Responses to Clarification Questions on the Licensing Framework for Broadband Radio Service (BRS) — 2500 MHz Band

Posted on Industry Canada website: August 18, 2014

The following are responses to clarification questions received subsequent to the release of SLPB-001-14, Licensing Framework for Broadband Radio Service (BRS) — 2500 MHz Band (hereinafter referred to as the Framework).

Questions may have been rephrased, and in some cases, similar questions have been consolidated.

Some of the questions regarding bidding procedures or the functionality of the software will be addressed during the information session and in mail-out packages for qualified bidders.

Industry Canada has not responded to questions regarding bidding strategies, auction formats or results in other countries, or to submissions that suggested changes to the decisions and rules included in either the Framework or SMSE-002-12, Policy and Technical Framework: Mobile Broadband Services (MBS) — 700 MHz Band, Broadband Radio Service (BRS) — 2500 MHz Band.

This document may be updated from time to time, as additional questions arise. Interested parties are encouraged to regularly check Industry Canada’s website for updates.

For ease of reference, the clarification questions and responses have been grouped under the following themes:

1. Auction Format (Combinatorial Clock Auction (CCA) / OR Bidding)
2. Affiliated and Associated Entities / Prohibition of Collusion Rules
3. Conditions of Licence
4. Auction Process
5. Bidder Training and Support

1. Auction Format / Combinatorial Clock Auction (CCA)/ OR Bidding

QUESTION 1.1

Other than OR bids, how do the revealed preference constraints that are applied to bids submitted in the clock rounds differ from those that apply in the supplementary round?

RESPONSE 1.1

In any clock round, a bidder is permitted to bid on a package that exceeds its current eligibility provided that the package satisfies revealed preference with respect to each prior eligibility-reducing round.

In the supplementary round, bids for packages that exceed the bidder’s eligibility in the final clock round must satisfy revealed preference with respect to each eligibility-reducing round, beginning with the last round in which the bidder had sufficient eligibility to bid on the package and with respect to the final clock round.

Whenever a bidder submits a bid that exceeds its eligibility (in the current round for clock round bids, and in the final clock round for supplementary bids), the bid must satisfy revealed preference based on the bidder’s bidding history up to that point.

QUESTION 1.2

Can Industry Canada provide clarification on the software algorithm that will be used to determine the set of base prices, noted in paragraph 8 of Annex G of the Framework? Will the same mathematical formulations used in the 700 MHz auction be applied to the 2500 MHz BRS auction?

RESPONSE 1.2

As was the case in the 700 MHz auction, the winner determination and pricing process will use the optimization algorithm as described in the paper entitled Quadratic Core-Selecting Payment Rules for Combinatorial Auctions, by R.W. Day and P. Cramton (2012). The winner determination and pricing tool will determine the winning packages and prices to be paid by the bidders in the allocation stage. This same algorithm will also be used to determine the assignment prices.

QUESTION 1.3

Paragraph 8 of the Framework states “In the band 2570-2620 MHz (“the unpaired spectrum”), the spectrum will be licensed in blocks of 25 MHz (which includes the respective 5 MHz restricted band) in each available service area.” This means that the time division duplex (TDD) spectrum is effectively split in two. Will the two licensees in this portion of the spectrum band be required to build a joint or synchronized TDD system, or will each be expected to utilize an additional 5 MHz (blocks B5/B6­—total 10 MHz) as guardbands in between?

RESPONSE 1.3

Guardbands between operators are often used to minimize interference between their networks. Another approach is to synchronize the two TDD networks. However, as outlined in Decisions on the Transition to Broadband Radio Service (BRS) in the Band 2500-2690 MHz and Consultation on Changes Related to the Band Plan, such a measure could result in technical limitations for operators in the same service area.

As announced in Decisions on a Band Plan for Broadband Radio Service (BRS) and Consultation on a Policy and Technical Framework to License Spectrum in the Band 2500-2690 MHz, the Department decided not to mandate either the use of guardbands or synchronization of TDD operators. Licensees have the flexibility to work with other operators towards a voluntary individualized agreement for coexistence.

QUESTION 1.4

During the supplementary round, are there additional constraints imposed on a bidder’s base + OR package bids, above those applied to the standard supplementary bids?

RESPONSE 1.4

All base + OR package bids implied by a given collection of OR bids, must satisfy revealed preference with respect to the final clock round and with respect to:

1. all eligibility-reducing rounds starting with the last round in which the bidder had eligibility of at least its bidder-defined eligibility point limit for the given collection of OR bids; or
2. all eligibility-reducing rounds if the bidder has not defined an eligibility point limit for the given collection of OR bids.

This means that some base + OR package bids will be subject to more constraints than if the same package were bid on using a standard supplementary bid.

QUESTION 1.5

Can Industry Canada confirm that, where a bidder sets an eligibility point limit relating to OR bids, this will eliminate some constraints on the bid amounts that would otherwise apply had no eligibility limit been set?

RESPONSE 1.5

When a bidder defines an eligibility point limit for a given collection of OR bids, all base + OR package bids implied by the collection must satisfy revealed preference with respect to the final clock round and with respect to all eligibility-reducing rounds, starting with the last round in which the bidder had eligibility of at least the eligibility point limit defined for the given collection. This means that defining an eligibility point limit on the generation of base + OR package bids, compared to not defining a limit, could reduce the number of revealed preference constraints applied to some of these base + OR package bids.

QUESTION 1.6

Can Industry Canada confirm that the calculation of revealed preference constraints on base + OR package bids will assume that the bidder has submitted the highest allowable standard supplementary bid on each constraining package, without these bids having been made?

RESPONSE 1.6

The activity rules for the auction will be implemented as described in Annex D of the Framework. For the purposes of calculating the revealed preference constraints on base + OR package bids from a given collection, it will be assumed that the bidder has submitted the highest allowable standard supplementary bid on each constraining package, subject to the bidder’s highest bid on its final clock package. In this way, the revealed preference constraints for base + OR package bids will be determined solely by the bidder’s clock round bids and its highest bid amount on its final clock (base) package, and will not be affected by other base + OR package bids implied by the collections of OR bids. These assumed highest allowable bids on each constraining package are only used for the purposes of calculating the revealed preference constraints for bids on base + OR packages. These assumed bids are not actual bids and are not considered in the winner determination and pricing process.

QUESTION 1.7

Can Industry Canada confirm that:

1. OR bids can only be applied to the base package and not to other standard supplementary round bids; and
2. that it is not possible to submit OR bids that subtract licences from the base package?

RESPONSE 1.7

1. a) OR bids will only be considered as additions to a bidder’s base package. For each bidder, the base package will always be the bidder’s final clock package or, in the case of a bidder without a final clock package, its base package is the package consisting of no licences (known as the “zero package”). No other package will be used as the base package.
2. Each OR bid within a collection is an incremental bid on one licence, or combination of licences, within a single service area that a bidder wants to add to its base package. It will not be possible to submit OR bids that subtract licences from the base package.

QUESTION 1.8

What will be the maximum number of standard package bids allowed in the supplementary round (not including OR bids)?

RESPONSE 1.8

For practical reasons, it is necessary to limit the number of standard package supplementary bids submitted by each bidder. The maximum number of different packages for which a bidder will be allowed to place standard package supplementary bids will be announced after the bidder qualification has occurred, but will be at least 500. Only new standard package supplementary bids will count toward this limit. Clock round bids, whether or not revised in the supplementary round, and bids implied by OR bids will not count toward this limit.

QUESTION 1.9

Will the contiguity rules apply equally in all Regions, including those with licences where there are site-specific licensees in the relevant licence areas?

RESPONSE 1.9

During the assignment stage, the specific frequency options available to each bidder will be determined on a service-area-by-service-area basis, by applying the contiguity rules described in Annex D (see paragraphs 97-99) of the Licensing Framework for Broadband Radio Service – 2500 MHz Band. Priority will be given to ensuring that licences within a product are assigned as contiguous whenever possible. The contiguity of assigned licences within a product will be determined in order of priority as follows:

1. A bidder that wins more than one licence in the same product in the auction will be assigned these licences as contiguous blocks;
2. A bidder that wins one or more licences in a product where it has an existing licence will have its new licence assigned as contiguous to its existing licence provided that it is feasible to do so after ensuring the first contiguity rule;
3. Finally, licences that remain unallocated within a product will be retained by Industry Canada as contiguous blocks provided that it is feasible to do so after ensuring the first and second contiguity rules.

These rules will be applied in the above order. The contiguity rules may affect the specific frequency options that are available to bidders in the assignment round. If the application of these contiguity rules reduces the number of feasible assignments to exactly one for any specific bidder, then Industry Canada will assign that licence to the specific bidder. Where multiple assignment possibilities remain after consideration of the contiguity rules, bidding in the assignment round will determine the actual assignment of specific licences. In addition, the contiguity rules will be applied consistently to all service areas, and will not be affected by the existence of site-specific licensees in some of the blocks available in the auction.

QUESTION 1.10

Can Industry Canada clarify the circumstances in which various products would be sufficiently similar, and where they may be combined into a single assignment round within the assignment stage?

RESPONSE 1.10

Industry Canada will determine the structure of the assignment stage after having considered the contiguity rules described in Annex D (see paragraphs 97-99) of the Framework. As the licences to be assigned and application of the contiguity rules can vary based on the service area, the specific frequencies available to bidders may differ in different service areas. It is also possible that the application of the contiguity rules would affect the specific frequencies to be assigned in a way that prevents those frequencies from being combined into a single assignment round with other service areas.

As outlined in Section 15 of Annex D of the Framework, the assignment round will be run product-by-product in descending order of the populations of the associated service areas. In support of simplifying the assignment stage and facilitating the assignment of contiguous spectrum across service areas, two or more products will be combined into a single assignment round when the products are in the same Region (i.e. Region A, Region B or Region C), when their service areas form a contiguous geographic area and when the winners, and the number of licences they have won, are the same in the service areas to be combined.

Also, as indicated in paragraph 89 of Annex D, products in the same Region may also be combined into a single assignment round when the winners, and the number of licences they have won, are sufficiently similar. Industry Canada will determine whether it is possible or practical to merge service areas by examining the results of the allocation stage. For service areas to be considered sufficiently similar to be merged, they must still be in the same Region (Region A, B, or C) and the number of licences won by bidders that have won licences in each service area being considered must be the same. Service areas may be considered sufficiently similar to be merged whether or not the service areas are contiguous to each other. However, meeting all of these criteria does not guarantee that the service areas will be merged and it will only be possible to determine the extent to which service areas will be merged once the allocation stage has ended.

For example, consider five service areas, all in Region A, with only one difference between any pair of two service areas.

In this example, there is only one difference between any pair of two service areas; however, it is unclear which of these service areas should be merged given that there are quite a few differences overall. In a situation such as this, Industry Canada would not merge the assignment rounds for these service areas.

QUESTION 1.11

What will be the specific schedule for the auction, including the duration of clock rounds, the time between the rounds, the time between the different stages, etc.?

RESPONSE 1.11

As in previous auctions, information regarding the initial bidding schedule for the clock rounds, as well as information regarding the timing of the supplementary round and the assignment rounds, will be included in the mail-out packages to be provided to qualified bidders on the date specified in the Table of Key Dates. The additional number of possible assignment rounds will be taken into consideration.

QUESTION 1.12

Industry Canada provided the option to current holders of 2500 MHz spectrum licences to transfer or return some or all of those licences in advance of the upcoming auction.

1. Will Industry Canada publish a comprehensive list of 2500 MHz spectrum holdings which reflects any returned licences?
2. Will the returned spectrum be offered as part of the auction?

RESPONSE 1.12

1. Industry Canada has posted a table which lists all currently active 2500 MHz spectrum licences, which reflects any returned or transferred licences. Industry Canada will update this table if any further changes occur prior to the start of the auction.
2. The returned spectrum licences will not be included in the upcoming 2500 MHz auction. They will be part of a subsequent licensing process at a time to be determined.

2. Affiliated and Associated Entities / Prohibition of Collusion Rules

QUESTION 2.1

The auction Framework states that associated entities may be permitted to bid separately, and have the spectrum caps apply separately if they can demonstrate to Industry Canada’s satisfaction that they will actively compete with one another. Given this possibility, will the contiguity rules apply where licences are won by associated entities, so that their licences are contiguous?

RESPONSE 2.1

The contiguity rules outlined in Section 4.1.6 of the Framework will apply consistently to all qualified bidders. As stated Section 4.1.6, “A bidder that wins more than one licence in the same product in the auction will be assigned these licences as a contiguous block.” As such, each bidder is considered separately, regardless of associations. Licences won by associated entities will not be considered within the contiguity rules.

QUESTION 2.2

In reference to the prohibition of collusion rules and the potential agreements between potential associated entities, can Industry Canada provide clarification on the following:

1. the earliest date that potential bidders can seek guidance or a predetermination on affiliated and associated entities;
2. whether predetermination decisions are binding;
3. whether other parties will be allowed to see requests for guidance or predeterminations and, if so, when they will be allowed to see them, and also indicate the details that will be disclosed publicly; and whether other parties have any input into predetermination decisions?

RESPONSE 2.2

1. At any time prior to the application date, entities may request guidance as to whether an agreement or proposed agreement between specific entities gives rise to a finding of association by submitting all relevant documentation to Industry Canada for review.
2. Any guidance or predetermination will not constitute a binding decision; however, potential applicants may benefit from an early opportunity to approach Industry Canada with their proposed arrangements.
   
   In the case where associated entities have requested to participate in the auction separately and to have the aggregation limits apply separately, Industry Canada will conduct a review. The ruling for the purpose of the auction will not predetermine the result of any subsequent reviews that may be required post-auction.
   
   Associated entities that become licensees may also be subject to further reviews post-auction, in order to demonstrate to Industry Canada’s satisfaction that they separately and actively provide services in the applicable licence area and that they remain eligible to have the spectrum aggregation limits apply separately.
3. Industry Canada will treat requests for guidance and predeterminations of whether an agreement or proposed agreement gives rise to an association as confidential business information, noting that such information is subject to the Access to Information Act. Where entities are deemed to be associated or affiliated, this will be published on the website prior to the auction. Other parties are not intended to be part of the decision-making process.

QUESTION 2.3  

In reference to Section 5.1.1 — Presumption of Affiliate Status of the Framework, Industry Canada will make a general presumption regarding control in certain circumstances.

1. Can an applicant rebut the presumption of affiliated status when a person owns 20% or more of an entity’s voting shares by demonstrating either that a different person controls that entity or that no person controls the entity?
2. Will other parties have an opportunity to rebut the Department’s findings with respect to other applicants?

RESPONSE 2.3

1. Applicants may provide information to Industry Canada to rebut the presumption of affiliate status. On or prior to the application deadline date, applicants must notify Industry Canada in writing if they are rebutting the presumption and must file material that will enable Industry Canada to review the question and make that determination. It is the responsibility of the applicant to file the appropriate material. Such material may include copies of the relevant corporate documentation relating to both entities; a description of their relationship; copies of any agreements and arrangements between the entities and affidavits or declarations, signed by officers from the two entities, dealing with the control as outlined in the definition of “affiliate” in paragraph 190 of the Framework.
   
   Upon receipt of this material, Industry Canada will either make a ruling based on the materials submitted or ask the applicant for further information (and provide a timeline within which to do so).
2. Industry Canada does not intend to seek submissions from other parties on affiliation or association issues nor will it provide an opportunity to rebut its decisions on affiliate status. All decisions made on applicant eligibility for the purposes of participating in the auction will be final.

QUESTION 2.4

When determining whether two entities are associated, how will Industry Canada treat scenarios such as a network sharing agreement between bidders, a jointly operated network, or a joint equipment purchasing agreement?

RESPONSE 2.4

In the Framework, the definition of “associated entities” includes a broad scope of agreements or arrangements, including those that explicitly or implicitly relate to the use of the 2500 MHz band. Each situation will be considered on its own facts. Where an applicant is unsure as to whether it would be deemed to be associated with another potential bidder, it is encouraged to submit the pertinent information to Industry Canada for guidance.

QUESTION 2.5

What process will be followed to assess the eligibility of associated entities to participate in the auction separately?

RESPONSE 2.5

As stated in the Framework, Industry Canada will review the applications and narratives, including responses to potential requests for additional information, to assess compliance with the information disclosure and anti-collusion rules, and to ensure that the published narratives provide the appropriate level of disclosure and transparency to all bidders.

During the assessment period, if Industry Canada determines that the applicants in question are ineligible to participate in the auction separately, the affected applicants will be advised immediately. The list of provisionally qualified bidders will be made public on the date specified in the Table of Key Dates.

(See Section 8.5 — Bidder Qualification of the Framework for further details on the qualification process.)

QUESTION 2.6

In the case where associated entities request to have the spectrum aggregation limits apply separately, and consequently must demonstrate that they intend to separately and actively provide services in the applicable licence area;

1. How much time will be required for Industry Canada to provide a ruling?
2. Will applicants be permitted to meet with departmental officials to discuss the proposed arrangement?

RESPONSE 2.6

1. Based on the prohibition of collusion rules, it is likely that associated entities that want to participate in the auction separately and to have the aggregation limits apply separately will only be able to have very limited discussions prior to the conclusion of the auction.
   
   Therefore, based on the information provided by the applicants prior to the auction, Industry Canada will conduct a review to determine whether the associated entities will be permitted to participate in the auction separately and, where requested, to have the aggregation limits apply separately during the auction. This ruling for the purpose of the auction will not predetermine the result of any subsequent reviews that may be required post-auction.
   
   Associated entities that become licensees may also be subject to further reviews post-auction, in order to demonstrate to Industry Canada’s satisfaction that they separately and actively provide services in the applicable licence area and that they remain eligible to have the spectrum aggregation limits apply separately.
   
   The time required to provide a ruling will depend on the complexity of the association and on the completeness of the material submitted. Industry Canada may require further material from the relevant bidders, in which case, the Department will contact the bidders and set a deadline for submission of further information with a view to making a ruling before the final deposit is required.
2. Before the application deadline, companies may submit questions about their associations to Industry Canada. Meetings with applicants to discuss associations or potential associations may be permitted; however, any guidance or predetermination will not constitute a binding decision. Rulings will only be made after the application deadline — and will be based solely on — the written submissions from the application materials.

QUESTION 2.7

In reference to Section 5.4.1 — Communication During the Auction Process of the Framework, please clarify the following questions:

1. Define the term “auction process,” including when it is considered to have started.
2. What will Industry Canada do if it becomes apparent that two or more bidders are communicating or acting in concert during the auction?

RESPONSE 2.7

1. Any communications from an applicant and its affiliates, associates or beneficial owners or their representatives that disclose or comment on the amount to be bid; bidding strategies; licence selection, including but not limited to the intent of bidding, post-auction market structure and communications with or via the media, are prohibited until after the public announcement of provisional licence winners by Industry Canada.
   
   This rule, which is part of the prohibition of collusion rules as set out in Section 5.4 of the Framework, considers all communications other than communications between applicants and their affiliated and associated entities that are bidding together as one.
   
   The rule is such that any discussions occurring at any time prior to the public announcement of provisional licence winners by Industry Canada are prohibited. This rule is set out in order to preserve the integrity of the auction process. Industry Canada considers that the auction process started upon the publication of the Licensing Framework and thus parties must observe the rules on collusion now and continue to do so throughout the process.
2. The auction was designed to reduce opportunities for signalling and anti-competitive behaviour through the use of anonymous bidding and a reduction in the public disclosure of information prior to the auction (e.g. no release of eligibility points and deposit information pre-auction). If it appears that two or more bidders may be contravening the prohibition of collusion rules, the Minister of Industry will assess the situation and take appropriate action. This may result in the disqualification of the bidders involved.

QUESTION 2.8

The prohibition of collusion rules stipulate that prospective bidders cannot communicate with “competitors” regarding the licences being auctioned or relating to the post-auction market structure, including frequency selection, bidding strategy and post-auction market strategy. Based on these rules, what types of discussions are permitted where separate entities are considering potential arrangements, such as agreements to share spectrum in the future, entering into joint builds if they are successful in the auction, having a joint equipment purchasing agreement or forming a consortium to bid as a single bidder in the auction?

RESPONSE 2.8

As noted in the Framework, a “competitor” means any entity, other than the applicant or its affiliates, which could potentially be a bidder in this auction based on its qualifications, abilities or experience.

Discussions regarding the mere intent to participate in the auction will not be deemed to have contravened the collusion rules. Prior to the auction, an applicant who wishes to participate separately in the licensing process may approach another potential bidder to discuss a joint infrastructure build, a joint equipment purchasing agreement or a potential spectrum sharing agreement under the following circumstances:

Once a consortium has been established and if the entities within that consortium have had communications that contravene the anti-collusion rules, these entities would no longer be eligible to participate separately in the auction. The same entities would therefore no longer be deemed competitors for the purpose of the auction, and discussions regarding issues such as bidding strategies could then take place. Should the consortium be dissolved prior to the auction, only one of the entities would be eligible to participate in the auction, and all parties would continue to be subject to the prohibition of collusion rules.

The same restrictions apply to entities that have had unsuccessful discussions regarding the formation of a consortium to bid as a single bidder. Where communications that fall within the definition of associated entities have taken place, the nature of the association must be disclosed. Entities applying to participate separately are required to make a declaration that they have not entered into and will not enter into any agreements or arrangements of any kind with any competitor regarding the amount to be bid, bidding strategies or the particular licence(s) on which the applicant or competitor will or will not bid. In the case where discussions that contravene the prohibition of collusion rules have occurred, the entities would only be permitted to participate in the auction as one single bidder, or only one of the entities could participate.

Discussions concerning operational arrangements that are unrelated to the 2500 MHz auction process are permitted. For example, discussions regarding existing arrangements, such as network sharing agreements that relate to spectrum other than spectrum in the 2500 MHz band (e.g. AWS, PCS, or 700 MHz spectrum), are not considered contrary to the anti-collusion rules. Similarly, extension of such arrangements or negotiations of new network sharing arrangements would also be permitted provided that they do not relate to spectrum in the 2500 MHz band. As these arrangements do not create an association in relation to the 2500 MHz auction, disclosure is not necessary.

However, participants to these discussions should carefully consider the potential that their discussions may violate the anti-collusion rules, for example, reference to a particular technology related to the 2500 MHz spectrum or to the post-auction market structure. Any breach of the auction rules could result in disqualification.

In each case, Industry Canada will examine the nature of the association and the agreements/discussions in order to determine eligibility to participate in the auction.

QUESTION 2.9

Annex C of the Framework provides a list of all licensees holding site-specific licences in the 2500 MHz band that are protected from interference from new BRS systems. Under the auction rules, are potential applicants permitted to approach these licensees to discuss possible options for alternate service provisions in exchange for vacating the spectrum?

RESPONSE 2.9

The 2500 MHz auction rules prohibit applicants from cooperating, collaborating, discussing or negotiating agreements with competitors, relating to the licences being auctioned or relating to the post-auction market structure, including frequency selection, bidding strategy and post-auction market strategy, until after the public announcement of provisional licence winners by Industry Canada.

Where a potential applicant is interested in discussing alternate service options with a current licensee, the potential applicant should first establish the current licensee’s status as a competitor or potential competitor in the auction, and request the necessary assurances to that effect.

If the current licensee considers that it may participate in the auction, it would be a competitor or potential competitor, and therefore, any discussions as outlined above are prohibited, unless the two competitors form a bidding consortium, with the understanding that only one of the entities may bid on behalf of both entities. 

If the current licensee is confirmed to not be participating in the auction hence, not a potential competitor, the potential applicant is not precluded from discussing agreements that disclose bidding strategy and/or post-auction market structure with the existing licensee under the anti-collusion rules. If such discussions take place, the existing licensee may be deemed an associated entity of the potential bidder and could therefore be prohibited from holding discussions with other potential applicants. The potential applicant would be required to disclose its associated entities as part of its application. This would be made public on Industry Canada’s website.

Potential applicants should carefully consider any discussions that could give rise to a breach of the auction rules. In addition, where applicants form associations, they should ensure that their associated entities are aware of and abide by the rules regarding communications during the auction. Therefore, if an applicant enters into discussions with any of the site-specific licensees, it may be prudent for the applicant to require a non-disclosure agreement from the site-specific licensee to prevent the disclosure of any information that could result in a contravention of the rules.

3. Conditions of Licence

QUESTION 3.1

1. For the purposes of the auction, when will the spectrum aggregation limits apply in relation to spectrum returned to Industry Canada or transferred to another entity prior to the deadlines set by Industry Canada?
2. If there is a subsequent licensing process to assign any returned spectrum or unassigned spectrum, would the same spectrum aggregation limit apply?

RESPONSE 3.1

1. For the purposes of the auction, spectrum holdings to be counted against the aggregation limits will be based on the spectrum holdings at the time of the application deadline.
2. As stated in the Framework, all current licences in the band will be amended to include the spectrum aggregation limit which will apply to all licensees (whether or not they participate in the auction) for a period of 5 years following the upcoming auction. Therefore the limit will apply to licences made available through a subsequent licensing process during this period and to any requested licence transfers during this time.

QUESTION 3.2

What criteria will Industry Canada use in assessing requests to exchange spectrum blocks? Can a successful bidder apply to exchange its licence for a licence that was unassigned in the auction?

RESPONSE 3.2

As noted in the decision paper, Industry Canada may consider requests from licensees to exchange spectrum blocks in the same geographic area provided that the exchange does not result in the spectrum aggregation limit being exceeded or an increase in the spectrum holdings of a licence holder already in excess of the limit.

All requests to exchange or swap spectrum blocks whether within the same licence area, across licence areas, within the same band, or across bands, will be considered licence transfers of commercial mobile spectrum and will be reviewed under the relevant provisions of CPC-2-1-23, Licensing Procedure for Spectrum Licences for Terrestrial Services. This procedure outlines the factors that Industry Canada will analyze in making its determination as to the impacts of the licence transfer on the policy objectives.

QUESTION 3.3

1. How will the general deployment condition of licence apply to tiers with site-specific incumbent licensees operating in the 2500 MHz band?
2. If a site specific licensee has not deployed on its 2500 MHz spectrum or is not using these sites by the expiry of its current license period, will Industry Canada continue to allow those licences to be renewed?

RESPONSE 3.3

1. The deployment conditions will apply as set out in the Framework in all licence areas, including those with existing site-specific licensees.
2. As announced in 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, Industry Canada decided to allow continued operation of 2500 MHz site-specific licences in Manitoba with protection from harmful interference from BRS. These licensees have been permitted to continue to offer their existing services using currently licensed stations. The Department encourages current and future BRS licensees and 2500 MHz site-specific licensees to work together to facilitate the continuation of services provided by the school divisions, as well as the implementation of BRS in Manitoba.
   
   As with all licences, 2500 MHz site-specific licences must be used in compliance with the policy and conditions of licence. It is expected that new licences will not be issued where the licensee does not intend to continue operating.

QUESTION 3.4

Will annual spectrum licence fees apply to the 2500 MHz spectrum licences during the initial 20-year term?

RESPONSE 3.4

Auction bid payments are in lieu of fees for the initial term of the licence. No annual fees related to the spectrum licence will apply during the initial 20-year term of the 2500 MHz spectrum licences.

4. Auction Process

QUESTION 4.1

During the Advanced Wireless Services (AWS) simultaneous multiple round ascending (SMRA) auction, bidders were provided with waivers that allowed them to maintain eligibility and to continue in the auction in the event that they did not bid in a round. Will Industry Canada allow waivers to be used by bidders during the 2500 MHz auction?

RESPONSE 4.1

As discussed in paragraph 421 of the Framework, waivers are not considered to be suitable in the context of a CCA format and its related activity rules. However, Industry Canada reserves the right to extend the length of a round, or to alter the bidding schedule, in the event of being notified that a bidder(s) is experiencing technical difficulties at its primary and backup bidding locations, which prevents the bidder(s) from submitting a bid.

Information regarding the backup bidding procedures will be included in the mail-out packages provided to qualified bidders (see Table of Key Dates).

QUESTION 4.2

Will there be an opportunity to ask questions regarding the application form once it is made available? What is the process to be followed?

RESPONSE 4.2

The application form is now available on request. Requests for an application form, as well as any questions concerning the forms, can be directed to:

Industry Canada
c/o Manager, Auction Operations
Spectrum Licensing Policy Branch (Room 624G)
235 Queen Street
Ottawa, Ontario K1A 0H5
Telephone: 613-957-8106
Email: ic.spectrumauctions-encheresduspectre.ic@canada.ca

QUESTION 4.3

As per paragraph 407 of the Framework, “Industry Canada reserves the right to request additional financial deposits during the auction.” Can you explain:

1. which circumstances would trigger this requirement for additional financial deposits;
2. in what form the additional deposits must be made; and
3. how this process would be implemented by Industry Canada during the auction?

RESPONSE 4.3

1. Industry Canada may exercise its right to request additional financial deposits from all bidders during the auction if bids ascend to such a level that the initial financial deposits are considered insufficient.
2. Additional deposits must be made using one of the following methods of payment: certified cheque, bank draft, wire transfer or letter(s) of credit. Bidders will be given suitable notification to provide additional deposits.
3. Should such a request be warranted, Industry Canada would provide additional information on this process. Bidders will receive sufficient notice for any such requests.

QUESTION 4.4

What specific information will be publicly released with the list of applicants and provisionally qualified bidders prior to the auction?

RESPONSE 4.4

A list of all applicants, their beneficial ownership information and any declaration of affiliated or associated entities, including the narrative description on the nature of the association, will be made public prior to the start of the auction. The number of eligibility points and the financial deposit amounts will not be published. Also, as stated in question 1.12 above, Industry Canada has posted a table listing all currently active 2500 MHz spectrum licences, which reflects any returned or transferred licences.

QUESTION 4.5

It is indicated that “only the Auction Authorized Representative of the bidding company may notify the Manager, Auction Operations, of any material changes in the information submitted in the application documents.”

1. Please provide the definition of an “Auction Authorized Representative.”
2. If the representative must be a bidder (as determined in paragraph 420 of the Framework), please provide the reasons for this.
3. Please advise whether the representative can be an officer or designate of the bidder, without being a bidder himself.

RESPONSE 4.5

An Auction Authorized Representative is an individual authorized by the company, for the 2500 MHz auction, to sign, to submit information and to make any changes on behalf of the applicant. The person identified as the Auction Authorized Representative by the applicant must be identified in the application form submitted to participate in the auction and can be an Officer of the company. Although not mandatory, the Auction Authorized Representative may also be a Designated Bidder.

QUESTION 4.6

When will Industry Canada provide a detailed description of the backup procedures described in Section 8.8 of the Framework?

RESPONSE 4.6

Information regarding the backup bidding procedures will be included in the mail-out packages provided to qualified bidders (see Table of Key Dates).

QUESTION 4.7

Will potential bidders be able to ask questions regarding the auction after the April 28th 2014 deadline for clarification questions?

RESPONSE 4.7

Yes, any further questions concerning the auction can be directed to:

Industry Canada
c/o Manager, Auction Operations
Spectrum Licensing Policy Branch (Room 624G)
235 Queen Street
Ottawa, Ontario K1A 0H5
Telephone: 613-957-8106
Email: ic.spectrumauctions-encheresduspectre.ic@canada.ca

Whenever additional questions of relevance to other bidders are received, Industry Canada will update the clarification questions in order to assure equal access to information for all potential bidders.

5. Bidder Training and Support

QUESTION 5.1

1. As the number of products available in the 2500 MHz auction will be significantly more than were available in the 700 MHz auction, will Industry Canada make any changes to the auction software and, if so, when will bidders be able to see the new interface?
2. Will the auction use manual bid entry in the clock rounds exclusively, as was done for the 700 MHz auction? Will an upload facility be provided for the clock rounds?
3. Will the same representation of bids used during the 700 MHz auction (i.e. a string of numbers separated by a special character) be used in the 2500 MHz auction given the increase in the number of products available?

RESPONSE 5.1

1. The auction bidding software will be updated to accommodate the increased number of products available in the auction. As in the 700 MHz auction, the software interface will be user-friendly and intuitive. Qualified bidders will be able to view the software during the qualified bidder information session and during the mock auctions.
2. Bid entry in the clock rounds will be by manual entry, similar to the 700 MHz auction. No upload facility will be provided.
3. The output file structure will be similar to the one used in the 700 MHz auction, but will be updated to allow for OR bids and the increased number of service areas. The specification of the results file formats will be released in the mail-out packages to qualified bidders (see the Table of Key Dates).

QUESTION 5.2

Can Industry Canada provide the following information on the 2500 MHz auction participation website:

1. When will the auction website be available to bidders?
2. When will the auction website close, subsequent to the end of the auction?
3. Will Industry Canada provide bidders notice before results are posted to ensure timely access to the auction results?
4. Will Industry Canada provide a fixed timeline to release both the initial provisional results, as well as the final detailed bidding information?

RESPONSE 5.2

1. The auction website will be available to bidders after the auction information session on February 26, 2015.
2. The website will close two business days after the close of the final assignment round.
3. Industry Canada will advise all bidders directly when the results are being made available.
4. The timing of the release of the results has not yet been determined.

QUESTION 5.3

Regarding the winner and price determination tool that will be made available on a website hosted by Industry Canada, please provide clarification on the following:

1. Will the tool be made available as an executable file that can be downloaded from the Industry Canada website? Will the tool accept OR bids?
2. Will Industry Canada provide details on the format of input and output files for the winner and price determination tool, as well as a specification of any validity checks on the input files in advance of the tool being made available?

RESPONSE 5.3

1. The winner and price determination tool is a web-based application similar to the one used in the 700 MHz auction process. It has been updated to support OR bids. Qualified bidders will be able to upload entire auction scenarios (i.e. many packages of licences by different bidders). The tool will determine the winning packages and prices to be paid by the bidders according to the algorithms published by Industry Canada.
2. The specification of the file formats for uploading all bids to the winner and price determination tool and downloading results will be released in the mail-out packages to qualified bidders (see the Table of Key Dates).
   The tool will validate the file structure of the data uploaded by qualified bidders, but it will not validate bids to ensure that they meet any of the auction rule restrictions (e.g. revealed preference limits).