Decisions on the Transition to Broadband Radio Service (BRS) in the Band 2500–2690 MHz and Consultation on Changes Related to the Band Plan

June 2010

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1. Intent

Through the release of this paper, Industry Canada hereby announces the decisions from the consultation process undertaken in Canada Gazette Notice No. DGRB -005-09 - Consultation on Transition to Broadband Radio Service ( BRS ) in the Band 2500-2690  MHz . The Department is also taking this opportunity to initiate the consultation on the band plan, including mapping incumbents into a new band plan.

The Department will release a separate decision paper in the near future concerning the conditions of licence related to Research and Development, as proposed for BRS , and Learning Plans, which apply to Multipoint Communication System ( MCS ) licences.

Part A - Firm Transition Date, Eligibility and Service Area

2. Background

The 2006 policy decision, DGTP -002-06 - Policy Provisions for the Band 2500-2690  MHz to Facilitate Future Mobile Service, announced a spectrum utilization policy that designates this band for mobile, fixed and broadcasting use. The impetus for this policy was the decision made at WRC -2000 to identify the band 2500-2690  MHz for IMT-2000 radio services (also known as third generation mobile or 3G services). The International Telecommunication Union's ( ITU ) identification of this band created significant interest, as it is the only band identified by the ITU for next generation mobile services on a global basis. In November 2001, Industry Canada indicated that the fixed and mobile services would be allocated throughout the band 2500-2690  MHz . The term used in this and future documents for policy, technological and licensing purposes in this band will be Broadband Radio Service ( BRS ) where any of the mobile, fixed or broadcasting services may be deployed.

Although the 2006 policy provided some details in terms of the spectrum for the new flexible licences under BRS , it did not fully address eligibility criteria for conversion of Multipoint Communication System ( MCS ) and Multipoint Distribution Service ( MDS ) authorizations to BRS licences, nor whether site-specific MCS licences should be eligible for conversion to BRS spectrum licences.

In March 2009, in keeping with Industry Canada's policy of consulting two years prior to the end of a licence term, the Department published DGRB -005-09 - Consultation on Transition to Broadband Radio Service ( BRS ) in the Band 2500-2690  MHz .^{Footnote 2} The consultation requested comments on the Department's proposals that:

• (1) a firm transition date be established and that date be set as March 31, 2011, to coincide with the expiry date of the licence terms for all MCS spectrum licences;
• (2) the criteria set out in the consultation paper be used in determining which operations would be eligible for converting to BRS licences to enable the Department to process requests pursuant to the 2006 policy;
• (3) the same conversion criteria be applied for the issuance of BRS licences for any remaining qualified MCS licences and MDS operations, should they not be already converted to BRS by the proposed transition date;
• (4) the geographic service area for converted BRS licences be either Tier 3 or Tier 4 service areas; and
• (5) the proposed conditions of licence be attributed to the converted BRS spectrum licences until such time as the consultations to finalize the policy and licensing framework, which may include additional conditions, are concluded.

3. Moratorium

The March 2009 consultation paper also announced that an immediate moratorium was being placed on new applications for broadcasting certificates in the band 2500-2690  MHz . All applications for broadcasting certificates already in the possession of Industry Canada would be processed, culminating in the issuance of a broadcasting certificate should all requirements be met. All outstanding documents necessary for the processing of these applications were to be received by the Department within three (3) months of the date of the notice; otherwise the application would be returned. Two MDS incumbents submitted additional documentation, and the related applications are currently being processed.

4. Establishment of a Firm Transition Date

As noted in the consultation paper, the licence terms for MCS and MDS incumbents in the band 2500-2690  MHz expire in 2011 and, as noted above, a consultation process is generally undertaken no later than two years prior to the end of the licence term.

Industry Canada initiated the consultation process in DGRB -005-09 to determine whether to allow the renewal of MCS licences and MDS authorizations, and whether to continue with voluntary conversion to BRS or adopt a firm transition date and related transition policies.

In the paper, the Department noted that continuing with voluntary conversion as set out in the 2006 policy would result in a piecemeal outcome, which would make transition to a new band plan extremely challenging. Given that MCS licences and MDS authorizations expire in 2011, the Department consulted on whether their renewal at the end of the current licence term would be appropriate or whether March 31, 2011, should be set as the firm transition date to BRS licences.

Most of the comments received in response to the consultation agreed with a firm date being set for transitioning the MCS and MDS authorizations to BRS licences, with general agreement on the March 31, 2011 date proposed by Industry Canada. Some qualified their agreement with the proviso that there be flexibility in the timeline for incumbents to transition to the reduced spectrum. One of the licensees was against setting a firm date, and requested that its existing MCS spectrum licences be renewed and that a transition period be identified if a BRS licensee wished to deploy in the same area.

Given that most MCS and MDS authorizations expire in 2011, Industry Canada has decided to establish March 31, 2011, as the firm date for transition to BRS . This will facilitate harmonization with international developments and allow for the introduction of mobile services with the transition of all systems to a new band plan to be phased in over time.

For those who have not voluntarily converted prior to March 31, 2011, the existing MCS spectrum licences will expire on March 31, 2011, and BRS spectrum licences will be issued effective April 1, 2011, to eligible MCS and MDS licensees. In keeping with the 2006 policy, these licences will cover approximately two thirds of the incumbent's current spectrum holdings.

5. Criteria to be Used When Issuing BRS Licences

In the consultation paper, Industry Canada identified the three types of MCS licences that have been issued to date:

• (1) site-specific licences for school divisions in Manitoba for the carriage of distance education and Instructional TV (ITV);
• (2) site-specific licences for the provision of Internet access in Manitoba; and
• (3) spectrum licences for the provision of a range of fixed local telecommunications distribution services across Canada, except in Manitoba.

The Department also identified the two types of CRTC authorizations considered in the consultation:

• (1) licensed MDS ;^{Footnote 3} and
• (2) licence-exempt radiocommunication distribution undertakings (RDUs).

5.1 Eligibility Requirements and Treatment of Incumbents

5.1.1 Manitoba School Divisions and Commercial MCS Licensee in Manitoba

With respect to the situation with school divisions and the commercial MCS site-specific licensee in Manitoba, the Department proposed three options for consideration:

• (1) Option 1 - Eligible for conversion to BRS ;
• (2) Option 2 - Subject to a transition policy; or
• (3) Option 3 - Grandfathered ( i.e. not subject to transition)

A list of licensees is included in Annex A.

Manitoba School Divisions

A variety of comments were received on this issue. The Manitoba school divisions commented as two separate groups on this issue: the largest of the school divisions requested that its operations be grandfathered indefinitely; and the other school divisions requested that their operations be grandfathered as well, but with an option to transition to either the TDD or to the FDD spectrum in any future band plan, as required, with preference for the FDD spectrum. These proposals from the school divisions received support from other respondents only with regard to grandfathering the operations. Two comments received suggested that a transition policy be put into effect to move the school divisions to other available spectrum that would better suit their current and future operational needs. It was suggested that Industry Canada find ways to fund the transition.

The Department recognizes that school divisions operate on tight budgets and that the financial cost of implementing any option other than grandfathering could be prohibitive in the near term. It should also be noted that funding transition is not within the Department's mandate. Due to the nature of the services provided by the school divisions and taking into consideration that they are not commercial operations, the Department has decided to grandfather the school division licences, subject to the terms set out in the decision box below. Furthermore, the Department believes that it should enable the school divisions to upgrade their equipment and add links if required, as long as this does not increase thefrequencies licensed or the geographic footprint of the existing network, i.e. has no additional impact on a future BRS operation. Industry Canada would assess requests for additional links and may seek input from the BRS licensee for that service area.

With respect to the request by some of the school divisions to be able to transition to TDD or FDD spectrum at a later date, the school divisions will be required to come to a mutually acceptable agreement with the BRS licensee. As noted in Annex B, a BRS licence may be transferred or subdivided in geography or frequency and a subordinate licensing process is also available to assist school divisions in their discussions with the BRS licensee. Any request in this regard requires the prior approval of the Minister of Industry. The Department encourages the use of secondary market measures and recommends that current and future BRS licensees and school divisions work together to facilitate a mutual understanding that permits the continuation of services provided by the school divisions, as well as the implementation of BRS in Manitoba.

Commercial MCS Licensee - Craig Wireless Manitoba

Several respondents to this request for comments indicated that the commercial MCS licensee should be eligible to convert to BRS , whereas one respondent argued that a transition policy should be enacted in order to free up spectrum to provide for a future â"national licence." The Department recognizes that Craig has ongoing operations that use small amounts of MCS spectrum, an established client base and that it remains in compliance with its current licence conditions. However, its licences are site-specific and were not awarded based on a competitive licensing process.

In light of this, the Department has decided to grandfather the commercial MCS site-specific licences, which will allow the licensee to continue providing services to its client base while allowing Industry Canada to assign BRS spectrum in a future licensing process, subject to the terms set out in the decision box below. The provisions with respect to upgrading equipment and adding links if required, which are applicable to the school divisions, are also applicable to the commercial MCS site-specific licences.

5.1.2 MCS Spectrum Licences

In implementing the 1999 MCS policy, Industry Canada issued spectrum licences through a competitive process to two Canadian carriers (Inukshuk Internet Inc. and SaskTel) for all parts of Canada except Manitoba. Inukshuk Internet subsequently transferred two licences in northern Canada to SSI Micro.

The primary issue related to these MCS spectrum licences is the setting of a firm date for transitioning to BRS licences. The decision on the date, set out in Section 4 above, will apply to these MCS spectrum licensees.

5.1.3 CRTC -licensed MDS Broadcasting Stations

In the March 2009 consultation, the Department indicated that there are three components to the authorization of CRTC -licensed MDS systems (a CRTC Decision, an Industry Canada broadcasting certificate and a CRTC broadcasting licence), that the requirements for MDS broadcasting stations are further elaborated in section 22 of the Broadcasting Act, and that CRTC licences for MDS stations will expire on August 31, 2011. Industry Canada invited comments on which component(s) should be required in order for an MDS operation to qualify for conversion to BRS in a given area.

The consultation paper also indicated that, in response to requests from MDS operators, the CRTC had agreed that MDS operators could use up to 50% of their MDS spectrum for non-broadcasting purposes. This usage required a separate spectrum licence from Industry Canada that is renewed annually. The Department noted that these licences cover the same frequencies as the MDS authorizations and, as such, are subject to the same considerations as the MDS authorizations.

Comments received on the eligibility criteria for MDS authorizations to convert to BRS licences included all possible options. Recommendations received stated that the incumbent should be required to have a deployed system in a particular area or that the incumbent should be required to have one or all of the three elements indicated in the consultation ( CRTC Decision, Industry Canada broadcasting certificate and CRTC broadcast licence).

The Department recognizes the significant shifts in both equipment and services that have taken place in this band in Canada and internationally since the 2000 World Radiocommunication Conference ( WRC -2000) decision to identify the band for IMT-2000 services. These shifts have made planning and deployment of systems challenging, as the ultimate outcome was uncertain. In this context, the Department has decided that preliminary activities for the establishment of a broadcasting operation are sufficient. As a result, operations that have a valid CRTC Decision and an Industry Canada broadcasting certificate in place will be eligible to convert to BRS licences.

5.1.4 Licence-exempt Broadcasting Stations in Rural Areas

In the consultation paper, Industry Canada noted that the CRTC allows for the operation of licence-exempt broadcasting stations under certain circumstances. The Department also noted that licence-exempt broadcasting stations are low power and located in remote areas of the country where it is likely that their existence will not hinder the future deployment of BRS .

In light of this, Industry Canada requested comments on whether these CRTC licence-exempt systems should be treated differently from the CRTC -licensed systems. If it was decided that they are not eligible for conversion and a firm transition date to BRS is adopted, the Department asked what would constitute a suitable notification period for these stations to retune to available frequencies or cease operating, keeping in mind that notification would be given only if the MDS station would prevent the deployment of a BRS system.

Seven of the eight comments received on this issue recommended allowing the operations to continue, but indicated that the incumbent should be required to transition out of the band upon notification that the BRS licensee has plans to deploy; the suggested notification periods ranged from six months to two years.

Having considered the comments received and, based on the limited number of stations that are in very remote areas, Industry Canada has decided that these stations will not be eligible for conversion to BRS and that they will be subject to a transition policy.

It is the general policy of Industry Canada to effect the displacement of frequency assignments only where and when required, so as to minimize disruption. The Department recognizes the significance of providing reasonable notice to inform spectrum users of any conditions or circumstances that might result in the displacement of services.

All costs associated with displacement of frequency assignments will remain the responsibility of the spectrum users who are to be displaced. The Government of Canada bears no responsibility for any or all costs and expenses incurred by the displacement of frequency assignments and, accordingly, it does not have a responsibility or intent to financially compensate spectrum users who are displaced. As new services are introduced, arrangements may be made between new radio users and incumbents on a voluntary basis, as a contractual matter between private parties, to the extent that such arrangements are consistent with the provisions of the spectrum transition policy. These are long-standing principles that have been used successfully for many years to introduce new radio services while taking into account the needs of new operators and the incumbents.

5.2 Geographic Service Areas

A major consideration in the March 2009 consultation paper involved the geographic service areas to be authorized for converted MCS and MDS authorizations. Industry Canada sought comments on whether Tier 3 or Tier 4 licence areas are the most appropriate for the conversion of MDS authorizations and site-specific MCS licences to BRS spectrum licences.

In the paper, the Department noted that there are certain advantages to using Tier 4 areas to define the BRS authorizations for operators converting from MDS . In particular, by using the smallest tier areas, the Department is able to most closely match the contour maps of the MDS authorization. In very few cases, where an existing operation significantly overlaps two Tier 4 areas, the assignment of more than one Tier 4 area may be required. Where operators plan to continue to offer fixed services, the smaller licensed areas may be more practical and offer opportunities for more operators to be licensed.

The use of Tier 3 areas has other advantages. Tier 3 areas are larger and more likely to provide licensees with contiguous service areas between urban centres, which would facilitate the deployment of large-scale, high mobility systems.

Although the Department gave the options of Tier 3 or Tier 4, four respondents, including three incumbents, recommended that Tier 2 be allowed. One MDS incumbent requested Tier 2 in order to level the playing field with the MCS incumbents that have province-wide licences, whereas another MDS incumbent argued that the sizeable coverage indicated in its broadcasting licences warranted granting it a Tier 2 licence. However, the majority of the comments favoured Tier 3 and highlighted the mobility aspect. The remaining comments recommended the Tier 4 areas and suggested that smaller areas would ultimately allow smaller operators to participate, particularly in rural areas.

In view of the comments received and taking into consideration the current deployments of networks and the reasons behind the 2006 policy decision, Industry Canada has decided that Tier 3 service areas will be used for the conversion of eligible MCS and MDS authorizations to BRS spectrum licences. Two MCS licensees (Inukshuk and SSI Micro) hold MCS spectrum licences with geographic service areas in northern Canada that are equivalent to Tier 4 service areas. These MCS licences will be converted to Tier 4 BRS licences.

Geographic areas for licences issued through future licensing processes may be different from those established through this decision. A future consultation will take place to determine the licensing framework for the unassigned licences, including the size of the Tiers to be licensed.

6. Licence Fees

As noted in the consultation paper, the Department will consult on a new licence fee applicable to all BRS licences issued to incumbents through either the voluntary conversion process or the transition policy.

In the interim, the radio authorization fees established in Canada Gazette Notice DGRB -013-99 will continue to apply to MCS spectrum licences. This fee will also be used for all BRS licences issued pursuant to the conversion or transition processes until such time as a new fee order has been established. The existing licence fees will continue to apply to site-specific MCS licences.

7. Conditions of Licence

Industry Canada proposed conditions of licence in the March 2009 consultation paper. The Department also noted in the consultation paper that all conditions of licence and authorizations ( i.e. MCS , BRS and MDS broadcasting certificates) would be subject to change following the consultation on the policy and licensing framework for the auction of spectrum in the band 2500-2690  MHz . This would allow for licence conditions to be aligned and consistent with those of future licences in this frequency band. There was general support for the conditions as proposed; however, alternative suggestions were made with respect to the licence term. Two comments indicated that licence terms should be longer (from 15 to 25 years), with one of the comments indicating that the words "high expectation of renewal" should be included in the licence term condition. Regarding the Lawful Intercept condition, comments received suggested that changes be made to provide for cost recovery and transition periods. One suggestion was that implementation targets be developed, whereas others recommended that no targets be set. Finally, the Radio Advisory Board of Canada requested clarification on the need for broadcasting certificates once BRS licences are issued.

In reviewing the comments related to the licence term, the Department has decided that BRS licences will be issued with a 10-year term, similar to other long-term spectrum licences. However, to provide greater certainty to licensees, and in view of the similarities with the Advanced Wireless Services ( AWS ) spectrum, the licences will have a high expectation of renewal where conditions of licence have been met and the licensee can demonstrate population coverage which is, at a minimum consistent, with the roll-out targets set out in Annex C unless a fundamental reallocation of spectrum to a new service is required or an overriding policy need arises. Licence renewal will be subject to a public consultation process that will take into consideration the extent of population coverage across the licensed area.

No comments were received in relation to the Eligibility condition, which indicated that radiocommunication carriers, service providers and users would be permitted to hold a BRS licence. However, taking into consideration that this frequency band has been identified internationally for IMT-2000 and that, globally, this band is being licensed for commercial subscriber-based services, Industry Canada has decided that a BRS licensee must be eligible to become a radiocommunication carrier and, as such, must comply on an ongoing basis with the eligibility criteria set out in section 10(2) of the Radiocommunication Regulations.

With respect to a recommendation to include mandatory roaming, the Department's intent in mandating roaming for PCS , cellular and AWS licensees was to promote competition and support the orderly development of radiocommunication in light of the policy objectives of the Telecommunications Act. Mandated roaming was considered a follow-up to the requirement for incumbent cellular licensees holding PCS licences to offer roaming to new PCS licensees. No extensive mobile BRS networks are currently available on which new entrants could roam. However, mobile systems will be deployed in the near future. Industry Canada does not intend to mandate roaming at this time, but may consult on mandated roaming between all BRS licensees and other spectrum licensees in mobile bands ( e.g. cellular, PCS , AWS and BRS ) in a future consultation.

In response to comments on Lawful Intercept, the Department notes that concerns about cost and timing related to this condition are outside the scope of the consultation on the conditions of licence and that interested parties should express their concerns during any legislative process that the government might undertake concerning lawful interception. It should be noted that the condition allows for the licensee to request that the Minister of Industry forbear from enforcing certain lawful interception capability requirements for a limited period of time where there are technical reasons as to why the condition cannot be met.

Since the publication of the March 2009 consultation paper, the Department has undertaken a review of the wording in all conditions of licence with a view to standardizing the language for each condition for all future licences. The conditions of licence for BRS licences, which appear in Annex B, reflect the standardization of the wording. The change to the wording does not change the intent of the condition as proposed in the consultation paper. It should be noted that, in accordance with the Broadcasting Act, the CRTC is the regulatory body in determining all aspects related to broadcasting. BRS licensees intending to operate broadcast servicesmust comply with CRTC requirements and are advised to contact the CRTC for more information.

The need for inclusion of the Research and Development condition formed part of the consultation on the Framework for Spectrum Auctions in Canada. That decision will apply to existing and future spectrum licences. In the Consultation on Transition to Broadband Radio Service ( BRS ) in the Band 2500-2690  MHz , it was proposed that conditions of licence for the BRS licences be consistent with existing licences for similar services ( e.g. Cellular, Personal Communication Services and Advanced Wireless Services). Interim BRS licences issued to date include the R&D condition pending the outcome of the consultation on that issue. The proposed conditions of licence for BRS licences did not include a Learning Plan requirement, which exists only on the MCS spectrum licences. Following the closing of the comment period, the Department received input from the educational community asking that the Learning Plan requirement continue. The Department is considering this issue and will release the decision on R&D and Learning Plans in a decision separate from this paper.

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Footnotes

1. ² DGRB -005-09 — Consultation on Transition to Broadband Radio Service ( BRS ) in the Band 2500-2690  MHz
2. ³ Since the March 2009 consultation, the CRTC has allowed terrestrial broadcasting distribution undertakings (BDUs) with fewer than 20,000 subscribers to apply for exemption from the licensing requirement. For the purposes of this decision paper, the MDS operations, for which applications have been made to the CRTC for licence exemption under this new order, will be covered under "licensed MDS ," whether or not they were exempted by the CRTC after March 2009.
3. ⁴ Transition Provisions for Fixed Services in the Band 2110-2170 MHz for the Implementation of AWS in the Bands 1710-1755 MHz and 2110-2155 MHz