Final Policy and Licensing Procedures for the Auction of the 24 and 38 GHz Frequency Bands

2. Spectrum Allocation and Policy

Fixed wireless broadband access technology in the frequency bands 24 GHz and 38 GHz continues to advance. Several manufacturers have developed broadband wireless products and a number of telecommunication service providers are considering wireless broadband solutions for the implementation of new local distribution networks and the expansion of existing networks. Point-to-point and point-to-multipoint systems operating in the bands 24 GHz and 38 GHz provide promising solutions for service providers wishing to offer competitive voice, data and multi-media services.

With the release of this document, the department is making available 400 MHz of spectrum in the 24 GHz frequency band and 800 MHz of spectrum in the 38 GHz frequency band on an exclusive basis. As described in section 6 of this document, this spectrum will be assigned via an auction.

The remaining 600 MHz of spectrum in the 38 GHz frequency band will continue to be available for licensing for shared use on a first-come, first served basis. The following sub-sections outline the department's policies on the frequency band structures, allocation, and eligibility.

A number of other frequency bands remain available for future broadband wireless access. These bands include the reserved Local Multipoint Communications Systems (LMCS) spectrum at 26 GHz (2000 MHz), a Multipoint Communications Systems (MCS) band at 23 GHz (800 MHz), and designated MCS and Very High Capacity Microwave (VHCM) bands at 18 GHz. Also, spectrum policy development for broadband wireless access spectrum will be initiated for the bands 40 GHz and 33 GHz.

More information on the department's plans for these bands will be available in the spectrum release plan to be published in the second quarter of 1999. Interested parties should monitor the department's Strategis Web site (http://strategis.ic.gc.ca/spectrum) for updates.

2.1 Frequency Band Structure

In the consultation document the department put forth a view that the structure of the 24 and 38 GHz bands should align as closely as possible with other administrations to ensure the greatest availability of equipment, minimize costly customization requirements, and provide a larger equipment market for Canadian manufacturers. Respondents were generally supportive of these views. As outlined below, the structures of both the 24 GHz band and the 38 GHz band are harmonized with the spectrum designated in the United States.

2.1.1 The 24 GHz Band

In the consultation paper, the department proposed an amendment to the Canadian Table of Frequency Allocations to include a primary allocation for the fixed service in the bands 24.25–24.45 GHz and 25.05–25.25 GHz as well as a related amendment to the Canadian footnote C44.Footnote 1 The department noted that these bands partially overlap the allocations to the radionavigation service in the band 24.25–24.65 GHz, and to the fixed-satellite service in the band 24.75–25.25 GHz. In Canada there is no current use, nor are there any immediate plans for use, of these bands by the radionavigation or fixed-satellite services.

Most respondents were supportive of the allocation of the band 24 GHz for fixed service and of the proposed changes to the Canadian Table of Frequency Allocations. Several respondents also requested that Industry Canada seek an allocation for the fixed service as part of the International Table of Frequency Allocations or through an in-country footnote for Region 2. They suggested that the in-country footnote could indicate that the bands 24.25–24.45 and 25.05–25.25 GHz are allocated to the fixed service on a primary basis in Canada. Two respondents, however, indicated that using 200 MHz of the 500 MHz allocated to the fixed-satellite service may limit the use of this band for future feeder links which may be implemented after the year 2007.

Industry Canada believes that its originally proposed allocation will advance the availability of broadband digital access at affordable prices and that such an allocation will not unduly constrain other allocations in these bands. Industry Canada is herewith amending the Canadian Table of Frequency Allocations, as indicated in Table 1, with associated modification to footnote C44.

The policy provisions for the 24 GHz band are:

  1. The allocation for fixed service on a primary basis is being added to the Canadian Table of Frequency Allocations (see Table 1).
  2. Fixed service use in this band is intended for point-to-point and point-to-multipoint broadband wireless applications.
  3. The spectrum in this band is divided into paired frequencies of 40+40 MHz for coordination purposes within Canada and with the U.S. (see Table 2).
  4. The frequency pairs that will be aggregated as licences for this auction are outlined in Table 4 (see section 2.2). Licensees are permitted to use any channelling arrangement within the licensed blocks of spectrum as long as the requirements for out-of-block emissions at the licensed band edge are met. (See section 4 for more information on the technical requirements.)
Table 1: Amendment to Canadian Table of Frequency Allocations
24.25 – 24.45
 
Modification starts FIXED Modification ends
RADIONAVIGATION
24.45 – 24.65
 
INTER-SATELLITE 882E
RADIONAVIGATION
24.65 – 24.75
INTER-SATELLITE
RADIOLOCATION-SATELLITE (Earth-to-space)
24.75 – 25.05
FIXED-SATELLITE (Earth-to-space)
882G Modification starts MOD C44 Modification ends C47
25.05 – 25.25
 
 
FIXED
FIXED-SATELLITE (Earth-to-space)
882G Modification starts MOD C44 Modification ends C47
Modification starts MOD C44 Modification ends
(CAN-94) Feeder links to broadcasting-satellite space stations operating in the band 17.3–17.8 GHz shall be implemented in the band 24.75–25.25 GHz. Modification starts In areas where fixed systems have been licensed using a competitive process, future earth stations (Earth-to-space) in the band 25.05–25.25 GHz will be permitted provided that such installations will not cause interference to any fixed service to be deployed in the authorized service areas. Modification ends

Note: modifications are indicated in bold

Table 2: 24 GHz Frequency Pairs of 40+40 MHz
Lower Frequency Block
(MHz)
Upper Frequency Block
(MHz)
24,250–24,290 25,050–25,090
24,290–24,330 25,090–25,130
24,330–24,370 25,130–25,170
24,370–24,410 25,170–25,210
24,410–24,450 25,210–25,250

2.1.2 The 38 GHz Band

In the consultation paper the department proposed two assignment options for the fourteen 50+50 MHz frequency pairs in the 38 GHz band. The first option was to designate seven frequency pairs (700 MHz) for licensing on an exclusive basis, for point-to-point and/or point-to-multipoint use, through the auctioning process and to designate the remaining seven frequency pairs (700 MHz) for licensing on a shared basis, for point-to-point use only, under the existing first-come, first-served (FCFS) process. The second option was to designate nine frequency pairs (900 MHz) for licensing on an exclusive basis, for point-to-point and/or point-to-multipoint use, through the auctioning process and to designate the remaining five frequency pairs (500 MHz) for licensing on a shared basis, for point-to-point use only, under the existing first-come, first-served (FCFS) process.

A number of respondents felt that there was significant need for additional spectrum for point-to-point systems on a shared basis and favoured option one. Other respondents who favoured option two noted that withholding the additional two frequency pairs may artificially limit the spectrum available for exclusive use.

The department has concluded that there is some need for additional spectrum for shared point-to-point use on a FCFS basis and that a total of six frequency pairs (600 MHz) is appropriate to accommodate this need. Consequently, the department herewith designates eight frequency pairs (800 MHz) for exclusive licensing via auction. (See Table 3.)

The policy provisions for the 38 GHz frequency band are:

  1. The fixed service is given priority over other service allocations in the Canadian Table of Frequency Allocations.
  2. Fixed service use in this band is intended for point-to-point and point-to-multipoint broadband wireless applications.
  3. The spectrum in this band is divided into frequency pairs of 50+50 MHz for coordination purposes within Canada and with the U.S.
  4. The frequency pairs that will be aggregated as licences for this auction are outlined in Table 4 (see section 2.2). Licensees are permitted to use any channelling arrangement within the licensed blocks of spectrum as long as the requirements for out-of-block emissions at the licensed band edge are met. (See section 4 for more information on the technical requirements.)
  5. The shared frequency pairs will continue to be available for deployment of point-to-point systems in the band 38.6–40.0 GHz, as outlined in Table 3, on a first-come, first-served basis. The spectrum policy provisions in Spectrum Policy and Licensing Considerations, Fixed Radio Systems in the 23 GHz and 38 GHz Frequency Bands (SP 23/38 GHz)Footnote 2 will be modified to reflect the changes outlined in this document.
Table 3: Frequency Pairs in the Band 38.6-40.0 GHz
Frequency limits
(MHz)
Usage Licensing Process Exclusivity
38,600–38,650 / 39,300–39,350 point-to-point first-come, first-served shared
38,650–38,700 / 39,350–39,400 point-to-point first-come, first-served shared
38,700–38,750 / 39,400–39,450 point-to-point point-to-multipoint auction exclusive
38,750–38,800 / 39,450–39,500 point-to-point point-to-multipoint auction exclusive
38,800–38,850 / 39,500–39,550 point-to-point point-to-multipoint auction exclusive
38,850–38,900 / 39,550–39,600 point-to-point point-to-multipoint auction exclusive
38,900–38,950 / 39,600–39,650 point-to-point point-to-multipoint auction exclusive
38,950–39,000 / 39,650–39,700 point-to-point point-to-multipoint auction exclusive
39,000–39,050 / 39,700–39,750 point-to-point point-to-multipoint auction exclusive
39,050–39,100 / 39,750–39,800 point-to-point point-to-multipoint auction exclusive
39,100–39,150 / 39,800–39,850 point-to-point first-come, first-served shared
39,150–39,200 / 39,850–39,900 point-to-point first-come, first-served shared
39,200–39,250 / 39,900–39,950 point-to-point first-come, first-served shared
39,250–39,300 / 39,950–40,000 point-to-point first-come, first-served shared

2.2 Spectrum Licence Packages

In addition to the technical aspects of how the frequency pairs should be structured, there is the important question of how this spectrum should be packaged for licensing. As with the choice of the appropriate geographic size of licences, there are trade-offs involved when choosing between a small number of licences with a large amount of bandwidth and a large number of licences with a small amount of bandwidth.

In the consultation document, the department proposed that the five 40+40 MHz paired blocks in the 24 GHz band be packaged as a single 400 MHz spectrum licence. The department also proposed that the paired 50+50 MHz blocks in the 38 GHz band be packaged as follows: one 400 MHz licence, one 300 MHz licence and one 200 MHzFootnote 3 licence.

Many respondents found the proposed block sizes too large. They argued that such large blocks would effectively exclude those who require smaller amounts of spectrum from participating in the auction. Whereas all respondents agreed that the 24 GHz spectrum should be packaged as a single licence, most suggested that the 38 GHz spectrum be packaged so as to include one or more smaller licences of 100 MHz.

Having considered these comments, the department will offer the 24 GHz spectrum as a single 400 MHz licence. The eight frequency pairs (800 MHz) in the 38 GHz band will be packaged as follows: one 400 MHz licence and four 100 MHz licences. See Table 4 below.

Table 4: Spectrum Licence Packages Offered
Spectrum
Licence
Size
(MHz)
Lower Frequency
(MHz)
Upper Frequency
(MHz)
A 400 24,250–24,450 25,050–25,250
B 400 38,700–38,900 39,400–39,600
C 100 38,900–38,950 39,600–39,650
D 100 38,950–39,000 39,650–39,700
E 100 39,000–39,050 39,700–39,750
F 100 39,050–39,100 39,750–39,800

2.3 Eligibility and Spectrum Aggregation Limits

In the consultation paper, the department presented the guiding principles that would be applied to ensure a competitive post-auction market-place. These principles, and the department's decisions after having considered the comments received, are presented below.

2.3.1 General Eligibility Requirements

All entities operating as radiocommunication users or radiocommunication service providers other than radiocommunication carriers must comply on an ongoing basis with the eligibility requirements outlined in subsection 9(1) of the Radiocommunication Regulations.

All entities operating as radiocommunication carriers must comply on an ongoing basis with the Canadian ownership and control requirements outlined in subsection 10(2) of the Radiocommunication Regulations.

2.3.2 Competition Principles

One of the key advantages that has led the department to introduce auctioning as a spectrum assignment tool is the ability of an auction mechanism to award spectrum in an economically efficient manner. Within a competitive environment, a market-based spectrum assignment mechanism will be best able to select licensees who can most efficiently provide the wireless services most valued by Canadian consumers. To ensure that economic benefits are maximized, it is important that licensees will indeed be operating in a competitive market-place.

The means available to the government to promote a competitive post-auction market-place for broadband services include disallowing the participation of certain firms in the auction and imposing aggregation limits on the amount of spectrum that any bidder may acquire. With regard to these two measures, the department considers two guiding principles.

Principle 1

A company that currently provides telecommunications services should be restricted from holding certain licences in the following circumstances:

  1. the company possesses market power in the supply of one or more telecommunications services in a region covered by the licence to be auctioned;
  2. a new entrant is likely to use the licence to provide services in competition with the company's existing services; and,
  3. the anti-competitive effects of the company's acquisition of a licence are not outweighed by the potential economies of scope arising from the integration of 24 and 38 GHz spectrum into the company's existing network.
Principle 2

When multiple licences for the use of spectrum in a given geographic area are auctioned, and these can be used to provide closely substitutable services, limits on the amount of spectrum that any single bidder is allowed to acquire may be required to ensure competitive markets. Spectrum aggregation limits may be imposed in the following circumstances:

  1. a bidder that acquires a significant amount of spectrum would not face effective competition from providers of services that use infrastructure other than the spectrum being auctioned; and,
  2. the anti-competitive effects arising from the acquisition of a significant amount of spectrum by a single bidder would not be offset by lower costs or higher valued services resulting from holding this amount of spectrum.

2.3.3 Competition Policies for the 24 and 38 GHz Bands

With regard to the principles outlined above, the department proposed in the consultation document that no restrictions on bidder eligibility were required, but that a spectrum aggregation limit of 700 MHz should be imposed.

A wide variety of viewpoints were expressed in the comments received. Respondents were divided on the need for a spectrum aggregation limit. Some respondents wanted no limit whatsoever, while others felt that the limit should be lower than the proposed figure of 700 MHz. Respondents were also divided as to whether spectrum aggregation limits should be applied to all licensees, or only to local telephone companies, cable companies, and/or holders of licences for 28 GHz LMCS (Local Multipoint Communications Systems) spectrum.

After considering the comments received regarding the potential impact on competition in the broadband services market-place of various types of spectrum aggregation limits, the department has concluded that some limits are required to act as a safeguard against anti-competitive behaviour. The department continues to believe that no one entity should be permitted to acquire all the available broadband spectrum in a given area and hence a general spectrum aggregation limit will be applied. Furthermore, the department has determined that the market position of certain incumbent local exchange carriersFootnote 4 (ILECs) in the provision of high speed data connections—particularly to businesses—necessitates that a more stringent limit be placed upon them in their local exchange areas. As the ILECs have extensive distribution infrastructures consisting of comprehensive local switching and access facilities and transmission lines to most residences and businesses, they do not require access to the same amount of spectrum within their local exchange areas as would be required by a competitive local exchange carrier (CLEC). However, given that there are potential economies of scope with their existing wired infrastructures, the department believes it is appropriate that ILECs still be permitted to bid for a limited amount of spectrum in these bands in their local exchange areas.

Given that cable companies do not hold the same market position as ILECs in the provision of high speed data connections to businesses, cable companies will not be subject to the more stringent spectrum aggregation limit that will apply to ILECs.

2.3.4 Spectrum Aggregation Limits for the 24 and 38 GHz Bands

For the purposes of the spectrum aggregation limits discussed below, the spectrum within a service area consists of spectrum licensed to any entity, and to its affiliates, in the 24.25–24.45 GHz, 25.05–25.25 GHz, 38.70–39.10 GHz and 39.40–39.80 GHz frequency bands. Note that licences for spectrum in the shared portion of the 38 GHz band do not count towards the spectrum aggregation limit.

For the purposes of this policy, "affiliate" means a person who controls the entity, or who is controlled by the entity or by any person who controls the entity.Footnote 5

Furthermore, for the purposes of this policy, if a person owns, directly or indirectly, at least 20% of the entity's voting shares, where the entity is a body corporate, or where the entity is not a body corporate, at least 20% of the beneficial ownership in such entity, this will result in a rebuttable presumption that the person controls the entity. Such person may rebut the presumption by submitting an affidavit or declaration, signed by an officer or other appropriate official, which sets out the specific ownership holdings of any person with a 20% or greater holding in the entity, and which affirms that the person does not control the entity and sets out reasons as to why the person does not control the entity. Such a document should be filed as part of the application materials, and in any event, no later than five business days after the publication of the list of qualified bidders. The department reserves the right to request further information and make its own determination on this issue.

In an area, any entity and its affiliates, other than an incumbent local exchange carrier whose local exchange area overlaps that area, will be eligible to hold spectrum licences covering frequency assignments aggregating up to a total of 600 MHz of spectrum.

In those 24 and 38 GHz service areas where the incumbent local exchange carrier already has significant local infrastructure and coverage, it and its affiliates will be eligible to hold spectrum licences covering frequency assignments aggregating up to a total of 200 MHz of spectrum. As the boundaries of the 24 and 38 GHz service areas being auctioned do not always coincide exactly with the boundaries of incumbent local exchange carriers' local exchange areas, the department must determine the degree of "overlap" between a 24 and 38 GHz service area and an incumbent local exchange carrier's local exchange area that will result in the application of this 200 MHz spectrum aggregation limit. For the purposes of this policy, the department defines "overlap" of a 24 and 38 GHz service area as those situations where 35% or more of the population of the 24 and 38 GHz service area is covered by an incumbent local exchange carrier's local exchange area and by the local exchange area(s) of its affiliates. In these situations, the incumbent local exchange carrier and its affiliates will be eligible to hold spectrum licences covering frequency assignments aggregating up to a total of 200 MHz of spectrum. Consistent with this limit, an incumbent local exchange carrier and its affiliates will be ineligible to bid on the 400 MHz "A" and "B" licences in service areas in which 35% or more of the population is overlapped by its local exchange area and/or by the local exchange area(s) of its affiliates.Footnote 6

In service areas in which less than 35% of the population is overlapped by its local exchange area and/or by the local exchange area(s) of its affiliates, an incumbent local exchange carrier and its affiliates will be eligible to hold spectrum licences covering frequency assignments aggregating up to a total of 600 MHz of spectrum.

The aggregation limit will also be enforced when a licence is transferred in the secondary market or when the transfer of an ownership interest in a successful applicant is effected.

Further details on the enforcement of these spectrum aggregation limits are provided in section 6.6.4.

2.3.5 Application of Aggregation Limit to the 28 GHz Band

In 1996 the department established a policy that licences for spectrum in the 27.35–28.35 GHz LMCS band (referred to hereafter as "the 28 GHz band") could not be held by entities who were either:

  1. a telecommunication common carrier which provides local exchange telephone service anywhere in Canada; or,
  2. licensed to carry on a cable distribution undertaking under the Broadcasting Act anywhere in Canada.

This policy is hereby rescinded, effective immediately, and licences for 28 GHz LMCS spectrum may be held by these entities, subject to the spectrum aggregation limits outlined below. Any proposed transfer or division of an LMCS licence will continue to be subject to review and approval by the Minister.Footnote 7

In the consultation paper, the department proposed that if an LMCS licenseeFootnote 8 did not participate in the auction, or did not acquire 24 or 38 GHz exclusive spectrum in the secondary market, then the 1000 MHz of spectrum that is currently licensed to it would not be affected. The department also indicated that if an LMCS licensee wished to obtain licences for 24 or 38 GHz spectrum in an area that overlapped its licensed LMCS area, then its LMCS spectrum assignment would be included in the spectrum aggregation limit that was proposed for the 24 and 38 GHz bands. There was no opposition to this proposal in the comments received.

The department continues to believe that there are benefits to allowing current and future holders of LMCS licences to hold licences for 1000 MHz of spectrum in the 28 GHz band, provided that they do not also hold spectrum licences for 24 or 38 GHz spectrum which overlap the same service area. However, for entities wishing to hold licences for 28 GHz spectrum and either 24 or 38 GHz spectrum within the same area, the department has concluded that they should be subject to spectrum aggregation limits that will increase the number of competitors in the area.

Specifically, the spectrum aggregation limits for entities wishing to hold licences for LMCS spectrum, or a combination of LMCS spectrum and 24 or 38 GHz spectrum, are defined as follows.

In an area, any entity and its affiliates, other than an incumbent local exchange carrier whose local exchange area overlapsFootnote 9 that area, may hold:

  1. licences covering frequency assignments in the 28 GHz LMCS band aggregating up to a total of 1000 MHz of spectrum; or,
  2. licences covering frequency assignments in the 28 GHz LMCS band and the 24 or 38 GHz bands aggregating up to a total of 600 MHz of spectrum.

An incumbent local exchange carrier and its affiliates, in an area which is overlappedFootnote 10 by its local exchange area, may hold:

  1. licences covering frequency assignments in the 28 GHz LMCS band aggregating up to a total of 200 MHz of spectrum; or,
  2. frequency assignments in the 28 GHz band and the 24 or 38 GHz bands aggregating up to a total of 200 MHz.

For the purposes of these spectrum aggregation limits, the spectrum within a service area consists of spectrum licensed to any entity and its affiliates, for wireless broadband services in the 24.25–24.45 GHz, 25.05–25.25 GHz, 27.35–28.35 GHz, 38.70–39.10 GHz and 39.40–39.80 GHz frequency bands. Note that licences for spectrum in the shared portion of the 38 GHz band do not count towards the spectrum aggregation limit.

The aggregation limit will also be enforced when a licence is transferred in the secondary market or when the transfer of an ownership interest in a successful applicant is effected.

Further details on the enforcement of these spectrum aggregation limits are provided in section 6.6.4.

2.3.6 Review of Aggregation Limits

The limits on the aggregation of spectrum will be reviewed when a subsequent licensing process is announced for other wireless broadband spectrum or three years following the close of this auction, whichever comes first. Depending on the degree to which competition has developed in the local broadband services market-place, as evidenced by factors such as the concentration of market shares, the availability of choice in the provision of local broadband services, or the determinations of the Canadian Radio-television and Telecommunications Commission (CRTC) with regard to need for the regulation of prices for local broadband services, the department may modify or remove this spectrum aggregation limit.


Footnotes

  1. back to footnote reference 1 Canadian footnote C44 (CAN-94) currently reads as: "Feeder links to broadcasting-satellite space stations operating in the band 17.3–17.8 GHz shall be implemented in the band 24.75–25.25 GHz."
  2. back to footnote reference 2 Available on the department's Strategis Web site (http://strategis.ic.gc.ca/spectrum).
  3. back to footnote reference 3 Assuming that 900 MHz would be made available for licensing on an exclusive basis via auction.
  4. back to footnote reference 4 For the purposes of this policy, ILECs are defined to be: BCT.TELUS Communications Inc., Bell Canada (Bell), Island Telecom Inc. (Island Tel), Manitoba Telecom Services Inc. (MTS), Maritime Telegraph & Telephone Company, Limited (MT&T), The New Brunswick Telephone Company Limited (NBTel), NewTel Communications Inc. (NewTel), Northwestel Inc., Québec-Téléphone, SaskTel, Télébec ltée, and any successors to these companies.
  5. back to footnote reference 5 For the purposes of this policy, "control" means control in any manner that results in control in fact, whether directly through the ownership of securities or indirectly through a trust, agreement or arrangement, the ownership of a body corporate or otherwise.
  6. back to footnote reference 6 Beyond this, there are no licence-specific restrictions on any bidder for this auction. Therefore, in a minor deviation from the procedure outlined in the Framework for Spectrum Auctions in Canada document, applicants will not need to identify the particular licences on which they wish to bid. Aside from the prohibition on incumbent local exchange carriers and their affiliates bidding on Licence A or Licence B in certain service areas, all bidders will be able to submit bids on any licences for which they have a sufficient number of eligibility points. See section 6 for more details.
  7. back to footnote reference 7 It should be noted that enhanced transferability and divisibility attributes are being attached to the 24 and 38 GHz licences being auctioned. This is discussed in more detail in section 3.6 of this document.
  8. back to footnote reference 8 In June 1998 the Minister of Industry announced that applications to transfer ownership of LMCS licences to eligible purchasers would be considered, hence this was not intended to apply only to the original LMCS licensees.
  9. back to footnote reference 9 The definition of overlap is provided in section 2.3.4.
  10. back to footnote reference 10 The definition of overlap is provided in section 2.3.4.
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