Decision on the Spectrum Licence Renewal Process for Non-Auctioned Broadband Radio Service (BRS) Licences

1. Through the release of this document, Innovation, Science and Economic Development Canada (ISED), on behalf of the Minister of Innovation, Science and Industry (the Minister), hereby announces the decisions resulting from the consultation undertaken inCanada Gazettenotice DGSO-002-19,Consultation on the Spectrum Licence Renewal Process for Non-Auctioned Broadband Radio Services (BRS) Licences (the Consultation).

2. All comments and reply comments received in response to the Consultation are available on ISED’sSpectrum management and telecommunications website. Comments and/or reply comments were received from:

• Bell Mobility Inc. (Bell)
• Cogeco Communications Inc. (Cogeco)
• Ecotel Inc. (Ecotel)
• Québecor Média Inc. (Québecor)
• Rogers Communications Canada Inc. (Rogers)
• Saskatchewan Telecommunications (SaskTel)
• Shaw Communications Inc. (Shaw)
• SSi Micro Ltd. (SSi)
• TELUS Communications Inc. (TELUS)
• Xplornet Communications Inc. (Xplornet)

3. This document (hereinafter referred to as the Decision) sets out decisions for the renewal of non-auctioned broadband radio services (BRS) licences.

4. The Minister, through theDepartment of Industry Act, theRadiocommunication Actand theRadiocommunication Regulations, with due regard to the objectives of theTelecommunications Act, is responsible for spectrum management in Canada. As such, the Minister is responsible for developing goals and national policies for spectrum utilization and for ensuring effective management of the radio frequency spectrum resource.

5. In developing policies and licensing frameworks to make spectrum available or to renew existing licences, ISED is guided by the policy objectives of theTelecommunications Act, and theSpectrum 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.

6. ISED recognizes that Canadians want three things from their telecom services: high quality, broad coverage and affordable prices. Canadians rely on mobile services to access a variety of mobile applications, such as multi-media services, social networking and Internet browsing, to do business, to connect with others, and to manage finances, health and homes.

7. Through the Innovation and Skills Plan and its focus on people, technologies and companies, the Government of Canada is committed to promoting growth across all sectors of the Canadian economy. The ubiquity of wireless technologies and services across sectors is a defining feature of this digital economy. The spectrum discussed in this Decision supports the development of Canada’s digital economy and the goals of the Innovation and Skills Plan by enabling Canadians to participate in the digital economy. Consequently, ISED’s objectives for the renewal of the relevant licences are to:

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

8. Following the designation of the 2500-2690 MHz frequency band for flexible use, ISED issued BRS licences to incumbent Multipoint Communication System and Multipoint Distribution System licensees for approximately two-thirds of their originally licensed spectrum (herein referred to as non-auctioned BRS licences). The remaining one-third of spectrum was returned to ISED and was auctioned in 2015. The majority of non-auctioned BRS licences will expire on March 31, 2021.

9. With the licence term near expiration, ISED issued Canada Gazette notice DGSO-002-19, Consultation on the Spectrum Licence Renewal Process for Non-Auctioned Broadband Radio Services (BRS) Licences. The Consultation sought input on four primary issues:

• renewal eligibility
• licence term
• implementation of spectrum usage
• other conditions of licence for renewed non-auctioned BRS licences

10. The majority of non-auctioned BRS licences will expire on March 31, 2021. In the Consultation, ISED proposed to renew these licences where the licensee was able to demonstrate compliance with all conditions of licence.

Comments

11. Ecotel, Cogeco, SaskTel, SSi, Rogers, Bell and Shaw agreed with the proposal that non-auctioned BRS licences be renewed where licensees could demonstrate compliance with all conditions of licence. Moreover, Ecotel and Cogeco stated that no licences should be renewed if the licensee cannot demonstrate that services are being provided to customers.

12. Ecotel and Cogeco also proposed that any returned or non-renewed spectrum be made available on a first-come, first-served basis.

13. Xplornet suggested that ISED treat both the 2500 MHz and 3500 MHz bands similarly, as both are valuable mid-range frequency bands that support 5G technology. They also recommended that ISED take a holistic assessment of all available mid-band 5G spectrum when developing policy. In their reply comments, Bell, SSi, SaskTel, Shaw and Rogers disagreed with Xplornet’s proposal, citing the previous fundamental reallocation of the 2500 MHz band and resulting return of one-third of the authorized spectrum (as explained in paragraph 8, above).

Discussion

14. As stated in the Framework for Spectrum Auctions in Canada (FSAC), at the end of the initial licence term, or any subsequent term, 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.

15. ISED fundamentally reallocated the 2500 MHz band in 2006 when designating it for mobile, fixed and broadcasting use (DGTP-002-06, Policy Provisions for the Band 2500-2690 MHz to Facilitate Future Mobile Service). Under the DGTP-002-06 Policy, any of the allocated services could be used, including mobile, fixed or broadcasting. Prior to being issued a flexible-use licence, licensees were required to return some of their originally authorized spectrum in the band, a similar process to the recent 3500 MHz fundamental reallocation decision.

16. ISED is not planning another fundamental reallocation of the 2500 MHz spectrum, nor is there any overriding policy need that would preclude renewal of these licences at this time. Accordingly, ISED proposed to renew all non-auctioned BRS licences where the licensee is able to demonstrate that they comply with all licence conditions, including deployment. In the Consultation, ISED proposed that deployment will be considered satisfied where the licensee can demonstrate that they are actively providing commercial wireless services with their licence to at least the minimum levels set out in annex C of Decisions on the Transition to Broadband Radio Service (BRS) in the Band 2500-2690 MHz and Consultation on Changes Related to the Band Plan. ISED believes that licences should be renewed if the spectrum is providing services and is being put to use. If licensees fail to deploy to the minimum level, they would not be eligible for a new long-term spectrum licence under the renewal process. As such, any licences returned to ISED may be made available in a future licensing process, subject to a public consultation.

Decision

17. Non-auctioned BRS licences will begin to expire on March 31, 2021, whereas auctioned BRS licences will expire on March 31, 2035, at the end of their current 20-year licence term.

18. In the Consultation, ISED proposed that non-auctioned BRS licences be renewed with a licence term of 14 years (to March 31, 2035), in an effort to harmonize the expiry of all BRS licences within the band.

Comments

19. The majority of respondents, including Rogers, Ecotel, SaskTel, Shaw, SSi, TELUS and Xplornet, supported the proposed 14-year licence term where all conditions of licence have been met, agreeing with ISED’s objective of harmonizing the expiry date of BRS licences.

20. Rogers, SSi and Xplornet included the caveat that upon expiry in 2035, that both auctioned BRS and non-auctioned BRS licences have a high expectation of renewal for a future term of 20 years.

21. Bell disagreed with the proposed term and recommended ISED renew non-auctioned BRS licences for 20 years, to ensure greater certainty in network planning and return on investment.

22. Cogeco held no preference concerning the licence term as long as mid-term deployment conditions are increased to a Tier 4 level to support rural deployment.

Discussion

23. Within the FSAC, ISED adopted a flexible approach in determining licence terms, allowing for licence terms of up to 20 years. ISED recognizes that licence terms in excess of 10 years create greater incentives for financial institutions to invest in the telecommunications industry and for the industry to further innovate and invest in the development of network infrastructure and technologies.

24. A 14-year licence term provides the necessary certainty for companies to continue to invest and expand their networks. It also effectively harmonizes the expiry of BRS licences within the band, streamlining and reducing some of the reporting requirements.

25. Consistent with the FSAC, and noting that the Minister retains the discretion to amend terms and conditions of licence at any time, a licence term of 14 years will apply to renewed non-auctioned BRS licences.

Decision

26. Deployment requirements are a condition of licence that requires licensees to deploy services to a minimum percentage of the population within the licence area, within a specified timeline. ISED uses deployment requirements to facilitate timely availability of services across the country, including rural areas.

27. Non-auctioned BRS licensees are required to meet deployment requirements on a Tier 3 level (with the exception of the Yukon, the Northwest Territories and Nunavut, which will be required to deploy on a Tier 4 level) as set out in annex C of Decisions on the Transition to Broadband Radio Service (BRS) in the Band 2500–2690 MHz and Consultation on Changes Related to the Band Plan.

28. The Consultation proposed to harmonize deployment requirements within the BRS band. As proposed, licencees of renewed non-auctioned BRS licences would be required to meet mid-term deployment levels (10-50% of population coverage) on a Tier 3 level (with the exception of the Yukon, the Northwest Territories and Nunavut, which will be required to deploy on a Tier 4 level), corresponding with auctioned BRS licences deployment conditions. In addition, it was also proposed that non-auctioned BRS licensees must continue to meet these minimum population coverage levels for the remainder of the licence term to be eligible for renewal.

Comments

29. Bell, SaskTel, Shaw, SSi, TELUS and Xplornet supported the harmonization of deployment requirements given the predictability and certainty it would provide the carriers for network planning and deployment.

30. Conversely, Rogers did not see the need to maintain deployment requirements, stating that 99% of Canada’s population already has access to wireless services. However, Rogers did agree with ISED’s proposal to harmonize deployment requirements, should ISED decide there is still a need.

31. Ecotel and Cogeco proposed ISED impose stronger deployment requirements, by increasing population coverage levels as a condition of licence to a Tier 4 area basis by 2025. Ecotel stressed that Tier 4 deployment requirements would promote deployment to rural and remote areas by providing an incentive for licensees to either deploy more broadly or enter into subordination arrangements.

32. As another means to promote rural deployment, Cogeco suggested that any unused Tier 4 portions of licences be returned to ISED and made available to those who can demonstrate their capacity to use the spectrum. Cogeco further suggested that any licensee that has entered into a subordinate licensing arrangement prior to the licence’s expiry be afforded a grace period of three additional years to deploy.

Discussion

33. The renewal decision provides an opportunity to harmonize the deployment conditions for BRS licences and ensure that the spectrum is used for the economic and social benefit of Canadians. As noted by Bell, SaskTel, Shaw, SSi, TELUS and Xplornet, the harmonization would promote the predictability and certainty needed for network planning and deployment for carriers.

34. It was proposed that ISED could incentivize rural deployment by imposing more stringent deployment requirements and increasing deployment conditions to a Tier 4 level. Whilst ISED is focused on increasing rural deployment, increasing deployment conditions for renewed licences would create a new subset of licence conditions and would create unnecessary complexity and uncertainty for network planning.

35. As specified in annex B of the Consultation, these licences are transferable in whole or in part, in both bandwidth and geographic dimension. A subordinate licence may also be issued. To maximize the benefits that Canadians derive from the use of the spectrum, ISED encourages subordination in cases where the licensee does not plan to deploy services.

36. The current Framework Relating to Transfers, Divisions and Subordinate Licensing of Spectrum Licences for Commercial Mobile Spectrum (the Transfer Framework) is effective in facilitating subordination agreements, and relies upon market forces rather than regulatory measures. Any policy changes regarding mandatory subordination would be subject to a separate consultation.

Decision

37. In addition to conditions of licence already discussed, ISED sought comments on all other proposed conditions of licence for non-auctioned BRS licences issued through the renewal process as set out in annex B of the Consultation. Other conditions of licence that received comments include:

• mandatory roaming
• lawful interception
• research and development
• annual reporting
• mandatory subordination

75. The following section discusses comments received regarding fees that would apply to renewed non-auction BRS licences.

Comments

76. Rogers, TELUS and SSi proposed a decrease in spectrum licence fees. Rogers and SSi expressed adopting an administrative cost-recovery spectrum fee regime, similar to the one in the U.S., which would allow facilities-based network operators to invest greater amounts of capital in new technologies and expand current network capacity and coverage. SSi also proposed lowering licence fees, specifically lower than PCS and cellular licence fees.

Discussion

77. The FSAC states that for licences issued through a renewal process, licence fees that reflect some measure of market value will apply.

78. This fee regime could be addressed in a future consultation to determine BRS licence fees. ISED intends to consult on a new licence fee applicable to all BRS licences issued to incumbents either through the voluntary conversion process, the transition policy or at auction.

Decision

79. Licences that are not renewed will be reassigned through a subsequent licensing process. This subsequent licensing process will be the subject of a future consultation.

80. All spectrum-related documents referred to in this paper are available on ISED’s Spectrum management and telecommunications web page.

81. For further information concerning the decisions outlined in this paper or related matters, contact:

Innovation, Science and Economic Development Canada
c/o Senior Director, Spectrum Operations
235 Queen Street, 6th Floor
Ottawa ON K1A 0H5
Email: ic.spectrumoperations-operationsduspectre.ic@canada.ca

Annex A: Deployment requirements

Tiers 3 and 4	Service area name	Minimum population coverage
3-01	Newfoundland and Labrador	30%
3-02	Prince Edward Island	30%
3-03	Mainland Nova Scotia	40%
3-04	Cape Breton	30%
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%
3-09	Québec	50%
3-10	Chicoutimi-Jonquière	40%
3-11	Eastern Townships	30%
3-12	Trois-Rivières	30%
3-13	Montréal	50%
3-14	Upper Outaouais	10%
3-15	Ottawa/Outaouais	50%
3-16	Pembroke	15%
3-17	Abitibi	30%
3-18	Cornwall	50%
3-19	Brockville	40%
3-20	Kingston	50%
3-21	Belleville	40%
3-22	Cobourg	30%
3-23	Peterborough	50%
3-24	Huntsville	30%
3-25	Toronto	50%
3-26	Barrie	30%
3-27	Guelph/Kitchener	50%
3-28	Listowel/Goderich/Stratford	15%
3-29	Niagara-St. Catharines	50%
3-30	London/Woodstock/St. Thomas	50%
3-31	Chatham	50%
3-32	Windsor/Leamington	50%
3-33	Strathroy	50%
3-34	North Bay	40%
3-35	Sault Ste. Marie	50%
3-36	Sudbury	50%
3-37	Kirkland Lake	30%
3-38	Thunder Bay	40%
3-39	Winnipeg	50%
3-40	Brandon	20%
3-41	Regina	40%
3-42	Moose Jaw	25%
3-43	Saskatoon	40%
3-44	Edmonton	50%
3-45	Medicine Hat/Brooks	30%
3-46	Lethbridge	40%
3-47	Calgary	50%
3-48	Red Deer	25%
3-49	Grande Prairie	25%
3-50	Kootenays	15%
3-51	Okanagan/Columbia	40%
3-52	Vancouver	50%
3-53	Victoria	50%
3-54	Nanaimo	40%
3-55	Courtenay	50%
3-56	Thompson/Cariboo	40%
3-57	Prince George	40%
3-58	Dawson Creek	30%
4-170	Yukon	20%
4-171	Nunavut	20%
4-172	Northwest Territories	20%

1. The following conditions are for renewed non-auctioned BRS spectrum licences.

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 of Innovation, Science and Industry continues to have the power to amend the terms and conditions of spectrum licences, under paragraph 5(1)(b) of the Radiocommunication Act. The Minister may do so for a variety of reasons, including furtherance of the policy objectives set out in section 7 of the Telecommunications Act and the policy objectives related to this band. Such action would normally only be undertaken after consultation.

3. The licensee must be fully aware of its obligations with respect to licence terms and conditions. Innovation, Science and Economic Development Canada (ISED) will monitor compliance and take any necessary action to ensure compliance and to enforce the provisions of the Radiocommunication Act and the Radiocommunication Regulations.

B1. Licence term

4. The term of this licence is 14 years from the date of renewal (March 31, 2021). At the end of this 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.

5. 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 following a public consultation.

B2. Eligibility

6. 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 any change that would have a material effect on its eligibility. Such notification must be made in advance of any proposed transactions within its knowledge.

B3. Licence transferability, divisibility and subordinate licensing

7. This licence is transferable in whole or in part (divisibility), in both bandwidth and geographic dimensions, subject to ISED’s approval. A Subordinate Licence may also be issued in regard to this licence. ISED’s approval is required for each proposed Subordinate Licence.

8. 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.

9. 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.

10. 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), the licensee 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.

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

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

B4. Treatment of existing spectrum users

13. The licensee must comply with all displacement and/or transition policies set out in SMSE-005-11, Decisions on a Band Plan for Broadband Radio Service (BRS) and Consultation on a Policy and Technical Framework to Licence Spectrum in the Band 2500-2690 MHz. In addition, the licensee must not cause harmful interference to the grandfathered stations in Manitoba, as per DGSO-001-10, Decisions on the Transition to Broadband Radio Service (BRS) in the Band 2500-2690 MHz and Consultation on Changes Related to the Band Plan.

B5. Radio station installations

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

B6. Provision of technical information

15. When ISED requests technical information on a particular station or network, the licensee must provide the information in accordance with the definitions, criteria, frequency and timelines specified in the request. For further information, refer to Client Procedures Circular CPC-2-1-23, Licensing Procedure for Spectrum Licences for Terrestrial Services, as amended from time to time.

B7. Compliance with legislation, regulation and other obligations

16. 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.

B8. Technical considerations, and international and domestic coordination

17. 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.

18. 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.

B9. Lawful interception

19. The licensee operating as a 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). These standards may be amended from time to time.

20. The licensee may request the Minister 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.

B10. Research and development (R&D)

21. 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 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.

B11. General deployment requirement

22. Licensees will be required to demonstrate to the Minister that this spectrum has been put to use, as specified in section 7 and annex A of this Decision, within 4 years of the initial issuance of the licence. When the spectrum is put to use, it shall be used to provide services predominantly to Canadians within the service area.

23. ISED will review licensees’ compliance with their deployment conditions at years 4 and 14. Where, at any point in the licence term, the licensee is not in compliance with its deployment conditions, ISED may invoke various compliance and enforcement measures.

24. These measures may include warning, administrative monetary penalties, legal action, licence amendments, suspensions or other measures. In certain cases of non-compliance, ISED may determine that the most appropriate course of action is to revoke the licence.

25. Where a licence is transferred, the requirement for the new licensee to deploy will continue to be based on the date the initial licence was issued. Deployment by a subordinate licensee will count towards the requirement of the primary licensee.

B12. Mandatory antenna tower and site sharing

26. 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.

B13. Mandatory roaming

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

B14. Annual report

28. The licensee must submit an annual report for each year of the licence term, which includes all of 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 expenditures 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
• other information related to the licence as specified in any notice updating the reporting requirements as issued by ISED

29. 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. Where the licensee holds multiple licences, spectrum implementation reports should be broken down by licence area. Confidential information provided will be treated in accordance with subsection 20(1) of the Access to Information Act.

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

Innovation, Science and Economic Development
Spectrum Management Operations Branch
Manager, Operational Policy
235 Queen Street, 6th Floor East
Ottawa  ON  K1A 0H5

Email: ic.spectrumoperations-operationsduspectre.ic@canada.ca

B15. Amendments

31. The Minister retains the discretion to amend these terms and conditions of licence at any time.