CPC-2-1-10 — Spectrum Licence Fee Calculations for Cellular and Incumbent Personal Communications Services (PCS)

Issue 1
February 2005

Comments and suggestions may be directed to the following address: 

Industry Canada
Spectrum Management and Operations Branch
235 Queen Street
Ottawa, Ontario
K1A 0H5

Attention: DOSP

via email: ic.spectrumpublications-publicationsduspectre.ic@canada.ca

All spectrum publications are available on the Internet at: http://www.ic.gc.ca/spectrum.

Table of Contents

1. Principle

The radio frequency spectrum is a natural resource to which all Canadians are entitled access. Industry Canada endeavours to provide this access with a minimum administrative burden to clients while ensuring the efficient use of the radio frequency spectrum.

2. Mandate

Under section 5 of the Radiocommunication Act, the Minister may issue spectrum licences in respect of the utilization of specified radio frequencies within a defined geographic area. The Minister may fix the terms and conditions of any such licence. In accordance with section 9 of the Department of Industry Act, the Minister may fix spectrum licence fees in respect of the rights and privileges provided.

3. Background

On December 20, 2003, the Department released Gazette Notice DGRB-006-03 entitled Spectrum Licensing Policy for Cellular and Incumbent Personal Communications Services (PCS). This notice announced the release of the Department's policy for the transition of cellular and incumbent PCS licences to spectrum licences thus eliminating the requirement for radio licences.

Concurrently, the Department released Canada Gazette Notice DGRB-005-03 entitled Radio Authorization Fees for Wireless Telecommunication Systems that Operate in the Radio Frequency Bands 824.040 MHz to 848.970 MHz, 869.040 MHz to 893.970 MHz or 1850 MHz to 1990 MHz. With this notice, the Minister of Industry, pursuant to section 19 of the Department of Industry Act, fixed the fees, effective April 1, 2004, for spectrum licences to be issued to cellular and incumbent PCS licensees. Copies of the above-mentioned documents are available on the Spectrum Management and Telecommunications Web site at: http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/home.

Through this document, the Department sets out the procedures for the administration of associated spectrum licences. This includes detailed examples for the calculation of spectrum licence fees.

4. Definitions/Interpretation

In this document:

5. Policy

5.1 Licensing

Applicants for unassigned cellular or PCS spectrum may contact any Industry Canada district office to process their requests. Details on application requirements are provided in Client Procedures Circular 2-1-23, Licensing Procedures for Spectrum Licences for Terrestrial Services (CPC-2-1-23). Application procedures for cellular and PCS licensees wishing to transfer or divide their existing spectrum licence(s) are also outlined in CPC-2-1-23.

5.2 Licence Fees

The Minister of Industry, pursuant to section 19 of the Department of Industry Act, fixed the fees for cellular and PCS licensees (except PCS licensees subsequent to the 2001 PCS auction) in Gazette Notice DGRB-005-03, published in the Canada Gazette, Part I on December 20, 2003. For cellular or PCS spectrum usage, the fee rate of $0.03512361 per MHz per person over the geographic area of their spectrum licence was established. Furthermore, the minimum yearly fee for a spectrum licence was set at $1,000. This fee will be charged on an annual basis, payable in full by March 31 of each year.

The Minister also determined that for incumbent cellular and PCS licensees, the fee rate would be implemented over a seven-year period before the full measure of the new fee becomes payable. Implementation will be graduated based on the difference between licence value effective April 1, 2003 and the amount payable for fiscal year 2010/2011. This graduated implementation will apply to both incumbent licensees notified that they will be receiving an increase in their current annual licence fees and to those notified that they will be receiving a decrease in their fees, including situations where licence partitioning and frequency disaggregation takes place.

Cellular and PCS licensees may transfer their licence(s) in whole or divide the licence in both bandwidth (i.e. disaggregation) and geographic dimensions (i.e. partitioning); however, any transfer, partitioning or disaggregation of a spectrum licence must first obtain approval from the Minister, in accordance with the procedures set out in Section 5.6 of CPC-2-1-23. The Department will not refund to the transferer any prorated licence fees for the fiscal year in which the transfer takes place nor will it charge the recipient issuance fees. The recipient will be billed the appropriate fees as part of the subsequent annual renewal. If the fee for the licence is subject to a graduated implementation (either a notified increase or decrease), the recipient will assume the same graduated fee schedule for the licence as was determined for the transferer.

To help explain how the annual renewal fees will be implemented for the transition of existing cellular and PCS licensees, the Department has provided in this CPC a number of scenarios which demonstrate how the fees will be calculated. In these scenarios, Company ABC, an incumbent PCS licensee, has one spectrum licence for 10 MHz of PCS spectrum for Tier Area 2-11, located in Saskatchewan. The 2001 census population for that area was 974,915 hence the 2010/2011 renewal fee would be $342,425 -- calculated as: 10 MHz (spectrum) x 974,915 (population) x $0.03512361 (fee rate). For the transition period, the annual renewal fee is calculated using the appropriate formula set out in section 8.(1) of Canada Gazette Notice DGRB-005-03, where:

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