED to monitor the effectiveness of these conditions in meeting the policy objectives regarding the band and ISED's intent that the spectrum be deployed in a timely manner for the benefit of Canadians.

14. Amendments

Annex B — Deployment requirements – Tier 3

Annex C — Deployment requirements – Tier 4