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Policy and Licensing Framework for Spectrum in the 3500 MHz Band

SLPB-001-20
March 2020

July 2020:

NOTE 1: Changes have been made to paragraphs 94 and 95 to inverse the references to table A2 and table A3 of annex A.

NOTE 2: A change has been made to paragraph 321 to clarify that deployment requirements will be assessed against the population of the entire unencumbered licence area.

NOTE 3: A change has been made to paragraph 48 of annex C.  The word “initial” has been added to the phrase “initial supply of the set-aside product.”

NOTE 4: Corrections have been made to the eligibility points for areas 4-003-0, 4-009-0, 4-087-0, and 4-108-0 in table D1 of annex D.

NOTE 5: Paragraphs 11, 12, 22 and 23 of annex E have been amended.

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1. Intent

1. Through the release of this paper, Innovation, Science and Economic Development Canada (ISED), on behalf of the Minister of Innovation, Science and Industry (the Minister), announces the decisions resulting from the consultation process undertaken in Canada Gazette notice SLPB-002-19Consultation on a Policy and Licensing Framework for Spectrum in the 3500 MHz Band (hereinafter referred to as the Consultation).

2. All comments and reply comments received on this Consultation are available on ISED's website. Comments and/or reply comments were received from:

  • Association of Manitoba Municipalities
  • Bell Mobility Inc. (Bell)
  • British Columbia Broadband Association (BCBA)
  • Canadian Association of Wireless Internet Service Providers (CanWISP)
  • City of Burlington
  • City of Cambridge
  • City of Edmonton
  • City of Leduc
  • City of Lethbridge
  • City of Moose Jaw
  • City of Prince George
  • City of Selkirk
  • City of Stonewall
  • City of Vancouver
  • City of Victoria
  • City of Winnipeg
  • Cogeco Communications Inc. (Cogeco)
  • Eastern Ontario Wardens’ Caucus and the Eastern Ontario Regional Network (EOWC/EORN),
  • Bragg Communications Inc., carrying on business as Eastlink (Eastlink),
  • Ecotel Inc. (Ecotel)
  • Iristel Inc. (Iristel)
  • Kris Joseph and Michael McNally
  • Michael Thompson, Deputy Mayor and Councillor, Scarborough Centre
  • Motorola Solutions
  • Québecor Média Inc. (Québecor)
  • Rogers Communications Canada Inc. (Rogers)
  • Rural Municipalities of Alberta
  • Saskatchewan Telecommunications (SaskTel)
  • Shaw Communications Inc. (Shaw)
  • Strathcona Regional District
  • Toronto Region Board of Trade
  • TekSavvy Solutions Inc. (TekSavvy)
  • TELUS Communications Inc. (TELUS)
  • Vancouver Economic Commission
  • Xplornet Communications Inc. (Xplornet)

3. This document (hereinafter referred to as the Framework), sets out the policy and licensing framework for the 3450-3650 MHz frequency band (hereinafter referred to as the 3500 MHz band).

2. Legislative mandate

4. The Minister of Innovation, Science and Industry, through the Department of Industry Act, the Radiocommunication Act and the Radiocommunication Regulations, with due regard to the objectives of the Telecommunications Act, is responsible for spectrum management in Canada. As such, the Minister is responsible for developing national policies for spectrum utilization and ensuring effective management of the radio frequency spectrum resource.

3. Policy objectives

5. Canadians rely on wireless telecommunications services to access a variety of applications, multi-media services, social networking, and Internet browsing; to do business and connect with others; and to manage finances, health, and homes in both urban and rural communities. Accordingly, Canadians expect high-quality services, ubiquitous coverage, and affordable prices from their telecommunications service providers.

6. It is a key priority for ISED that Canadian consumers, businesses, and public institutions continue to benefit from the latest wireless telecommunications services across the country. A robust wireless telecommunications industry drives the adoption and use of digital technologies and enhances the productivity of the Canadian economy.

7. Spectrum is a critical resource for wireless carriers in both densely populated urban areas as well as in rural and remote areas of the country. Access to flexible-use spectrum that can be used for mobile or fixed services will enable providers to increase network capacity to meet the traffic demands of higher usage rates, and support the provision of next-generation wireless technologies for both fixed and mobile services. The development and deployment of 5th generation (5G) technologies will support Canada in becoming a global centre for innovation, and will position Canada at the forefront of digital development through the creation and strengthening of world-class wireless infrastructure.

8. Beyond initial improvements to the speed and capacity of mobile broadband networks and services, 5G technologies are expected to transform services across all sectors of the economy including manufacturing, healthcare and transport. Testing and demonstrations of different use cases are taking place domestically and internationally. It is unclear at this time which business cases will drive ongoing investment in 5G networks, which services and applications will deliver the greatest benefits to Canadians, and when such applications will be ready for market. The decisions in this Framework will allow Canadians to benefit from the short-term improvements to mobile broadband networks and be ready to embrace new applications and services as they are deployed.

9. Spectrum releases in Canada are designed to align with international market developments and the continual evolution of wireless technologies around the world in relation to the Canadian context. ISED makes spectrum available to reflect global trends, emerging standards and the equipment ecosystem that is expected to materialize in the coming years, so that Canada is in a position to benefit from the next generation of smartphones and other advanced wireless devices. In addition, Canadian circumstances are unique and must be taken into account when releasing spectrum.

10. Canada’s vast geography means that many Canadians living in rural areas may continue to rely on fixed wireless access using the 3500 MHz band for broadband connectivity. Fixed wireless access providers are expected to offer 5G fixed services to enhance broadband connectivity in rural areas. In accordance with one of the objectives of the Telecommunications Act—to promote the availability of reliable and affordable services to all regions of Canada—ISED is continuing to promote the usage of spectrum in rural areas through this Framework to auction licences in the 3500 MHz band.

11. In developing this Framework, the Minister has also been guided by the policy objective of the Spectrum Policy Framework for Canada (SPFC), to maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum resource. This objective and the enabling guidelines listed in the SPFC will continue to guide the Minister in managing the spectrum resource.

12. The Government of Canada is committed to promoting the delivery of broadband services to rural and remote areas across the country and launched Canada’s Connectivity Strategy in 2019. This strategy announced a national connectivity target where every Canadian home and business will have access to speeds of at least 50 megabits per second (Mbps) download and 10 Mbps upload by 2030. As part of this commitment, ISED takes into consideration the need to support and encourage connectivity for rural and remote communities, in designing and establishing the rules for this spectrum auction.

13. In May 2019, the Government of Canada released Canada’s Digital Charter: Trust in a digital world. The Digital Charter lists universal access as the first of 10 principles that will lay the foundation for a made in Canada digital approach, and will guide policy thinking and actions towards building an innovative, people-centered and inclusive digital and data economy built on trust. Universal access is the principle that all Canadians will have an equal opportunity to participate in the digital world and the necessary tools to do so, including access, connectivity, literacy and skills.

14. This Framework will support the Connectivity Strategy, Digital Charter and the SPFC policy objective by positioning Canada at the leading edge of the digital economy through the enabling of flexible-use of the 3500 MHz band to support 5G technologies. Consequently, ISED's policy objectives for the 3500 MHz band are to:

  • foster innovation, investment and the evolution of wireless networks by enabling the development and adoption of 5G technologies
  • support sustained competition, so that consumers and businesses benefit from greater choice
  • facilitate the deployment and timely availability of services across the country, including rural areas

15. ISED makes no representation or warranties about the use of this spectrum for particular services. Applicants should be aware that this auction represents an opportunity to become a licensee, subject to certain conditions and regulations. An ISED auction does not constitute an endorsement by the Department of any particular service, technology or product, nor does a spectrum licence constitute a guarantee of business success. Applicants should perform their individual due diligence before proceeding as they would with any new business venture.

4. Background

16. In 2014, ISED released DGSO-007-14, Decisions Regarding Policy Changes in the 3500 MHz Band (3475–3650 MHz) and a New Licensing Process (the 2014 Decision), which included a decision to implement a fundamental reallocation of the 3475–3650 MHz band to allow mobile services in addition to existing fixed services. The 2014 Decision also recognized the importance of fixed wireless services for the delivery of broadband in rural areas. It determined that the future licensing framework should permit existing licensees that are in compliance with existing conditions of licence, and who would have a high expectation of spectrum licences under the 3500 MHz flexible-use policy, to continue to provide fixed wireless access services.

17. Further to the 2014 Decision, SLPB-001-19, Decision on Revisions to the 3500 MHz Band to Accommodate Flexible Use and Preliminary Decisions on Changes to the 3800 MHz Band (the 2019 Decision) released in June 2019, outlined the changes to the 3500 MHz band plan to accommodate flexible-use in the band.

18. In June 2018, ISED released the Spectrum Outlook 2018 to 2022 (the Spectrum Outlook), which noted that there was strong interest in releasing the 3500 MHz band for flexible-use as quickly as possible. In addition, ISED noted the international interest in the 3500 MHz band and the expectation of it being a key band for the development of both mobile and fixed 5G services and outlined the expected timeline for a global equipment ecosystem.

19. ISED published SLPB-001-17, Consultation on Releasing Millimetre Wave Spectrum to Support 5G in June 2017 to begin the process to make this high-band spectrum, optimal for low-latency and high-bandwidth use, available for 5G services in the future. Further, in April 2019, ISED completed the auction for the 600 MHz band to support increased network capacity and the deployment of next-generation technologies using low-band spectrum. ISED considers that this approach of releasing spectrum in the low, mid and high frequency bands will be beneficial to the deployment of 5G technologies offering higher speeds, low-latency and improved capacity and coverage.

5. Band plan

20. In the 2019 Decision, ISED implemented a 3500 MHz band plan composed of 20 unpaired blocks of 10 MHz, as shown in figure 1, providing a channel spacing size supported by both 4G Long Term Evolution (LTE) and 5G New Radio (NR) equipment. This band plan will facilitate the issuance of new licences to both incumbent and new licensees.

Figure 1: Band plan for 3500 MHz band

Figure 1: Proposed 3500 MHz band plan
Description of figure 1

This figure shows the 3500 MHz band plan, which includes the frequency range of 3450 to 3650 MHz. The frequency range is divided into 20 unpaired blocks of 10 MHz each.

6. Pro-competitive measures

21. For the purpose of this Framework, national mobile service providers (NMSPs) will be defined as “companies with 10% or more of national wireless subscriber market share.” The subscriber market share will be determined in accordance with the 2019 CRTC Communications Monitoring Report and related open data.

22. Over the past decade, ISED fostered competition in the mobile wireless market through the inclusion of pro-competitive measures in spectrum auctions to facilitate access to this critical resource for providers that could compete with NMSPs. Regional service providers have since undertaken the substantial investments required to deploy wireless networks in markets across Canada and to provide mobile wireless services to Canadians resulting in a mobile wireless market that has greater choice and brings the benefits of increased competition to consumers.

23. As noted in the Framework for Spectrum Auctions in Canada, there are various measures available in an auction to promote a competitive marketplace, notably spectrum set-asides and spectrum aggregation limits, also known as spectrum caps. These measures can help address issues of market power and support competition in the retail market.

24. A spectrum set-aside ensures that a minimum amount of spectrum is reserved for a certain sub-set of entities. A set-aside was used in the 2008 AWS-1 auction, in the 2015 AWS-3 auction, and in the 2019 600 MHz auction.

25. A spectrum cap limits the amount of spectrum that each licensee is allowed to obtain. Spectrum caps have been used in past auctions, including the 2014 700 MHz auction and the 2015 2500 MHz auction.

26. In the Consultation, ISED sought comments on its proposal to adopt pro-competitive measures for the 3500 MHz licensing process and, if used, on the proposed use of a spectrum set-aside, an in-band spectrum cap, or a combination of both. ISED also sought comments on the amount of spectrum that should be reserved for a set-aside and/or the amount of spectrum that could be subject to an in-band spectrum cap.

Summary of comments

27. The cities of Burlington, Cambridge, Leduc, Moose Jaw, Prince George, Selkirk, Stonewall, Victoria and the Strathcona Regional District, as well as the Vancouver Economic Commission and Michael Thompson, Deputy Mayor and Councillor of Scarborough Centre, supported the adoption of a combination of a spectrum set-aside and a spectrum cap to promote access to spectrum for regional providers in all major markets and every region of the country.

28. Several other government entities encouraged the federal government to take steps to support sustainable competition in the market, including: the cities of Edmonton, Vancouver and Winnipeg, as well as the Association of Manitoba Municipalities.

29. Bell disagreed with ISED’s proposal to implement pro-competitive measures and with the basic premise that NSMPs have market power. Bell proposed that neither a spectrum set-aside nor a spectrum cap was necessary and that ISED should support a market-based approach to access spectrum. However, Bell stated that if a pro-competitive measure were adopted, the least objectionable option would be a 50 MHz cap.

30. Rogers agreed with ISED’s proposal to include pro-competitive measures, but only if it is in the form of a spectrum cap. It stated that regional competitors do not need assistance at auction and that a more holistic approach is required to resolve the competition issues facing the Canadian wireless industry. Rogers proposed the use of two spectrum caps: a cap of 60 MHz per bidder and a cap of 80 MHz per network.

31. TELUS noted that it generally disagrees with the use of pro-competitive measures. However, in the case of the 3500 MHz auction it agrees with ISED’s proposal to implement pro-competitive measures, but only in the form of a spectrum cap, given the amount of spectrum remaining in the hands of existing licensees after the re-purposing decision. TELUS proposed the use of a 50 MHz cap, stating that a 40 MHz cap would unnecessarily constrain the spectrum available in urban centres and that a 60 MHz cap would leave band entrants exposed to marginalization in major markets.

32. Cogeco, Eastlink, Ecotel, Iristel, SaskTel, Shaw, TekSavvy and CanWISP agreed with ISED’s proposal to implement pro-competitive measures. They each proposed the use of both a spectrum set-aside and a spectrum cap. Many of the proposals had specific recommendations for the size of the set-aside and the amount of the cap, as well as differentiated proposals based on population and the amount of open spectrum available by the type of tier (urban, rural, or remote). Cogeco also proposed the implementation of a spectrum cap within the set-aside spectrum to ensure reasonable access by small and regional operators. Xplornet and Québecor also agreed with ISED’s proposals to implement pro-competitive measures and proposed the use of a spectrum set-aside, but did not support the use of a spectrum cap. Similarly, EOWC/EORN was in favour of pro-competitive measures and the use of a spectrum set-aside, stating that a spectrum cap would not be sufficient.

33. Shaw further proposed that where there is insufficient unencumbered blocks to be assigned to the set-aside, the least encumbered blocks should go toward the set-aside. Similarly, Québecor also proposed to allow “lightly encumbered” blocks to be part of the set-aside.

34. BCBA supported pro-competitive measures and proposed the use of a 20 MHz set-aside in all service areas and a 40 MHz set-aside in service areas where there is 80 MHz or more of unencumbered spectrum available for auction, as well as a 60 MHz spectrum cap. BCBA supported the use of a cap within a set-aside as proposed by Cogeco, as well as Rogers’ proposal for a joint network cap of 80 MHz.

35. In a joint submission, two individuals, Kris Joseph and Michael McNally, agreed with ISED’s proposal to implement pro-competitive measures.

Discussion

36. A wide range of service providers, including NMSPs, regional service providers, and wireless Internet service providers (WISPs), have expressed demand for sufficient 3500 MHz spectrum to provide 5G services to Canadians. The release of this band presents a key opportunity to support the ability of Canada’s telecommunications service providers to offer 5G services to consumers, the ability of regional service providers to compete with the NMSPs in the provision of 5G services, and the ability of WISPs to offer fixed wireless services in rural and remote areas of the country.

37. However, without pro-competitive measures it is unlikely that the 3500 MHz auction would support ISED’s policy objectives. Notably, there is a risk that competition in the 5G mobile wireless market could suffer if regional service providers do not acquire sufficient spectrum. In their recent submission to the Canadian Radio-television and Telecommunications Commission’s (CRTC) review of mobile wireless services in 2019, the Competition Bureau found that the NMSPs possess retail market power, indicated by high concentration, high profitability, and high barriers to entry. The Competition Bureau also found that in areas where the NMSPs face a facilities-based regional service provider, prices are significantly lower. The Bureau reported that generally, prices are 35-40% lower in areas where facilities-based regional service providers have achieved a market share above 5.5%.

38. The use of spectrum set-asides has contributed to the growth of regional service providers and their competitiveness in the market as they continue to invest in their mobile wireless networks and grow their subscribership. A set-aside is likely to provide the increased opportunity for regional service providers to acquire sufficient spectrum to compete effectively against the NMSPs in the market for 5G services. In particular, access to spectrum in urban areas would promote the delivery of comparable services from these regional service providers and increase the level of competition in the market.

39. WISPs provide fixed broadband services to rural and remote areas that are generally underserved compared to urban regions, with slower broadband speeds and less choice. Many WISPs have noted that access to spectrum continues to be a barrier for service providers in these areas.

40. Accordingly, it is critical that both regional service providers and WISPs have the opportunity to acquire 3500 MHz spectrum given it is one of the key bands where 5G technologies are likely to be deployed. ISED is of the view that without the use of pro-competitive measures, NMSPs have the incentive and means to acquire all the spectrum available at auction, significantly hindering competition from regional service providers and WISPs.

41. Spectrum set-asides used in previous auctions reserved between 40-60% of the available spectrum for eligible bidders. In the Consultation for the 3500 MHz auction, many stakeholders identified 50 to 100 MHz of mid-band spectrum as necessary to provide high-quality 5G services. However, there is only a total of 200 MHz in the 3500 MHz band, much of which is currently licensed. Due to the high demand for this band and the need to balance access to spectrum for many different service providers, ISED is of the view that a set-aside of 50 MHz, accounting for essentially 25% of the total band, will provide the best opportunity to achieve the policy objectives for the 3500 MHz auction and will be implemented.

42. In addition to a set-aside, ISED also consulted on the use of a spectrum cap for the 3500 MHz auction. While spectrum caps have been used in past auctions to prevent excessive spectrum concentration, the application of a cap in the 3500 MHz auction – as a standalone measure or combined with a set-aside – would not support ISED’s policy objectives. Due to the existing holdings of existing licensees and the bidding power of the NMSPs, a spectrum cap would be ineffective in facilitating access for regional providers and WISPs in many tiers. This would have negative consequences for competition in the mobile wireless market, as well as the delivery of high-speed broadband in rural and remote regions.

43. While a set-aside is necessary to promote access to spectrum for smaller service providers, ISED recognizes that there are tiers where less than 50 MHz of spectrum is available for auction. In many of these tiers, WISPs have existing holdings that reduce the amount of spectrum available for auction. Therefore, where there is less than 50 MHz of spectrum available for auction, in tiers that do not contain a large (urban) population centre, ISED will not implement a set-aside.

44. On the other hand, it is noted that it is particularly critical that regional service providers have the opportunity to acquire enough spectrum to meaningfully offer 5G services and compete with NMSPs in highly populated areas. Recognizing the importance of each type of service provider and regional differences across the country, ISED will implement a set-aside in all Tier 4 service areas with a large population centre. In those service areas with less than 50 MHz available, all spectrum will be set-aside. This will enable the launch of high-quality 5G services, foster competition in the market, and promote access to spectrum in rural and remote areas.

45. Additionally, due to the holdings of existing licensees, spectrum for the 3500 MHz auction will be comprised of unencumbered and encumbered blocks of spectrum. In the Consultation, ISED proposed that if a set-aside is applied the set-aside would consist of unencumbered blocks and that any remaining unencumbered blocks would be open to all bidders. It was also proposed that all encumbered blocks would be open to all bidders.

46. However, there are certain tiers where the application of a 50 MHz set-aside could not be achieved using only unencumbered blocks. Notably, in four tiers (4-044: Drummondville, 4-052: Sainte-Agathe-des-Monts, 4-055: Ottawa/Outaouais, and 4-160: Kamloops) there is insufficient unencumbered spectrum to form a 50 MHz set-aside. However, in each of these tiers there are additional blocks of encumbered spectrum, with the majority of the block free from encumbrance (95% in Drummondville, 94% in Sainte-Agathe-des-Monts, 79%-99.5% in Ottawa/Outaouais, and 99.96% in Kamloops). To promote access to spectrum for smaller service providers, ISED agrees with Québecor’s and Shaw’s proposal to use encumbered spectrum as part of the set-aside in tiers with an insufficient amount of unencumbered spectrum.

Decision

D1

For the 3500 MHz auction, ISED will implement pro-competitive measures in the form of a 50 MHz set-aside as follows:

Tiers with a large population centre

  • In tiers with a large population centre (or large urban population centre as defined by the 2016 Census of Population from Statistics Canada and listed in annex G) that have a minimum of 50 MHz of unencumbered spectrum available for auction, a set-aside of 50 MHz of unencumbered spectrum will apply.
  • In tiers with a large population centre where there is less than 50 MHz of unencumbered spectrum, encumbered blocks will form part of the set-aside until a total of 50 MHz is set-aside. As a result, in certain tiers both encumbered and unencumbered blocks will form the set-aside. In tiers where the number of encumbered blocks exceeds the total number of blocks required to form a 50 MHz set-aside, the encumbered blocks with the smallest encumbrance will be used to form the set-aside. Any remaining encumbered blocks will be open to all bidders.
  • In tiers with large population centres that have less than 50 MHz of spectrum available for auction (including both unencumbered and encumbered), all spectrum will be set-aside.

Tiers without a large population centre

  • In tiers without large population centres that have a minimum of 50 MHz of unencumbered spectrum available for auction, a set-aside of 50 MHz of unencumbered spectrum will apply.
  • In tiers without a large population centre where there is less than 50 MHz of unencumbered spectrum, encumbered blocks will form part of the set-aside until a total of 50 MHz is set-aside. As a result, in certain tiers both encumbered and unencumbered blocks will form the set-aside. In tiers where the number of encumbered blocks exceeds the total number of blocks required to form a 50 MHz set-aside, the encumbered blocks with the smallest encumbrance will be used to form the set-aside. Any remaining encumbered blocks will be open to all bidders.
  • In tiers without large population centres that have less than 50 MHz of spectrum available for auction (including both unencumbered and encumbered), ISED will not implement a set-aside (listed in table A1 annex A), even if a band incumbent returns spectrum prior to the auction, resulting in one or more of these tiers having a minimum of 50 MHz of spectrum.

6.1 Eligibility for set-aside spectrum

47. In the Consultation, ISED sought comments on the proposal that eligibility to bid on set-aside spectrum be limited to bidders registered with the CRTC as facilities-based providers that are not NMSPs, and that are actively providing commercial telecommunication services to the general public in the relevant Tier 2 service area of interest, effective as of the date of application to participate in the 3500 MHz auction.

Summary of comments

48. Bell suggested that the proposed criteria were overly broad and they should be narrowed to only include providers who are registered with the CRTC as mobile wireless carriers or can demonstrate that they have deployed a fixed wireless network, and are actively providing commercial wireless services in the relevant Tier 4 area. Specifically, it added that the provision of satellite relay distribution and direct-to-home services should not qualify bidders as set-aside-eligible. Other stakeholders including Cogeco, Iristel and Québecor also raised similar concerns and suggested that providers of satellite relay distribution and direct-to-home services should not qualify as set-aside-eligible bidders. Xplornet agreed with other parties that broadcast services should not count towards meeting the eligibility criteria.

49. Rogers proposed set-aside-eligible bidders should be restricted to bidding only on set-aside spectrum in all service areas to increase auction fairness and competition within set-aside spectrum. Similarly, TELUS suggested that set-aside-eligible bidders be prohibited from bidding on open spectrum. It also strongly opposed the proposed eligibility criteria, including the restriction on NMSPs and the limitation to active Tier 2 service areas.

50. Cogeco and Québecor proposed that eligibility for set-aside spectrum be based on actively providing services in the Tier 4 area. Xplornet proposed that providers should have been actively providing services in the relevant Tier 4 area as of June 5, 2019, to be set-aside-eligible.

51. Eastlink proposed that the definition of set-aside-eligible bidders should include the provision of mobile or fixed wireless telecommunications services.

52. Ecotel proposed that eligibility for set-aside spectrum should not be restricted to offering services in the relevant Tier 2 area, nor should offering commercial telecommunications services be limited to the general public, but should also include industries, vertical markets, private networks, Internet of Things and others.

53. Shaw proposed that providers be required to present proof that they are actively offering commercial mobile wireless services in Canada using a radio access network that it owns and operates in the relevant Tier 4 area.

54. BCBA proposed that set-aside eligibility should be different for non-urban areas, with the set-aside only available to companies with less than $25 million in annual revenues. BCBA also proposed that operators serving a Tier 4 area adjacent to a provincial border be allowed to bid on adjacent Tier 4 areas in the neighbouring province.

55. CanWISP proposed that regional mobile service providers be restricted from accessing set-aside spectrum.

56. Kris Joseph and Michael McNally proposed that the Tier 2 requirement should be limited to urban contexts or eliminated.

57. SaskTel, TekSavvy and EOWC/EORN agreed with the proposed criteria.

Discussion

58. ISED has identified three primary issues raised by stakeholders concerning the eligibility criteria for set-aside spectrum licences:

  • defining “commercial telecommunications services”
  • defining “general public”
  • identifying the tier at which providers must be actively providing services to be set-aside-eligible

59. To promote optimal spectrum utilization and deployment, set-aside-eligible bidders must be actively providing commercial telecommunications services. Services that are regulated under the Broadcasting Act will not be considered as “commercial telecommunications services” for the purposes of set-aside eligibility, however all services that are regulated under the Telecommunications Act may qualify.

60. The definition of “general public” was raised as a potential issue concerning service providers that offer their services to industries, vertical markets, private networks, and other “non-traditional” consumers. For the purposes of this decision, “general public” can include businesses, enterprises and institutions, as well as “traditional” residential consumers. Therefore, providers who are actively offering commercial telecommunications services to any of these consumers will be considered set-aside-eligible as long as they meet the additional eligibility criteria.

61. ISED is of the view that allowing set-aside-eligible bidders to bid on spectrum in any Tier 4 service area within the relevant Tier 2 service area for which they are currently offering services would facilitate the expansion of smaller providers’ networks, including to rural areas.

62. Therefore, eligibility to bid on set-aside spectrum will be limited to those registered with the CRTC as facilities-based providers, that are not National Mobile Service Providers, and that are actively providing commercial telecommunications services to the general public in the relevant Tier 2 area of interest, effective as of the date of application to participate in the 3500 MHz auction. Services that are regulated under the Broadcasting Act will not be considered as “commercial telecommunications services” for the purposes of set-aside eligibility, however all services that are regulated under the Telecommunications Act may qualify. National Mobile Service Providers will be defined as “companies with 10% or more of national wireless subscriber market share.” The determination of subscriber market share will be based on the 2019 CRTC Communications Monitoring Report and related open data.

63. Eligible entities are referred to as set-aside-eligible bidders. Upon application to participate in the auction, applicants will be required to indicate in their application whether they are applying to bid as a set-aside-eligible bidder on a Tier 2 service area by service area basis.

64. In its assessment of a bidder's eligibility to bid on the set-aside spectrum, ISED will determine whether commercial telecommunications services are actively being provided to the general public in the service area by the potential bidder. Potential bidders will be required to demonstrate this by providing relevant documentation to ISED, which will include, but not be limited to, descriptions of:

  • the services being offered in the service area;
  • the retail/distribution network; and
  • how subscribers access services and the number of subscribers in the service area.

Decision

D2
Eligibility to bid on set-aside spectrum will be limited to those registered with the CRTC as facilities-based providers that are not national mobile service providers, and that are actively providing commercial telecommunications services to the general public in the relevant Tier 2 service area of interest, effective as of the date of application to participate in the 3500 MHz auction. Services that are regulated under the Broadcasting Act will not be considered as “commercial telecommunications services” for the purposes of set-aside eligibility, however all services that are regulated under the Telecommunications Act may qualify.

6.2 Transferability of set-aside spectrum

65. In the Consultation, ISED proposed that set-aside licences not be transferable to set-aside-ineligible entities for the first five years of the licence term.

Summary of comments

66. The majority of respondents, including Eastlink, Ecotel, Iristel, Québecor, Shaw, TekSavvy, Xplornet, BCBA and CanWISP agreed with the proposal.

67. Rogers agreed with the proposal but suggested extending the moratorium on the transfer of set-aside spectrum to include set-aside-eligible entities as well.

68. TELUS agreed with the proposal and recommended that the proposed five-year deployment requirements be assessed before the expiry of the prohibition on licence transfer to discourage spectrum speculation.

69. Bell disagreed with ISED’s proposal, recommending that the transfer restriction be removed and stating that there may be situations where the best course of action is for set-aside spectrum to be transferred to an incumbent.

Discussion

70. ISED maintains the view that the proposed transferability rules support the SPFC policy objective to maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum. The rules strike a balance between deterring speculators (i.e. those with no intention of deploying) from gaining access to spectrum and enabling the transfer of spectrum to entities that are positioned to use it.

71. At the same time, in order to further discourage the acquisition of spectrum for speculation, ISED agrees that carriers should be required to meet deployment requirements prior to a set-aside licence being transferred to non-set-aside-eligible entities. For this reason, in developing its decision on the transferability of set-aside spectrum, ISED also considered the comments received regarding the deployment requirements proposed in the Consultation. Specifically, ISED considered the concerns raised regarding the potential delays in a licensee’s ability to deploy in certain areas, given the two- and three-year protection periods for existing operations.

72. ISED maintains that in tier areas that contain at least one large population centre existing operations can be displaced after 6 months, therefore the deployment of the auctioned licences should not be unduly hindered by the existing licensees. However, as described in section 10.2, ISED acknowledges that longer protection periods in other areas could delay deployment and has adjusted the first deployment requirement milestone in those areas. However, in order to deter speculation, ISED is adjusting the restrictions on the transferability of set-aside licences in those areas. The later deployment requirements (within 7 years) should be met prior to transferring to a non-set-aside-eligible entity.

73. In the Consultation, ISED also proposed two exceptions on the transferability restrictions. The first was to allow subordinate licensing in support of network sharing on certain conditions (see section 10.3). The second was to allow an exchange of equal amounts of 3500 MHz spectrum in the same licence area between a set-aside-eligible entity and a set-aside-ineligible entity, subject to the provisions of section 5.6 of Client Procedures Circular CPC-2-1-23Licensing Procedure for Spectrum Licences for Terrestrial Services. These exceptions will be adopted and are outlined in the condition of licence on transferability and divisibility (see section 10.3).

74. For clarity, in tier areas where there are no set-aside licences available, licences in these tier areas will not be subject to the set-aside limitations on transferability irrespective of the licensee having been qualified as a set-aside-eligible bidder. In addition, in all service areas, licences acquired through the transition process will not be subject to the set-aside limitations on transferability.

Decision

D3

Set-aside licences acquired in tiers that contain at least one large population centre (i.e. those listed in annex G) will not be transferable to set-aside-ineligible entities for the first five years of the licence term.

Set-aside licences acquired in tiers that do not contain at least one large population centre (i.e. those not listed in annex G), may not be transferable to set-aside-ineligible entities for the first seven years of the licence term, unless the seven-year deployment requirements have been met, in which case they may be transferred after five years.

7. Licence areas

75. The Service areas for competitive licensing document outlines the general service areas that are used by ISED for the purposes of issuing spectrum licences. The defined geographic areas have been categorized under “service area tiers” that are based on Statistics Canada’s Census Divisions and Subdivisions.

76. As different wireless services and applications are best suited to different sizes of service areas, five tiers of service areas have been established.

  • Tier 1 is a single national service area
  • Tier 2 consists of 14 large service areas covering all of Canada
    • eight Tier 2 service areas that have provincial/territorial boundaries
    • six that are sub-provincial within Ontario and Quebec
  • Tier 3 contains 59 smaller regional service areas
  • Tier 4 contains 172 localized service areas
  • Tier 5 contains the smallest licensing area and comprises 654 localized service areas

77. Most of the current licences in the 3500 MHz band are based on Tier 4 service areas. Licensing based on smaller tier sizes, such as Tier 4, provides additional flexibility to licensees, by allowing them to either concentrate on the geographic markets of most interest or to aggregate smaller service areas into larger regions that correspond to their business needs.

78. Given the current licences in the 3500 MHz band and the overarching goal of providing services for flexible-use in urban and rural areas, ISED sought comments on its proposal to licence the new flexible-use licences in this band using Tier 4 service areas.

Summary of comments

79. Bell, Eastlink, Québecor, SaskTel, TELUS, Motorola Solutions and Xplornet supported ISED's proposal to issue licences using Tier 4 service areas. Rogers was also in support of using Tier 4 service areas; however, they would prefer the use of a larger Tier size. Shaw did not comment on Tier sizes in their initial comments, however, indicated support for using Tier 4 in their reply comments.

80. TekSavvy and CanWISP disagreed with ISED's proposal, suggesting that ISED use Tier 5 service areas instead. Iristel proposed using Tier 5 where encumbrances exist, and either Tier 3 or 4 in all other areas.

81. Cogeco supported the use of Tier 4 in all areas other than Toronto, Montreal and Vancouver, in which they recommended using Tier 5.

82. EOWC/EORN and Ecotel recommended using smaller licence areas, with EOWC/EORN claiming that any licence area larger than Tier 4 would be too big for this band.

Discussion

83. Current licences in the 3500 MHz band are based on Tier 4 service areas.

84. Licensing based on small tier sizes, such as Tier 4, provides additional flexibility to licensees, by either allowing them to concentrate on the geographic markets of most interest or to aggregate smaller service areas into larger regions that correspond with their business needs. The propagation characteristics of the 3500 MHz band help to reduce interference amongst providers deploying spectrum in areas of close proximity and are appropriate for Tier 4 service areas.

85. Some stakeholders raised concerns that Tier 4 was too large for this band, specifically suggesting the use of Tier 5. However, using Tier 5 would result in adding significant complexity to the auction process. Therefore, ISED maintains the view that Tier 4 service areas are the appropriate choice for the 3500 MHz band licensing process.

Decision

D4
All 3500 MHz licences issued through this competitive licensing process will be based on Tier 4 service areas. This will include partial tier licences that are contained within Tier 4 service areas as set out in section 7.1.

7.1 Amount of spectrum available

86. As described in the 2019 Decision, existing licensees will be eligible to apply for flexible-use licences for a predetermined amount of spectrum based on their existing holdings in a specific area through the transition process. As existing holdings may include Tier 4 licences, sub-divided licences and grid-cell licences, the amount of spectrum remaining in each service area will vary. ISED proposed to include all remaining spectrum (including partially encumbered Tier 4 areas) as part of the auction. ISED also sought comments on its proposal to classify all partial tier licences as encumbered blocks.

Summary of comments

87. Bell, Cogeco, Eastlink, Ecotel, Iristel, Québecor, Rogers, SaskTel, Shaw and TELUS all supported ISED’s proposal to include all remaining spectrum (including partially encumbered Tier 4 areas) as part of the auction. TekSavvy had no objection to the proposal. Iristel and Rogers noted the importance of providing additional information on the areas covered by encumbrances prior to the auction. Shaw also emphasized that set-aside-eligible bidders should get priority for non-encumbered products, while TELUS objected to set-aside-eligible bidders getting priority.

88. Xplornet disagreed with ISED’s proposal and suggested that encumbered blocks should be protected and assigned after the auction, due to the potential interference issues with existing licensees of partial-tier licences. In their reply comments, Bell and Rogers disagreed with Xplornet’s proposal, suggesting that interference issues could be resolved through standard engineering practices.

89. The BCBA, Bell, Ecotel, Iristel, Rogers, SaskTel and TELUS supported ISED’s proposals to classify all partial tier licences as encumbered blocks. Iristel, however, further suggested using Tier 5 where encumbrances allow, which Rogers specifically disagreed with in their reply comments. CanWISP, Québecor, TekSavvy and Xplornet stated that they had no objections to ISED’s proposal. Cogeco proposed that blocks with only minor encumbrances should be considered unencumbered.

Discussion

90. In determining the amount of spectrum available in each of the Tier 4 service areas as part of the auction, ISED proposed considering two groups of licences. The first group would include licences that cover the entire Tier 4 service area (Tier 4 licences). The second group would include licences that only cover a portion of a Tier 4 service area. Given the strong support, ISED will include all available spectrum in the auction. ISED will use the terminology described below to distinguish between the different types of licences and encumbrances in the 3500 MHz band.

91. Tier 4 licences: The amount of unencumbered spectrum blocks available in the auction is based on the difference between the total amount of spectrum in the band (20 blocks of 10 MHz each totalling 200 MHz) and the amount of spectrum that can potentially be licensed through the transition process (whether the existing licensees have applied through the transition process or not). See table A1 of annex A for the projected amount of unencumbered products available for auction in each tier. ISED will publish an updated list of unencumbered products available before the auction as noted in the Table of Key Dates.

92. There are two types of grid-cell licences that encumber specific Tier 4 service areas in this band. In the first case, the grid-cell licence is a geographically defined area that is carved out of a Tier 4 service area, such that only the remaining portion of the Tier is available for auction. These are referred to as existing grid-cell licences. The second type is a geographically defined area that is overlaid on a Tier 4 service area, such that the area is encumbered by existing operations that must be protected by the new licensee. That is, the new licensee must coordinate with the protected grid cell licensee. These are referred to as protected grid-cell licences. These are important distinctions to consider for potential bidders, as the ability of the auction winner to deploy in those tier areas may be affected.

93. Where existing licensees are eligible to apply for flexible-use sub-divided and/or grid-cell licences that cover only a portion of a Tier 4 service area through the transition process, the remaining geographic portion of the Tier 4 service area will be made available. The area and population that is covered by the existing sub-divisions or grid-cells in these areas varies. In some cases, the existing sub-divisions or grid cells cover the majority of the tier (leaving very little to be auctioned), while in others they cover a very small area within the tier (leaving the vast majority of the tier to be auctioned).

94. Partial tier licences: Where a service area is encumbered by an existing grid cell licence, only the geographic area around the existing grid cell is available for auction. The licence available for auction does not include the geographic area that is encumbered by the existing grid cell. For a list of partial tier licences available at auction, refer to table A3 of annex A. ISED will publish an updated list prior to the auction, as required.

95. Tier 4 licences encumbered by a protected licence: Where a Tier 4 service area is encumbered by a protected grid cell licence, the entire Tier 4 service area is available at auction, but with the condition that the new licensee must protect the operations of the grid-cell licensee within a defined area. The licence available for auction includes the geographic area that is encumbered by the protected grid-cell. For a list of available Tier 4 licences that are encumbered by a protected licence, refer to table A2 of annex A. ISED will publish an updated list prior to the auction, as required.

96. For the purpose of the auction, licences encumbered by both types of grid-cell licences as explained above, will be offered as encumbered blocks of spectrum.

97. ISED notes the concerns expressed by Xplornet regarding the potential for interference with existing operations, however, ISED agrees with Bell and Rogers that standard technical practices and coordination could mitigate any potential issue. Furthermore, the existing holder of a grid-cell licence will also have an opportunity to acquire the spectrum licence for the remaining area of the tier. Responses to the consultation confirm that there is interest in these portions of Tier 4 service areas. As a result, ISED will make these partial tier and encumbered Tier 4 licences available in the auction. In these cases, the number of spectrum blocks to be made available, is based on the number of spectrum blocks that will be encumbered by grid-cells and sub-divided licences issued through the transition process.

98. Noting that most stakeholders agreed, or did not object to the classification of all partial tier blocks as encumbered, ISED will proceed in this manner. While there is interest in these blocks, many noted that even minor encumbrances could create challenges in deploying an extensive network and that it will be important for bidders to have detailed information before the auction. As noted in the consultation, before the auction, ISED will publish a map of sub-divided and grid-cell licences that reflect the holdings as of June 6, 2018 (the date of reference for the implementation of the 2019 Decision) which will be updated as required, for licensees that continue to be eligible for these holdings. In addition, ISED will also publish a list of all licences available for auction and will note which service areas have encumbrances. This will provide the necessary information for potential bidders to develop their bidding strategy. Further, as noted in the 2019 Decision, ISED requires all transfer requests for fixed use licences in the 3500 MHz Band to be received six months prior to the auction application date, as per the Table of Key Dates. This will allow ISED to process the applications, and publish the final list of products in a timely manner.

Decision

D5
After taking into account licences that may be issued as part of the transition process, ISED will include all remaining spectrum, including encumbered spectrum as part of the auction. The projected amount of spectrum is listed in annex A. A final listing of all spectrum to be auctioned will be published before the auction, as per the Table of Key Dates.
D6
ISED will classify all partial tier licences and encumbered Tier 4 licences as encumbered blocks.

7.2 Frequency determination and contiguity of spectrum

99. ISED noted that it would be beneficial to consider the assignment of frequencies to both auctioned licences and licences obtained through the transition process to be assigned specific frequencies at the same time. With this in mind, ISED sought comments on its proposal to consider all spectrum acquired through the auction and the full Tier 4 licences that will be issued through the transition process, simultaneously in the assignment round of the auction, in order to determine the specific frequency assignments of all licences in the 3500 MHz band.

100. ISED also sought comments on its proposal that licensees who acquire multiple flexible-use Tier 4 licences in a given area, either as a result of the auction or as a result of the transition process, be assigned contiguous spectrum, and that this also apply to partial area licences and Tier 4 licences encumbered by a protected grid-cell licence acquired through the auction, but not to grid-cell or subdivided licences obtained through the transition process.

101. ISED proposed that sub-divided and grid-cell licences, which will be issued to existing licensees as part of the transition process will not be assigned frequencies through the auction process. The determination of their new frequencies, however, would be based on the result of the auction and the frequencies assigned to the encompassing partial tier licence or encumbered Tier 4 licence. There would be no guarantee of contiguity for these grid-cell or sub-divided licences.

Summary of comments

102. All respondents that provided input on the topic supported ISED’s proposal to assign contiguous spectrum to those licensees that acquire multiple flexible-use Tier 4 licences either through the auction or the transition process, and that this apply to partial tier licences acquired through the auction. Rogers proposed that ISED consider the assignment round of the 3500 MHz auction as simply Part A of the assignment round of the greater 3300-4200 MHz band, and take into consideration contiguity of the assignment round of the future 3800 MHz auction as Part B. CanWISP supported Rogers’ position, with the caveat that the 3800 MHz band be set-aside for smaller providers.

103. Bell, Cogeco, Eastlink, Ecotel, Québecor, Rogers, SaskTel, Shaw and TELUS supported ISED’s proposal to consider all spectrum acquired through the auction and the complete Tier 4 licences that will be issued through the transition process, simultaneously in the assignment round of the auction, in order to determine the specific frequency assignments of all licences in the 3500 MHz band. The BCBA, CanWISP, TekSavvy and Xplornet, each suggested that smaller or existing users should get priority in the assignment round to minimize disruptions to existing services or to ensure smaller companies can have access to more desirable spectrum.

Discussion

104. In response to the suggestion that the assignment round be considered as the first part of the overall assignment of the broader 3300-4200 MHz band, ISED notes that any changes to spectrum utilization in these bands will be considered following public consultation. 

105. Given the broad support, ISED maintains that it would be beneficial to consider the assignment of frequencies for both auctioned licences and licences obtained through the transition process at the same time. This will facilitate a more efficient assignment of spectrum as the determination of frequencies for the full band would be considered simultaneously. As such ISED will ensure that licensees that acquire multiple flexible-use Tier 4 licences in a given area, either as a result of the auction or as a result of the transition process, be assigned contiguous spectrum. This will also apply to partial tier licences and encumbered Tier 4 licences acquired through the auction, but not to grid-cell or subdivided licences obtained through the transition process. The determination of specific frequencies for all Tier 4 service area spectrum holdings will be conducted during the final stage of the auction (the assignment stage). In the rare case where a Tier 4 service area is entirely encumbered by sub-divided or grid-cell licences, assignment and contiguity will be determined based on the licence that covers the largest portion of population. In this case, as explained in section 7.2 the licensee with the licence that covers the largest portion of the population will be eligible to participate in the assignment stage for its preferred frequency selection.

106. ISED will not implement any assignment prioritization for the 3500 MHz band. All participants will have the opportunity to express their preferences for specific blocks at the same time.

Decision

D7

ISED will consider all spectrum licences acquired through the auction and full Tier 4 licences that are eligible to be issued through the transition process, simultaneously in the assignment round of the auction, in order to determine the specific frequency assignments of all licences in the 3500 MHz band.

Sub-divided and grid-cell licences, which will be issued to existing licensees as part of the transition process will not be assigned frequencies through the auction process. The determination of their new frequencies, however, will be based on the result of the auction and the frequencies assigned to the encumbered Tier 4 licence or the encompassing partial tier licence. There will be no guarantee of contiguity for these grid-cell or sub-divided licences.

As an exception to the preceding paragraph, in the rare case where a Tier 4 service area is entirely encumbered by sub-divided or grid-cell licences, assignment and contiguity will be determined based on the licence that covers the largest portion of population. In this case, that licensee will be eligible to participate in the assignment stage for its preferred frequency selection.

D8

ISED will ensure that licensees who acquire multiple flexible-use Tier 4 licences in a given area, either as a result of the auction or as a result of the transition process, be assigned contiguous spectrum, and that this also apply to partial area licences acquired through the auction.

7.3 Bundling of some highly encumbered licences

107. In a particular tier area, where existing sub-divided or grid-cell licences are encumbering the majority of the tier, ISED proposed that the remaining portions of the encumbered areas be bundled in the auction as a combined encumbered block of 20, 30, 40 MHz or more, depending on the number of 10 MHz blocks being bundled. This would apply where the geography of the remaining portions is the same or similar, and/or the remaining area covers a relatively small population.

Summary of comments

108. Bell, Ecotel, Rogers and Xplornet supported ISED’s proposal to bundle some encumbered licences. Québecor had no objection, while Cogeco, Shaw and TELUS wanted more details on the criteria and what licences would be included. TELUS noted that it would be opposed to expanding the list further than what was in the Consultation. SaskTel only wanted to see identical blocks bundled, not similar. The BCBA, CanWISP, Iristel and TekSavvy disagreed with the proposal as it adds complexity or could raise prices rendering the spectrum unaffordable for smaller players.

Discussion

109. Given the large number of service areas and the existence of various levels of encumbrances, the 3500 MHz auction will have a large number of products. ISED has considered options for simplifying the bidding process without putting the auction integrity at risk. The proposal to bundle some of the licences in areas where there is little population coverage is seen as an opportunity for simplification. As per ISED’s original proposal, the bundling will only apply where the geography of the remaining portions is the same or similar, and/or the remaining area covers a relatively small population, which could keep prices low. The bundled blocks will be issued as individual licences of 10 MHz following the auction. In other cases where the geography is different the encumbered service areas would be auctioned in separate 10 MHz blocks.

110. As of the date of publication of this Framework, ISED is planning to bundle encumbered products in the following tiers:

  • 4-071 Napanee
  • 4-119 Estevan
  • 4-120 Weyburn
  • 4-122 Swift Current
  • 4-123 Yorkton
  • 4-126 Watrous
  • 4-129 Lloydminster
  • 4-158 Squamish/Whistler
  • 4-171 Nunavut

111. The planned products to be bundled are listed in annex B. This list will be updated and published prior to application date to participate in the auction, as per the Table of Key Dates, to reflect any relevant changes that would apply following the receipt and processing of any transfer requests for fixed use licences. As per the June 2019 Decision, any such transfer requests must be received six months prior to the auction application date at the latest.

Decision

D9

ISED will bundle certain encumbered licences offered in the auction as a combined encumbered block of 20, 30, 40 MHz or more, depending on the number of 10 MHz blocks being bundled. In particular, the bundle would include the tier areas where existing sub-divided or grid-cell licences are encumbering the majority of the tier. This would apply where the geography of the remaining portions is the same or similar, and/or the remaining area covers a relatively small population. The licences will be auctioned as a bundle, but issued as separate 10 MHz licences.

ISED’s planned list of bundled encumbered blocks can be found in annex B, though this list will be finalized once all transfer requests for fixed use licences are received and processed.

8. Auction format and rules

112. In the Consultation, ISED proposed the clock auction format with generic licences and intra-round bidding. As proposed, ISED will use the clock auction format for the 3500 MHz auction. Section 8 outlines stakeholder views regarding this proposal, along with ISED’s responses and rationale for decisions related to the adoption of the clock auction format.

8.1 Generic licences

113. ISED will auction the 3500 MHz band in unpaired blocks of 10 MHz, as discussed in section 5, and will use Tier 4 service areas, as discussed in section 7. In the Consultation, ISED proposed that these blocks be offered as generic licences in each of the 172 service areas.

114. Generic licences are blocks of spectrum that are sufficiently similar to one another and comparable in value so they can be offered as a single category in each service area. In determining whether licences should be regarded as generic, ISED considered the frequency location in the band, the block size, the encumbrance, and possible technology and interference constraints.

115. In the Consultation, ISED proposed that, should a set-aside be applied in each service area, the set-aside would consist of unencumbered spectrum only, and that any remaining unencumbered spectrum would be open to all bidders. It was also proposed that all encumbered blocks would be open to all bidders. Given the use of generic licences and the ability of set-aside-eligible bidders to bid on all available blocks in a service area, there is a possibility that set-aside-eligible bidders, individually or collectively, would be able to bid on and win more than the number of blocks reserved for the set-aside in a service area.

116. ISED also sought comments on its proposal that all blocks won by set-aside-eligible bidders be considered set-aside blocks, and be subject to the limit on transferability as described in section 6. In other words, where one or more set-aside-eligible bidder(s) collectively win(s) more than the quantity of spectrum reserved for the set-aside in a given service area, ISED asked if all of these blocks should be considered set-aside blocks, and be subject to the same limits on transferability.

Summary of comments

117. BCBA, Bell, Cogeco, Eastlink, Ecotel, Iristel, Québecor, Rogers, SaskTel, TELUS, Shaw and Xplornet generally supported ISED’s proposal on the use of generic licences.

118. CanWISP and TekSavvy opposed including all unencumbered blocks in each service area in a single generic product. CanWISP proposed to have the lower and upper half of the 3500 MHz band treated as separate products. TekSavvy proposed three categories of blocks:

  • unencumbered blocks overlapping LTE band 42
  • unencumbered blocks overlapping LTE band 43
  • encumbered blocks

119. In their reply comments, Bell, TELUS and Rogers opposed proposals to auction different parts of the band as separate products. Bell argued that bidders could express their preferences with regard to specific frequencies during the assignment round. Rogers maintained that the use of generic licences across the entire band simplifies the auction process and guarantees contiguous assignment with existing holdings in the 3500 MHz band, which is of the utmost importance for maximizing the utility of the spectrum.

120. BCBA, Bell, CanWISP, Eastlink, Ecotel, Iristel, Rogers, SaskTel and Shaw supported ISED’s proposal to create separate categories.

121. Québecor agreed with ISED’s proposal to create separate categories but suggested allowing “lightly encumbered” blocks (where more than 75% of the population is available) to be considered as not encumbered blocks and to be included in determining the spectrum available for the set-aside. Rogers opposed this suggestion in its reply comments.

122. Xplornet did not believe that it is necessary to separate categories of licences as part of the auction and proposed that the encumbered blocks be allocated using separate processes subsequent to the main auction.

123. BCBA, CanWISP, Eastlink, Québecor, Rogers, SaskTel, Shaw and TekSavvy all agreed with ISED’s proposal to categorize all blocks won by set-aside-eligible bidders as set-aside blocks.

124. Bell and Xplornet, however, disagreed with this proposal. Bell opposed the imposition of the transferability restrictions on any spectrum. In Bell’s opinion, such restrictions could frustrate secondary market dynamics and delay the deployment of spectrum. Bell recommended that if transferability restrictions are imposed on the set-aside spectrum, only the initial amount of spectrum available for the set-aside in a service area be subject to these restrictions. Xplornet suggested that the open blocks won by the set-aside-eligible bidders should be treated the same as all other open blocks.

Discussion

125. The use of generic licences simplifies the bidding process, as it enables bidders to indicate quantities of licences desired in each area instead of identifying specific licences. Bidding on the number of licences, as opposed to specific licences, greatly reduces the number of possible combinations that bidders have to consider in placing their bids. Further, the use of generic blocks to auction the full 3500 MHz band will facilitate the assignment of contiguous blocks of spectrum.

126. ISED anticipates that the equipment ecosystem and technical characteristics will be generally the same or very similar for all frequencies in the 3500 MHz band. Therefore, all unencumbered blocks in any given service area are expected to be of comparable value and could be auctioned as generic blocks in the allocation stage. Bidders will be able to express their preferences for specific frequencies during the assignment stage of the auction, as explained in section 8.8.

127. In areas where encumbered blocks of spectrum are available, the presence of an encumbrance has the potential to significantly change the value of a licence. The winner of the encumbered block will be required to protect the operations of the existing grid-cell licensee(s) even if the encumbered area covers a relatively small portion of the population of an entire Tier 4 service area. Therefore, encumbered blocks will be offered as a separate category. If there are different levels of encumbrance for different blocks in the same service area, each encumbrance level for the service area will be offered as a separate category.

128. The separation of encumbered blocks within the same service area based on the level of encumbrance will allow bidders to adjust their valuations for licences in accordance with the level of encumbrance and will facilitate price discovery. Auctioning both encumbered and unencumbered blocks in the same process permits achieving contiguity of frequency assignments for the allocation stage winners and for existing holders of Tier 4 licences in an efficient and timely manner. The spectrum in the 3500  MHz band will be assigned in a contiguous manner in each service area for unencumbered and encumbered blocks allocated in the auction and for existing holdings of Tier 4 blocks.

129. The application of a set-aside as outlined in section 6 indicates that in some service areas, a combination of both unencumbered and encumbered blocks will be reserved for set-aside while in some service areas (see annex A) no blocks will be reserved for set-aside. This requires a change in the manner in which the division of blocks was outlined in the Consultation. Specifically, the groupings of unencumbered open blocks, unencumbered set-aside blocks, and encumbered open blocks with different levels of encumbrance, will be replaced by the following groupings: set-aside blocks (where available) and open blocks (where available) at each encumbrance level and service area combination. Each such grouping (where available) will be considered to be a separate product.

130. As noted in section 6.2, ISED maintains its view that it is necessary to impose the restrictions on the transferability of set-aside spectrum. These restrictions are imposed in order to ensure the effectiveness of the set-aside and to deter speculation from entities that do not intend to use the spectrum to deploy services.

131. Even though the restrictions will limit the transferability of licences won by set-aside-eligible bidders for a number of years, it is important to note that set-aside spectrum serves to provide a significant advantage to set-aside-eligible bidders by effectively protecting them from competition by national mobile service providers (NMSPs) during the auction.

132. With the adopted auction format and generic products structure, there is a possibility that set-aside-eligible bidders, individually or collectively, will be able to bid on and win more than the number of blocks reserved for the set-aside in a service area. In the case where one or more set-aside-eligible bidder(s) individually or collectively win(s) more than the number of blocks reserved for the set-aside in a given service area, all of these blocks will be considered set-aside blocks, and will effectively be subject to the same conditions of licence set out in section 10.3.  The Decision on the pro-competitive measures indicates that there will be no set-aside available in some service areas. The blocks won by set-aside-eligible bidders in these service areas will not be considered as set-aside and, therefore, they will not be subject to the set-aside limitations on transferability.

Decision

D10
ISED will make use of generic licences in the auction. Spectrum blocks of 10 MHz will be offered as generic licences in all Tier 4 service areas. In areas where there are encumbered blocks of spectrum available, these blocks will be offered as a separate category or separate categories.
D11
ISED will create separate products for set-aside blocks (where available) and open blocks (where available) at each encumbrance level and service area combination. Annex A contains information on the number of unencumbered and encumbered blocks available as well as on the amount of spectrum reserved for set-aside in each service area.
D12
In the case where one or more set-aside-eligible bidder(s) individually or collectively win(s) more than the number of unencumbered or encumbered blocks reserved for set-aside in a given service area, all of these blocks will be considered set-aside blocks and will be subject to the same conditions of licence set out in section 10.3, including the set-aside limitation of transferability. The blocks won by set-aside-eligible bidders in service areas where there is no set-aside will not be subject to the set-aside limitations on transferability.

8.2 Anonymous bidding and information disclosure during the auction

133. In the Consultation, ISED sought comments on the proposal to use anonymous bidding during the auction. ISED also sought comments on the information that will be disclosed to bidders after each clock round, at the end of the allocation stage and after each assignment round.

134. ISED proposed that after each clock round, bidders would be provided with information regarding their own bidding activity and the aggregate demand in each service area, as well as their own eligibility and prices of products on which they are eligible to bid in the next clock round.

Summary of comments

135. BCBA, CanWISP, Cogeco, Ecotel, Iristel, Shaw, TekSavvy, TELUS and Xplornet all agreed with the proposal of using anonymous bidding during the auction.

136. Eastlink opposed the use of anonymous bidding, stating that it generally favours the large national incumbent bidders as they inherently have more information available to them during the price discovery rounds.

137. Bell suggested that if set-aside blocks are implemented, ISED should provide the information on the aggregate demand for open and set-aside blocks separately. Rogers supported the use of anonymous bidding but also proposed to release the aggregate demand information for open and set-aside blocks separately. In its reply comments, TELUS supported the views of Bell and Rogers on providing complete information about aggregate demand to all bidders.

138. SaskTel supported the approach of providing information on the bidder's own bidding activity and the aggregate demand for each product in each service area.

Discussion

139. The proposal by Eastlink not to use anonymous bidding could result in bidders focusing on the bidding behaviour of others, rather than on their own valuations, in relation to the price and demand information. This would increase the potential for gaming and anti-competitive behaviour, complicating the bidding process for bidders and possibly leading to a less efficient outcome. For these reasons, ISED notes that in recent years, auctions around the world have utilized anonymous bidding, regardless of the format used.

140. ISED agrees with arguments advanced by Bell, SaskTel, TELUS and Rogers in support of their proposal to provide the information on the aggregate demand for set-aside products separately from the aggregate demand for open products to all bidders.

141. Providing information on open and set-aside products separately could help bidders to mitigate their exposure risk and could enhance the price discovery process in the allocation stage. It will also allow releasing prices for all products after the conclusion of each clock round to all auction participants. The availability of this information will enhance the transparency of the auction process.

Decision

D13
ISED will use anonymous bidding for all stages of the auction.
D14

Following every clock round, bidders will be provided with information on their own bidding activity from previous rounds and their eligibility for the next round. In addition, each bidder will be informed of the aggregate demand for each set-aside product and the aggregate demand for each open product from the previous round and the price of each product for the next round. Bidders will not be informed about the individual bids submitted by other bidders or about the remaining eligibility of other bidders.

At the end of the allocation (clock) stage, each bidder will be informed of the number of blocks it won in each product, along with the price for these blocks.

Following the end of each assignment round, after the results have been verified by a third party, participating bidders will be notified of the specific frequencies that they have been assigned and the assignment price.

At the end of the auction, provisional winning bidders will be notified of the specific licences that they have won and the final prices to be paid (i.e. the sum of their allocation stage prices and assignment prices). Regardless of whether they actively participated in the assignment stage or not, eligible licensees will be notified of the specific frequencies that are available to them through the transition process.

8.3 Clock auction format

142. In the Consultation, ISED proposed to use a clock auction format for the 3500 MHz spectrum auction. A detailed description of the clock auction format to be used is described in annex C. This is a two-stage auction format that provides a simultaneous multiple-round allocation (clock) stage to determine the quantity of generic blocks won in each product, followed by an assignment stage to determine the specific frequency assignment for each winner.

Summary of comments

143. Bell, Cogeco, Eastlink, Ecotel, Québecor, Rogers, SaskTel, Shaw and Xplornet supported the use of a clock auction format.

144. BCBA, CanWISP, Iristel and TekSavvy generally supported the use of the clock auction format but expressed concerns about intra-round bidding in the allocation stage.

145. TELUS agreed with the use of a clock auction format but claimed that only a clock auction without any set-aside would address almost all of the gaming behaviours observed in the past auction.

Discussion

146. ISED maintains its view that the clock auction format is well suited for the 3500 MHz band licensing process. The multi-round allocation stage with intra-round bidding facilitates price discovery and allows for an efficient progression of the auction. Information released to bidders after each clock round helps them to mitigate their exposure risk. The allocation stage pricing provides bidders with high price certainty.

147. The structure of the assignment stage will guarantee the assignment of contiguous spectrum in each service area both to the auction winners and to the existing holders of Tier 4 service area licences. The second price feature of the assignment stage will allow bidders to bid full values on their preferred assignments while paying an appropriate amount for being assigned their preferred frequencies.

Decision

D15
ISED will use the clock auction format for the 3500 MHz auction. Further details are provided in annex C.

8.4 Structure of the allocation (clock) stage

148. The allocation stage is a simultaneous multiple-round auction process with bidding on generic blocks, where all licences are offered at the same time. Before the start of the auction, ISED will specify the initial supply of blocks in each product and the opening bid price (reserve price) of each product. An activity rule is used to improve price discovery and maintain auction progress.

149. The allocation stage consists of a number of rounds in which the bidders identify the number of blocks demanded of each product, at the price specified by ISED for that round (the clock price). As the allocation stage progresses, the clock prices of products with excess demand increase.

150. In the Consultation, ISED proposed to use intra-round bidding in the allocation stage. With intra-round bidding, all rounds that take place after Round 1 have a range of prices associated with them. The start-of-round price is the lowest price in this range, whereas the round’s clock price is the highest price in this range. In Round 1, each bidder indicates the number of blocks it demands for each product at the opening bid price. In subsequent rounds, a bidder can either maintain its demand for a product at the round’s clock price or request to change its demand by submitting a bid at a price that is in between the start-of-round price and the clock price. The ability to express demand at any price between the start-of-round price and the clock price (rather than simply at the clock price, as would be the case without this feature) is referred to as intra-round bidding.

151. At the end of a round, bids are processed to determine the number of blocks held by each bidder for each product after the round (the processed demand). A bid to maintain demand from the previous round for a product is always applied during bid processing. A bid to increase demand for a product is applied only if the increase will not cause the bidder’s processed activity (i.e. the activity associated with the bidder’s processed demands) to exceed the bidder’s eligibility for the round. A bid to decrease demand for a product is generally applied only if the reduction will not cause aggregate demand to fall below supply for that product (or to fall further below supply, if it is already below supply). This guarantees that once a product has aggregate demand greater than or equal to supply, there will never be any unsold blocks for the product. For a detailed description of how bids are processed, when there is both an open product and a set-aside product in an encumbrance level and service area combination, see sections C7 through C9 of annex C.

152. A bidder can submit a bid that expresses its demand for a product at any price between the start-of-round price and the clock price. In a simultaneous auction with intra-round bidding, a bidder’s ability to increase the demand for one product may depend on whether it can reduce the demand for another product. In order to treat bids for different products in a consistent manner, the price intervals between the start-of-round price and the clock price are expressed in relative (percentage) terms. Bids for a change in demand are processed in ascending order of “price point.” The price point is generally defined by how much the intra-round bid exceeds the start-of-round price in percentage terms relative to the distance between the start-of-round price and the clock price for the product. For a detailed description of how the price point is defined when there is both an open product and a set-aside product for the same encumbrance level and service area combination, see section C6 of annex C.

153. Once processed demands have been determined, the auction system will generally calculate the posted price of every product for the round as follows. A product’s posted price would be equal to the clock price of the same round if aggregate demand exceeds supply. If aggregate demand for a product is equal to supply due to an intra-round bid for a reduction in demand that was applied, the posted price would be the price of that intra-round bid. Therefore, the price for the round would not need to increase to the level of the clock price if the demand and supply are balanced at some price that is below the clock price, as expressed using intra-round bidding. If aggregate demand for a product is less than or equal to supply and no bid for a reduction in demand was applied, the posted price would be equal to the start-of-round price. The round’s posted price becomes the start-of-round price for the next round. For a detailed description of how posted prices are set when there is both an open product and a set-aside product for the same encumbrance level and service area combination, see section C8 of annex C.

Summary of comments

154. Rogers, SaskTel, Shaw, Québecor and Xplornet supported the proposed structure of the allocation stage. Eastlink agreed with the allocation stage structure if set-aside prices are not affected by larger bidders and parking is discouraged. BCBA, CanWISP and Iristel generally supported the proposed structure of an allocation stage but expressed some concerns about intra-round bidding. TekSavvy opposed the use of intra-round bidding and supported a simpler auction process.

155. Bell supported the structure of the allocation stage and agreed with ISED's perspective that using a combinatorial clock auction would introduce computational risks and complexity for bidders. However, Bell argued that the proposed methodology for calculating eligibility would increase the exposure risk since it could result in unrequested reductions in eligibility. Bell proposed three rules to address these issues:

  • a bidder's activity should be set equal to the eligibility points associated with its processed demand or the eligibility points associated with its requested demand, whichever is larger
  • allow optional "all-or-nothing" bids on individual products
  • allow optional overall "all-or-nothing" bids

156. In its reply comments, Rogers supported the first rule proposed by Bell. Rogers believed that this rule would allow bidders to better control their eligibility and would eliminate the risk that they experience an unrequested reduction in eligibility. However, Rogers disagreed with the other rules proposed by Bell because these rules may introduce opportunities for gaming.

157. Cogeco proposed a number of modifications for auction rules. It recommended allowing switch and all-or-nothing bids similar to what has been used by the United States’ Federal Communications Commission for the Forward Auction portion of the Broadcast Incentive Auction held in 2016-17. Further, Cogeco proposed starting from a lower activity requirement in comparison to what was proposed in the Consultation (i.e. 70% instead of 90%), to provide activity rule waivers, to include a “withdrawal” feature, and to add an extended round to provide bidders with the opportunities of acquiring unsold licences. Reply comments received from stakeholders in response to Cogeco’s proposals were divided with some stakeholders supporting and some opposing selected proposals.

158. TELUS generally supported the proposed structure of the allocation stage but suggested that the intra-round bidding feature may require more time between rounds for bidders to submit their bids. Also, TELUS discouraged ISED from using intra-round bidding as a justification for larger bid increments arguing that the auction should be allowed to evolve at a reasonable pace. TELUS recommended providing a small number of activity rule waivers to each bidder. Bell and Cogeco supported this proposal but Xplornet disagreed because it could encourage gaming.

159. Rogers and TELUS expressed their concern about the sequential demand processing claiming that it may prevent a simultaneous switch of demand on different products between bidders.

Discussion

160. ISED considers that the proposed structure of the allocation stage with generic licences and intra-round bidding will promote an efficient allocation of the 3500 MHz spectrum. The use of generic licences will allow achieving contiguity of the spectrum allocated in the allocation stage and of the pre-existing spectrum holdings within service areas. It will also speed up the allocation stage of the auction. The use of intra-round bidding has several advantages:

  • bidders can better express demand
  • ties in which multiple bidders change demand at the same price are less likely
  • a larger bid increment can be used without causing inefficiencies, potentially reducing the number of rounds

However, ISED will consider the overall auction dynamics for determining appropriate bid increments.

161. The concerns about the auction format’s complexity will be addressed through bidder training including participation in the mock auctions. This will provide qualified bidders with the opportunity to familiarize themselves with the auction format and software. Annex C provides further details with regard to the auction rules.

162. In the Consultation, ISED proposed that after the first round, a bidder’s eligibility to bid would be determined by its processed activity from the previous round. Some stakeholders raised a concern that this may lead to an unrequested reduction in eligibility as a result of sequential bid processing. To address this risk, ISED will change the method for calculating a bidder’s eligibility as outlined in section 8.6 and annex C. The adopted formula allows for a “grace round” before definitively reducing a bidder’s eligibility when the submitted activity is higher than the processed activity.

163. With regard to the proposals to introduce more complex “switch” and “all-or-nothing” bids, ISED observed that in cases where other jurisdictions implemented these or similar bid types, their actual use by bidders during the auctions was very limited. For example, there were only 129 all-or-nothing bids out of a total of 145,638 bids submitted in the Forward Auction portion of the Broadcast Incentive Auction held in 2016-17 in the U.S. At the same time, implementing such bids could significantly complicate the auction rules, software, and bidding process, so ISED does not consider that using bid types other than what was proposed in the Consultation would be beneficial for this auction.

164. Regarding the proposals to use waivers, withdrawals, lower activity requirements and an extended round, ISED will not implement these additional features in the 3500 MHz auction. Although ISED used some of these elements in the past, implementing them in the clock auction could create uncertainty with respect to the exact level of bidders’ demand, interfering with the basic clock price-setting and winner determination, which would provide less helpful price-discovery information to bidders and prolong the bidding process. As bidders plan their bidding strategies, they need accurate information about the relative prices and the level of excess demand in different markets. If significant bidding eligibility is held back, the available price and demand information will be less reliable. In addition, the revised method for determining eligibility already provides some additional flexibility to bidders in comparison to the rules outlined in the Consultation.

165. ISED does not consider the inability of a sequential bid processing approach to accommodate a simultaneous switch by two bidders to be a serious shortcoming. It is unlikely that the bidders would want to switch in the opposite direction at the same time. Such a switch would mean that one of the bidders wants to increase demand for a product that has become relatively more expensive. Unless bidders are bidding strategically, all of the attempted switches are likely to go in the same direction, and the sequential processing will not impact a bidder’s ability to express its preferences.

Decision

D16
ISED will use the structure of the allocation (clock) stage, including the methodology for calculating processed demands and posted prices after each round, as described in annex C. The method for calculating a bidder’s eligibility will be as outlined in section 8.6 and annex C.

8.5 Price increments in the clock rounds

166. In the Consultation, ISED proposed that a round’s clock price be in the range of 1-20% higher than the start-of-round price (or equivalently, the previous round’s posted price), rounded up to the nearest thousand dollars. During the auction, ISED reserves the right to adjust the amount of round-to-round price increases within this range to facilitate the progress of an efficient and timely auction.

Summary of comments

167. BCBA, CanWISP, SaskTel and Xplornet supported the proposed range of percentage increments. TELUS generally supported the range of percentage increments but argued that ISED should not use high bid increments to artificially speed up the auction while relying on the intra-round bidding for establishing correct prices. Iristel, Shaw and TekSavvy recommended using smaller price increments in the clock rounds, ranging from 5% to 10%.

168. Rogers suggested that ISED should not use increments larger than 10% in the most valuable service areas and proposed to introduce absolute caps on bid increments in terms of $/MHz/population (pop), varying by service areas from $0.02/MHz/pop to $0.05/MHz/pop. TELUS and Shaw supported this proposal in their reply comments. However, Bell disagreed with this proposal, arguing that ISED should preserve some flexibility to manage the progress of the auction while being cautious in using large bid increments. SaskTel recommended that ISED should use larger clock price bid increments, especially in the early rounds of the auction, and use smaller bid increments in later rounds of the auction.

169. Rogers also expressed concerns about the rule of rounding up prices to the nearest thousand dollars in smaller service areas, as it will result in increasing the clock round prices in these areas faster than anywhere else in relative (percentage) terms.

170. Eastlink disagreed with the proposal that when the price range for the set-aside product overlaps with the price range for the open product, the price increment for the set-aside product would be adjusted so that the clock price of the set-aside product equals the clock price of the open product.

Discussion

171. Bid increments are established so that the auction progresses in a timely manner. ISED maintains the view that increments in the range of 1-20% of prices from the previous clock round provide flexibility to factor the actual demand for different products. As such, during the auction, ISED reserves the right to apply round-to-round price increases within this range to facilitate the progress of an efficient and timely auction. The intra-round bidding provides bidders with additional flexibility to express their preferences and to establish market-clearing prices in an efficient manner.

172. ISED has changed the rounding rules in order to address the concerns that the proposed price rounding methodology would result in disproportionate price increases for smaller areas. Specifically, ISED will round up the clock prices greater than $10,000 to the nearest thousand dollars and the clock prices less than $10,000 up to the nearest hundred dollars.

173. ISED considers that the methodology for incrementing prices during the clock rounds, in combination with an adopted structure of set-aside and open products, as described in annex C, strikes the right balance between the concerns expressed by potential set-aside-eligible and set-aside-ineligible bidders. As proposed, when the price range for the set-aside product overlaps with the price range for the open product, the price increment for the set-aside product will be adjusted so that the clock price of the set-aside product equals the clock price of the open product. This will ensure that the price of the set-aside product never exceeds the price of the corresponding open product, while limiting the ability of set-aside-eligible bidders to raise the price of the open product without affecting the price of the set-aside product.

Decision

D17
ISED will apply price increments based on the aggregate demand for each product in that service area, in accordance with the incrementing methodology specified in annex C. Price increases will be in the range of 1-20% of prices from the previous clock round. During the auction, ISED reserves the right to adjust the amount of round-to-round price increases within this range to facilitate the progress of an efficient and timely auction. ISED will round up the clock prices greater than $10,000 to the nearest thousand dollars and the clock prices less than $10,000 up to the nearest hundred dollars.

8.6 Activity rules in the clock rounds

174. ISED has assigned a specific number of eligibility points (points) for each of the available blocks in the auction, which are approximately proportionate to the opening bid price of the licence. One eligibility point has been assigned for each $5,000 of opening bid prices. Refer to annex D for a listing of the points for each licence and the population of each service area.

175. Each applicant must indicate in its application form, the total number of "points’ worth" of blocks on which they wish to bid during the allocation stage (clock rounds). This number defines a bidder’s initial level of eligibility points and is also used to determine the financial deposit that must be submitted with the application. Bidders will not be able to increase their eligibility points after the application deadline to participate in the auction.

176. In any round, a bidder will not be allowed to submit bids if the eligibility points associated with the bids exceed the bidder’s eligibility for the round. The term “submitted activity” for a round means the eligibility points associated with the bidder’s demands if all of its bids submitted for the round are applied during bid processing. The term “processed activity” means the eligibility points associated with the bidder’s actual processed demands.

177. In order to maintain its eligibility from the previous round, the bidder’s processed activity must correspond to a certain percentage of its eligibility for that round. This percentage is called the "activity requirement." ISED will set the activity requirement between 90% and 100% in all clock rounds, and will retain the discretion to change the activity requirement within that range. The precise figure for the initial activity requirement will be communicated to all qualified bidders before the auction begins. Mathematical formulas for the calculation of eligibility are set out below.

178. In Round 1, a bidder’s eligibility to bid is determined by the number of points acquired with its financial deposit. In Round 2, a bidder’s eligibility to bid is determined by its processed activity in Round 1 divided by the activity requirement (e.g. divided by 0.95, if the activity requirement is 95%) and rounded down. Further, the bidder’s eligibility for Round 2 is not allowed to exceed the bidder’s eligibility for Round 1.

Mathematically, a bidder’s eligibility for Round 2 is defined as the minimum of:

  • The bidder’s eligibility for Round 1; and
  • PA(1)/AR(1), rounded down;
  • where PA(1) denotes the bidder’s processed activity for Round 1, and AR(1) denotes the activity requirement for Round 1.

179. In subsequent rounds, a bidder’s eligibility to bid in the next round is determined by the maximum of its: processed activity in the current round; and the minimum of its processed activity in the previous round and its submitted activity in the current round. This maximum is divided by the activity requirement and rounded down. Further, the bidder’s eligibility for the next round is not allowed to exceed the bidder’s eligibility for the current round.

Mathematically, a bidder’s eligibility for Round t+1, where t+1>2, is defined as the minimum of:

  • The bidder’s eligibility in Round t; and
  • max{PA(t), min[PA(t-1), SA(t)]}/AR(t), rounded down;

where PA(t) denotes the bidder’s processed activity for Round t, SA(t) denotes the bidder’s submitted activity for Round t and AR(t) denotes the activity requirement for Round t.

Some examples illustrating the application of this activity rule are provided in section C13 of annex C.

180. This calculation method has the advantage that a bidder’s eligibility is not inadvertently reduced because some of its submitted bids are not applied. In a departure from the Consultation, the formula above provides one “grace round.” It allows for the processed activity to drop for one round without affecting the eligibility for the next round. However, if the processed activity does not increase sufficiently after the next round, the eligibility will be permanently reduced.

181. Bidders are required to indicate their demands in every round, even if their demands at the new round’s prices are unchanged from the previous round, so as to affirmatively indicate their interest in products at the new prices. Missing bids are treated by the auction system as requests to reduce to a quantity of zero blocks for the product. If these requests are fully or partially applied, a bidder’s processed activity, and hence its eligibility to bid in the next round, may be reduced accordingly.

8.7 Conclusion of the allocation (clock) stage

182. The allocation stage will conclude for all products in all service areas after the first round in which the aggregate demand for each open product is less than or equal to its initial supply, and there is no excess demand for blocks with any encumbrance level (including unencumbered) in any service area, as described in section C14 of annex C. This round is referred to as the final clock round.

183. Bidders that hold processed demand for a product in a service area after the final clock round become provisional winning bidders. The price to be paid for one block of a product will be the product’s posted price of the final clock round. Winners will be assigned frequency-specific licences in the assignment stage.

8.8 Structure of the assignment stage

184. Whenever generic blocks are used, the auction format must include an assignment stage to determine the assignment of specific frequency blocks or frequencies. Recognizing that using contiguous spectrum within a service area is generally more efficient, and preferable to fragmented spectrum, ISED proposed that winners of multiple blocks in a service area receive contiguous spectrum. ISED also proposed to assign blocks for spectrum holdings obtained through the transition process as part of this auction.

185. Treatment of existing spectrum holdings: There are two types of incumbent licensees in the 3500 MHz band. The first type of licensee holds a Tier 4 service area licence; the second type of licensee holds sub-divided or grid-cell licences that cover a portion of the Tier 4 service area. As discussed in the 2019 Decision, these existing licensees will be eligible to apply for new flexible-use licences in amounts that equal 20 MHz, 50 MHz or 60 MHz following the 3500 MHz auction, subject to compliance with their conditions of licence. The specific frequency blocks for which they can apply will be determined through the auction process. The frequency blocks assigned to the existing licensees who hold Tier 4 service area licences will be determined in the assignment stage of the auction. In the case of sub-divided or grid-cell licences, frequency assignment will be determined indirectly through the assignment of associated licences during the auction process. These frequency assignments will be conveyed to the licensees after the conclusion of the auction process.

186. In the Consultation, ISED proposed that Tier 4 licensees, who are eligible to be assigned new licences through the transition process, be assigned contiguous blocks through the assignment stage.

187. Where an existing Tier 4 licensee that also participates in the allocation stage wins additional unencumbered or encumbered blocks, these blocks will be assigned contiguous to the blocks of licences that it is eligible to obtain through the transition process. Existing Tier 4 licensees that participate in the auction but are not successful in obtaining additional blocks during the allocation stage may still participate in the assignment stage in order to express their preferences over which frequencies will be assigned to their new flexible-use licences to be obtained through the transition process. For further information on the bidder application process and the required financial deposits to participate in the auction, refer to section 12.

188. In section 7.2, ISED decided that sub-divided and grid-cell licences obtained through the transition process would not be guaranteed contiguous spectrum blocks in the assignment stage given that they are encompassed within Tier 4 licences, and in some cases, cross Tier 4 boundaries. These sub-divided and grid-cell licensees would not be able to express their preferences for specific frequencies within the auction process. It was proposed that existing holders of sub-divided or grid-cell licences within an encumbered block would be assigned frequency blocks as determined by the assignment of the winning bidder of the partial tier or encumbered Tier 4 licences.

189. Structure of the assignment stage: All bidders will have an opportunity to express their preferences for specific frequency blocks at the same time. There will be no specific frequency blocks reserved for unencumbered, encumbered, open or set-aside products. In the Consultation, ISED proposed to conduct a separate assignment round for each of the eight most populated service areas sequentially, in descending order of population. Once the eight most populated service areas have been assigned, ISED proposed to conduct the bidding for the remaining service areas by grouping several service areas in the same round. That is, bidding for assignments in multiple service areas or groups of service areas would take place during the same assignment round. This would help to reduce the length of the assignment stage.

190. It was proposed that after the assignment of the eight most populated service areas, all remaining service areas will be ranked by population from highest to lowest and divided into sessions of six. Each session would generally not include more than one Tier 4 service area from within the same Tier 2 service area, to minimize the extent to which licences from service areas in close geographic proximity are assigned in different sessions in the same round. This will provide bidders with the additional knowledge of the assignment of their most populated service areas, before moving on to the next round in which they could adjust their preference for a specific assignment, based on the result obtained in the previous assignment round. This better assures that a bidder can obtain the same frequencies for its blocks across service areas that are in close geographic proximity.

191. Furthermore, in support of the decision to assign contiguous spectrum as outlined in section 7.2 of this Framework, ISED proposed that all contiguous bidding options would be presented in the assignment round, regardless of the number of blocks to be assigned to other bidders. Although the bidder might not be able to win some of its bidding options if they are inconsistent with the contiguity restrictions, presenting all potential options would help to maintain anonymous bidding.

192. In order to simplify the assignment stage and to facilitate the assignment of contiguous spectrum across regions, ISED proposed that, wherever possible and as an exception to the process described above, two or more contiguous Tier 4 service areas be combined into an assignment area. To be considered an assignment area, all of the following conditions must be met:

  • Tier 4 service areas form a contiguous geographic region
  • Tier 4 service areas are located within the same Tier 2 service area
  • the bidders (including any licensees who are eligible through the transition process) and the number of blocks they have to be assigned in the service areas being considered are the same

Summary of comments

193. SaskTel agreed with the overall proposed structure of the assignment stage. Shaw supported the proposed structure of the assignment stage but disagreed with the policy of presenting bidders with bid options that also include unfeasible assignment options. In its reply comments, TELUS supported Shaw's proposal to provide bidders only with feasible bid options.

194. Bell disagreed with the proposal of creating assignment sessions for six areas at one time and proposed to use a separate assignment round for each service area in descending order of population. Québecor supported the proposed structure of the assignment stage but would like to increase the number of service areas to be conducted in separate assignment rounds from the eight most populated areas to the 20 most populated areas. In its reply comments, TELUS supported Bell's and Québecor's views on the desirability of a more lengthy assignment stage. Cogeco recommended that ISED use Tier 5 service areas in the assignment round for the large metropolitan centres of Montréal, Toronto and Vancouver and Tier 4 service areas for other parts of the country. Shaw disagreed with the proposals by Bell, Québecor and Cogeco because they would add additional complexity to the auction without enhancing auction integrity, fairness or efficiency.

195. BCBA generally supported the proposal but suggested that existing licensees that are set-aside-eligible should be assigned contiguous blocks at the upper end of the band prior to the assignment round. Similarly, CanWISP and TekSavvy suggested that existing licensees that will acquire spectrum through the transition phase, including grid-cell licensees, should know which blocks will be assigned to them prior to the auction. Alternatively, they also suggested that open and set-aside-eligible bidders should be treated separately so that priority can be given to small regional operators for the upper portion of the band. Xplornet suggested that existing licensees must have priority in frequency assignment and that existing licensees should not be required to change frequencies that their equipment does not support to avoid the need for mass customer interruptions.

196. Xplornet suggested that prior to the assignment stage, ISED should provide a closed-door meeting amongst all eligible assignment stage parties to address the equipment range issues in order to avoid potential customer disruption. In their reply comments, Québecor and TELUS were sceptical about Xplornet's proposal because it could be difficult to come to an agreement in such a meeting.

197. Rogers noted its support for assigning contiguous spectrum, but suggested that  defragmentation of the band should also include the 3800 MHz band to be released in the future. Rogers believed that spectrum at the top of the 3500 MHz band will be valued at a premium and proposed assigning spectrum at the bottom of the band to the "network partners." Alternatively, it proposed that ISED could delay the final assignment until the conclusion of the 3800 MHz auction. In its reply comments, TELUS supported Rogers’ idea that network partners should have the adjacent spectrum assignments, but did not agree that it should be at the lower part of the band. TELUS supported adjacent assignments with the 3800 MHz band but suggested that it should be part of the 3800 MHz consultation. In its reply comments, Shaw disagreed with Rogers’ suggestion regarding defragmentation of the bands and network partners.  Shaw submitted that ISED should not engage in picking favourable positions for some bidders over others and that a complete defragmentation of both bands should be undertaken after the 3800 MHz auction.

198. TELUS proposed that licensees eligible to receive full Tier 4 service area licences through the transition process be given the option to apply and participate only in the assignment stage with an appropriate deposit. TELUS stated that the assignment stage does not support geographic contiguity and proposed an assignment round structure based on the notion of minimizing “regional bandwidth variation” (RBV). In its reply comments, Xplornet stated that it would be interested in knowing more about the proposition on adopting the RBV approach. Bell opposed the RBV approach in its reply comments, adding that while an optimization algorithm could simplify the process of determining the potential frequency assignments that allow contiguity, the outcome will not be optimized for all bidders since the approach will not incorporate each bidder's preferences for various frequencies on a service-area-by-service-area basis.

Discussion

199. ISED maintains the view that the proposed order and the format of the assignment rounds will promote an efficient assignment of contiguous blocks of spectrum across service areas. The assignment rounds will be run service-area-by-service-area in descending order of population for the eight most populated service areas. This process will enable bidders to know which specific frequencies they have won in the eight most populated service areas prior to their participation in the assignment rounds for the less populated service areas. After the assignment of the eight most populous service areas, all remaining service areas or assignment areas will be ranked by population from highest to lowest and divided into sessions of six. ISED views that the session sizes and the mix of geographic areas provide a balance between the need for a timely conclusion of the assignment stage and the ability of bidders to handle assignments in different service areas that are run in parallel. ISED maintains the right to make adjustments to this order and to change the number of areas to be included in each session. Any changes will be provided to qualified bidders in advance of implementation.

200. ISED disagrees with the proposal to use RBV optimization to achieve geographic contiguity. ISED considers that the proposed structure of the assignment stage provides bidders with sufficient opportunities to achieve contiguity across service areas. It also allows bidders to express their preferences for various frequencies across all service areas.

201. Bidders will be provided with all contiguous bidding options that are consistent with the allocation stage winnings and post-transition holdings of a bidder, regardless of what other bidders have won. Providing bidders with all bidding options including those which are not feasible is important to maintain the anonymity of bidding and thereby reduce the potential for gaming behaviours in the assignment stage.

202. The set-aside-eligible bidders with allocation stage winnings, the set-aside-ineligible bidders with allocation stage winnings, and the existing licensees who hold Tier 4 service areas (there may be overlap among these bidders) will have an opportunity to express their preferences for specific blocks at the same time, and there will be no specific blocks reserved for any bidder type. Also, there will be no distinction between licence blocks acquired in the auction and existing Tier 4 licence blocks for purposes of the assignment stage. ISED considers that it will be best for market forces to decide the relative value of particular frequencies and the placement of the allocation stage winners and the existing licensees in the band.

203. With regard to providing potential contiguity between the 3500 MHz band and the 3800 MHz band, this issue may be considered in future consultations.

204. In cases where geographic areas covered by the existing Tier 4 licences and by the existing sub-divided or grid-cell licences overlap, the holders of sub-divided or grid-cell licences will be assigned frequency blocks that correspond to the existing Tier 4 licensee’s assignment.

205. In the case where the new Tier 4 licensee obtains more blocks than those that cover the sub-divided or grid-cell licences, ISED will provide the sub-divided or grid-cell licensee contiguous spectrum, where possible. Existing holders of sub-divided or grid-cell licences within an encumbered product will be assigned frequency blocks as determined by the assignment of the winning bidder of the partial tier or encumbered Tier 4 licences. In some cases, ISED will request that the winning bidder of a partial tier or encumbered Tier 4 licence indicate which of its frequency blocks will be encumbered following the auction.

206. In the rare case where a block is entirely encumbered by sub-divided or grid-cell licences, the assignment and contiguity of the block will be determined by the licensee that covers the largest portion of population.  In this case, only this licensee will be eligible to bid for the assignment of this block within the assignment stage.

Decision

D18

The assignment stage will be structured as proposed in the Consultation. All bidders will have an opportunity to express their preferences for specific frequencies at the same time. There will be no specific frequencies reserved for unencumbered, encumbered, open or set-aside blocks won in the clock rounds or for current holdings.

ISED will conduct a separate assignment round for each of the eight most populated service areas sequentially, in descending order of population. After the assignment of the eight most populated service areas, all remaining service areas will be ranked by population from highest to lowest and divided into sessions of six. ISED will conduct the bidding for the remaining service areas in parallel. In general, each session will not include more than one Tier 4 service area from within the same Tier 2 service area. This rule may not be applied for the last session when there are less than six remaining service areas.

In order to simplify the assignment stage and to facilitate the assignment of contiguous spectrum across regions, wherever possible and as an exception to the process described above, two or more contiguous Tier 4 service areas may be combined into an assignment area. Two or more service areas will be assigned in a single assignment round when the service areas form a contiguous geographic area, are located within the same Tier 2 service area, and when the bidders (including any licensees who are eligible through the transition process) and the number of licences they have to be assigned are the same in the service areas being considered.

Based on ISED’s current projection of licences available, an example of the possible order of the assignment rounds is outlined in annex E. At the end of the clock rounds, a final list of the assignment rounds will be provided to all bidders, taking into consideration the possible grouping of certain service areas as noted above.

207. Assignment price: Winning bidders, and existing licensees who are eligible to apply for new flexible-use licences through the transition process, do not have to place bids in the assignment stage if they do not have an assignment preference, as they are guaranteed the number of generic licences that they have already won in the allocation stage or have been allocated spectrum as part of the 2019 Decision. Each winning bidder has both a right and an obligation to purchase one of the frequency range options presented to it in the assignment stage. Each qualified existing Tier 4 licensee has a right to bid on the frequency range options presented to it in the assignment stage, but should it choose not to participate, a frequency range will be assigned through the assignment stage.

208. The assignment bid is a package bid for the specific frequency locations of all blocks for a bidder in a given Tier 4 service area or assignment area. The assignment prices will be determined from the set of assignment bids for the service area or assignment area. The assignment price is attributable to the entire package of licences assigned to a given bidder in a given service area or assignment area and not to each individual licence in that package.

209. In the Consultation, ISED proposed to use a second-price rule to determine the prices to be paid by winning bidders in the assignment stage. More specifically, ISED proposed to apply bidder-optimal core prices and to use the “nearest Vickrey” approach in determining the assignment prices. Given the pricing rules, the assignment price of each winning assignment package will be equal to or less than the corresponding winning bid amount, and could even be zero. The final price paid by a winning bidder will be the sum of the allocation stage price(s) and the assignment stage price(s).

210. The structure of the assignment stage and the rules for determination of assignment prices are explained in detail in annex E.

Summary of comments

211. Bell, BCBA, Iristel, Rogers, SaskTel, Shaw, TekSavvy, TELUS and Québecor all supported the proposal to apply bidder-optimal core prices and to use the “nearest Vickrey” approach in determining the assignment prices.

Discussion

212. ISED views that the proposed bidder-optimal core prices and the “nearest Vickrey” approach in determining the assignment price represent the opportunity cost of the bidder-winning package. In some cases, the Vickrey price may not be high enough to ensure that there is no alternative bidder or group of bidders prepared to pay more for the licences in question, and so an additional payment above Vickrey prices may be required. In the event that such a payment above Vickrey prices is required, the calculation of the additional payment to be paid by a given bidder will be weighted based on the number of blocks being assigned to that bidder in the given assignment round. Further information on the determination of nearest Vickrey prices can be found in annex E.

Decision

D19
ISED will apply bidder‑optimal core price(s) and will use the "nearest Vickrey" approach in determining the assignment price(s). The final price paid by a winning bidder is the sum of the posted price(s) of the final clock round and the assignment price(s).

8.9 Opening bids

213. Opening bids are the prices for the spectrum licences at the start of the auction, and the minimum that will be accepted for each licence.

214. The 3500 MHz band is comparable to the 2500 MHz band in that they have similar propagation characteristics and will be able to be used for both commercial mobile or fixed wireless services. ISED’s proposal applied the same ratios for lower populated tiers, but based on the Tier 4 service area and using 2016 Census data (as opposed to Tier 3 and 2011 Census data in the 2500 MHz auction). ISED also proposed to increase the ratio for the largest populated areas due to the increasing value seen in recent Canadian auctions in those areas.

215. A ratio of $0.14/MHz/pop was used in the 2500 MHz auction for service areas with a population over 2 million, and ISED proposed to increase that ratio to $0.232/MHz/pop. ISED also proposed to use the same prices, in $/MHz/pop, that were used for the opening bids in the 2500 MHz auction (2015) for all other service areas. The proposed ratios were grouped into four categories based on population and the presence of a Census Metropolitan Area (CMA) within a service area:

  • service areas with population over 2 million: $0.232/MHz/pop
  • service areas with population over 1 million but less than 2 million: $0.1/MHz/pop
  • service areas with population under 1 million that contain one or more CMA: $0.065/MHz/pop
  • all other service areas: $0.051/MHz/pop

216. For each service area, the proposed opening bids were determined by multiplying the proposed prices in $/MHz/pop as outlined above by the population of the service area and 10 MHz block and rounding the obtained numbers to the nearest thousand.

217. The total amount of opening bids for one block of unencumbered 10 MHz nationwide would be $46.7 million.

218. ISED also proposed that the opening bid prices as well as the eligibility points be adjusted proportionally to the percentage of the population covered for the encumbered blocks of the partial tier and encumbered Tier 4 licences.

Summary of comments

219. BCBA, Ecotel, Rogers, SaskTel and Xplornet supported the proposed opening bids.

220. Bell supported the proposal if there is a set-aside, however, suggested lowering the opening bid prices for service areas with a population over 2 million if there is no set-aside. Eastlink generally supported the proposal, as long as a set-aside is used and two distinct product categories are used for open and set-aside spectrum.

221. Cogeco, Québecor, Shaw and TELUS opposed the increase in average opening bid prices from $0.14/MHz/pop to $0.232/MHz/pop in the largest service areas. Québecor, Shaw and TELUS argued that the proposed opening bid prices are higher than the opening bids and final prices in many auctions for mid-range spectrum conducted in other countries.

222. Iristel and TekSavvy suggested that the proposed prices were too high and recommended that they be reduced by half in order to ensure that smaller providers have greater access.

223. CanWISP argued that ISED should revise opening bids to account for CanWISP’s proposal to use Tier 5 service areas.

Discussion

224. Opening bid prices are generally established by taking into consideration the market value for similar spectrum bands, propagation characteristics, the availability of an equipment ecosystem, as well as pro-competitive policy objectives. Amongst the spectrum bands recently auctioned, ISED concludes that the 2500 MHz band is most comparable in terms of value, propagation characteristics and use.

225. Given that the 3500 MHz band will be essential for the roll-out of 5G services in large population centres, ISED anticipates that there will be high demand for this spectrum in those areas, particularly in areas where the population is greater than 2 million. As such, ISED maintains the view that higher opening bid prices for the most populated areas are required to ensure that Canadians obtain a fair return for the use of this spectrum. Therefore, as it was proposed in the Consultation, opening bid prices for service areas with population over 2 million are calculated based on a ratio of $0.232/MHz/pop.

226. ISED also maintains the view that the opening bids for service areas with population less than 2 million should be based on the same ratios that were used for calculating the opening bid prices in the 2500 MHz auction. For the 3500 MHz auction, the opening bid prices are calculated based on the Tier 4 service areas and using 2016 Census data (as opposed to Tier 3 and 2011 Census data in the 2500 MHz auction). The opening bids for unencumbered products are shown in table D1 of annex D.

227. The opening bid prices as well as eligibility points will be reduced proportionally to the percentage of the encumbered population. The opening bids for encumbered and bundled products, are shown in table D2 of annex D.

Decision

D20
ISED will apply opening bids for the licences available through this licensing process as shown in annex D.

8.10 Eligibility points

228. In the Consultation, ISED proposed that the eligibility points associated with the licences being made available in the 3500 MHz auction be based on the opening bids. Specifically, that one eligibility point be assigned for each $5,000 of opening bid prices. In service areas with opening bid prices below $50,000, the number of eligibility points would be rounded to the nearest point. For service areas with opening bids greater than $50,000 the number of eligibility points would be rounded to the nearest 10 points.

Summary of comments

229. BCBA, CanWISP, Eastlink, Ecotel, SaskTel and TekSavvy supported the ISED proposal on the eligibility points.

230. Cogeco, Québecor, Shaw and TELUS generally supported the ISED proposal but noted that the points need to be adjusted if ISED decides to change opening bid prices or to use a different tier size.

231. Iristel disagreed with ISED’s proposal to round eligibility points to the nearest 10 points for licences with an opening bid greater than $50,000. It recommended that eligibility points for all licences be rounded to the nearest eligibility point.

232. Rogers recommended that ISED assign the same eligibility points to both encumbered and unencumbered blocks in a service area if the encumbrance is at most 50%, claiming this would make it easier for bidders to switch between different products in the same service area thereby promoting price discovery. TELUS recommended that the eligibility points be the same for both encumbered and unencumbered product in service areas with population less than 100,000 in order to help bidders manage their bidding complexity.

Discussion

233. Considering the relative value of the spectrum in determining the eligibility points enhances price discovery and supports substitution between licences that are similar in value during the auction process. The proposed eligibility points reflect this approach and take into consideration the population per service area, bandwidth per block and the relative value of the spectrum, as expressed in the opening bids.

234. Based on the opening bids, the equivalent of a national licence, which is comprised of one 10 MHz block of spectrum in the 172 service areas covering the country, will be associated with 9,325 eligibility points. Tables D1 and D2 of annex D list the eligibility points per service area.

235. ISED is of the view that the rounding of eligibility points as it was proposed in the Consultation maintains the right balance between allowing substitutability between similar licences while differentiating between licences with significantly different values. This will allow bidders to change their bids between licences of similar value without losing eligibility while discouraging gaming.

236. The eligibility points listed in tables D1 and D2 of annex D apply to participation in the allocation stage (clock rounds) of the 3500 MHz auction. The requirements for participation only in the assignment stage of the auction are outlined in section 12.

Decision

D21
The eligibility points associated with the licences being made available for the allocation stage in the 3500 MHz auction are based on opening bids for these licences. One eligibility point has been assigned for each $5,000 of opening bid prices. In service areas with opening bid prices below $50,000, the number of eligibility points is rounded to the nearest point. For service areas with opening bids greater than $50,000, the number of eligibility points is rounded to the nearest ten points. The eligibility points per service area are listed in tables D1 and D2 of annex D.

9. Bidder participation: Affiliated and associated entities

237. In order to maintain auction integrity, as in past auctions, ISED proposed rules relating to the participation of affiliated and associated entities in order to ensure that each bidder is an independent bidder. As was the case in previous auctions, ISED proposed that affiliated entities not be allowed to participate separately in the auction. It was also proposed that associated entities only be allowed to participate separately if, following a review of their application, ISED is satisfied that their participation would not have an adverse impact on auction integrity. As in previous auctions, applicants would be required to disclose information about their company(ies), including affiliations and associations.

238. As well, given the proposal to make use of the auction's assignment stage to determine the specific frequency assignments of all flexible-use licences in the 3500 MHz band, ISED noted the risk that existing relationships between incumbent licensees and potential bidders in the auction may have an adverse impact on the integrity of the auction. For these reasons, ISED proposed to consider a fixed use licensee who is eligible to apply for a flexible-use licence, to be treated as though it were a bidder, whether or not it applies to participate in the auction.

239. ISED also sought comments on its proposed rules and definitions regarding affiliated and associated entities and their participation in the auction.

Summary of comments

240. Bell, TELUS, Xplornet, BCBA and SaskTel agreed with the proposed rules regarding affiliated and associated entities.

241. Iristel noted its opposition, stating that the rules regarding associated entities could result in the manipulation of bidding to allow aggregation in excess of what is permitted by the licensing framework. TELUS refuted Iristel’s claim, citing that no evidence was brought forth to support their case. In addition, TELUS stated that ISED’s proposed rules already address this scenario.

242. Shaw claimed that a national incumbent could potentially use a weaker set-aside-eligible entity as a vehicle to gain access to set-aside spectrum citing that it could take place in the form of a funding arrangement or funding guarantee, which would violate the intent of the auction framework. Shaw proposed a requirement that would require prospective bidders to disclose any such commercial arrangement for review during the application process. Rogers opposed Shaw’s claims, citing a lack of evidence.

243. Cogeco, Eastlink and Ecotel noted their concerns regarding the Inukshuk holdings shared by Rogers and Bell, and the potential ability of the three entities to subvert pro-competitive measures. Ecotel and Eastlink suggested that Inukshuk holdings should be divided equally between the two providers, while Cogeco suggested the implementation of an additional rule to prevent entities from circumventing a potential cap. Their proposed rule would allow entities not affiliated with each other but affiliated with a third common entity, to participate in the auction separately, while taking into consideration the holdings of each affiliate towards a cap. Québecor agreed with Cogeco, adding that prior to the application date to participate in the auction, Rogers and Bell should be required to disclose their Inukshuk holdings in each service area, whether Inukshuk continues to offer fixed wireless services or not. Québecor argued that disclosing this information is vital to ensure transparency during the auction process. TELUS disagreed, adding that the current rules already address this scenario. Rogers also refuted these claims and suggested implementing a single framework to integrate auction rules regarding collusions as well as affiliated and associated entities.

244. Rogers recommended changing the associated and affiliated rules to recognize existing relationships between national carriers, citing the Bell and TELUS network partnership. Eastlink also expressed the same concerns, stating that TELUS and Bell’s shared agreement is advantageous and suggested that steps should be taken to limit the amount of spectrum that both companies can acquire in the upcoming auction. Rogers noted that in light of joint network operators being able to bid individually, a spectrum cap should be imposed. Additionally, Rogers suggested including restrictions on subordination and transferability of licences post auction. Bell disagreed with Rogers stating that ISED’s proposed rules are robust enough to prevent any form of collusion and opposed any amendments to the current rules pertaining to associated and affiliated entities.

245. Rogers also opposed ISED’s proposal to consider a fixed use licensee who is eligible to apply for a flexible-use licence, to be treated as though it were a bidder, whether or not it applies to participate in the auction. Rogers argued that existing licensees are required to maintain service throughout the auction in order to meet their licence conditions and treating the fixed licensee as a bidder may force unnecessary spectrum transfers and could unnecessarily inhibit the continued operation of established fixed networks. Rogers added that any disruption to primary licensees would also impact subordinate licensees and could impact rural consumers.

Discussion

246. A major concern identified by respondents was the potential of companies attempting to use spectrum sharing agreements in such a manner that would reduce overall competition in the marketplace. ISED is of the view that associated entities should be able to bid separately without negatively affecting the auction, given that the public disclosure requirements and rules prohibiting collusion are in place to protect the integrity of the auction.

247. ISED has implemented robust measures to assess and qualify prospective bidders upon application to participate in an auction. These measures serve to prevent the potential for NMSPs acquiring set-aside spectrum through a set-aside-eligible entity. As with previous auctions, ISED is requiring information relating to the business structure of each bidder. Further, in the 600 MHz auction, ISED introduced an attestation in the application process that it will maintain in the 3500 MHz auction to safeguard the integrity of the auction. Providers will need to disclose any explicit or implicit arrangements or agreements where financing, security or guarantees have been, or may be, provided to the applicant or any of its affiliates, by another applicant or its affiliates, relating to the acquisition or use of any spectrum licences being auctioned. If an applicant is involved in an arrangement or agreement, ISED will request a brief description explaining the nature of their agreement or arrangement. ISED is unaware of any such existing agreements and is of the view that such a scenario is unlikely. However, it will request this information in order to further safeguard the integrity of the auction.

248. Some comments received expressed concerns regarding shared spectrum holdings. As proposed, only one member of an affiliate relationship would be permitted to become a qualified bidder in the auction or the affiliated entities could apply to participate jointly as a single bidder. Furthermore, ISED had proposed an additional rule in the Consultation to consider a fixed use licensee who is eligible to apply for a flexible-use licence, to be treated as a bidder in the auction, whether or not it applies to participate. This will further mitigate any risk that existing relationships between incumbent licensees and potential bidders in the auction may have an adverse impact on the integrity of the auction.

249. Rogers expressed concerns that since existing licensees are required to maintain service throughout the auction in order to meet their licence conditions, and that treating them as a bidder may force unnecessary spectrum transfers and could inhibit continued network operations. However, ISED maintains that the proposed rules strike the right balance between maintaining auction integrity and the continued provision of fixed wireless services by existing licensees. Specifically, the treatment of existing licensees as though they are a bidder in the auction (whether they apply to participate or not) does not alter their ability to continue offering services. Only in the event that an existing licensee wishes to improve its eligibility to actively participate in the auction would it be required to transfer some, or all of its current 3500 MHz holdings subject to the provisions of section 5.6 of CPC-2-1-23. Further, in consideration of the unique circumstances in this auction, as an exception to its general rules, ISED is allowing for the discussion of such transfers in the 3500 MHz band, up to six months prior to the application date to participate in the auction, which aligns with the deadline for transfer applications. ISED notes that as per paragraph 95 of the 2019 Decision, all subordinate licences will continue to be valid only as long as their related primary licences remain valid. Where a subordinate licence is related to current fixed use licence that will continue to operate, then the subordinate licence may also continue to be valid. Where a current licence is subject to termination via the transition process, then the subordinate licence will also be terminated.

250. ISED notes that all current fixed use licensees will be eligible to apply for a flexible-use licence and that this application could occur post-auction, but all frequency determinations will occur in the assignment round of the auction. In other words, the assignment round will determine what spectrum frequencies will be available to current fixed licensees, should they apply for a flexible-use licence.

251. In response to the suggestion of integrating policies pertaining to collusion, affiliated and associated entities into a single framework, ISED notes that the licensing framework associated with a specific auction currently reflects an integrated set of rules, based on the conditions at the time of the licensing process.

252. Requests for transfers of spectrum licences that are meant to help implement a sharing arrangement are subject to the approval of the Minister and will be reviewed under CPC-2-1-23 and the Framework Relating to Transfers, Divisions and Subordinate Licensing of Spectrum Licences for Commercial Mobile Spectrum (Transfer Framework).

253. The rules and definitions will be adopted as noted in this section.

Decision

D22

ISED is adopting the rules and definitions of affiliated and associated entities outlined in sections 9.1 and 9.2.

This includes, that a fixed use licensee who is eligible to apply for a flexible-use licence, will be treated as though it is a bidder, whether or not it applies to participate in the auction.

9.1 Affiliated entities

254. Definition of affiliated entities: As proposed in the Consultation, the definition of affiliated entities will be adopted as follows:

Any entity will be deemed to be affiliated with a bidder if it controls the bidder, is controlled by the bidder, or is controlled by any other entity that controls the bidder. “Control” means the ongoing power or ability, whether exercised or not, to determine or decide the strategic decision-making activities of an entity, or to manage or run its day-to-day operations.

255. Presumption of affiliate status: If a person owns, directly or indirectly, at least 20% of the entity’s voting shares (or where the entity is not a corporation, at least 20% of the beneficial ownership in such entity), ISED will generally presume that the person can exercise a degree of control over the entity to establish a relation of affiliation. The ability to exercise control may also be demonstrated by other evidence. Under this rule, ISED may, at any time, ask a prospective bidder for information in order to satisfy any question of affiliation.

256. Applicants may provide information to ISED to rebut the presumption of affiliate status. Applicants must notify ISED in writing if they are rebutting the presumption and must file material that will enable ISED 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” above.

257. Upon receipt of this material, ISED 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).

258. Should the entities fail to provide the relevant information in a timely fashion in order to allow ISED to complete its determination, ISED may make a ruling on eligibility that the entities in question are affiliated.

259. Eligibility to participate in the auction: Only one member of an affiliate relationship will be permitted to become a qualified bidder in the auction or the affiliated entities may apply to participate jointly as a single bidder. Affiliated entities must decide prior to the application deadline which entity will apply to participate in the auction. All affiliations must be disclosed at the time of the application.

260. Furthermore, as stated in section 8.8, ISED will make use of the auction’s assignment round to simultaneously determine the specific frequency assignments of all licences in the 3500 MHz band, either acquired through the auction process or the transition process. Given the resulting risk that existing relationships between incumbent licensees and potential bidders in the auction may have an adverse impact on the integrity of the auction, ISED is adopting an additional rule to mitigate this risk. As proposed in the Consultation, ISED will consider a fixed use licensee who is eligible to apply for a flexible-use licence, as though it were a bidder, whether or not it applies to participate in the auction.

9.2 Associated entities

261. Definition of associated entities: As proposed in the Consultation, as a basis for participating in the 3500 MHz auction, associated entities will be defined as follows:

Any entities that enter into any partnerships, joint ventures, agreements to merge, consortia or any arrangements, agreements or understandings of any kind, either explicit or implicit, relating to the acquisition or use of any of the spectrum licences being auctioned in this process will be treated as associated entities. Typical roaming and tower sharing agreements would not cause entities to be deemed associated.

262. As in past auctions, the rules will allow carriers to form a bidding consortium and to participate in the auction as a single bidder if they wish to coordinate their bids through a single bidder. In such a case, the eligibility rules will apply jointly in each licence area. For example, in the cases where any of the entities participating jointly would not qualify as a set-aside-eligible bidder, the bidding consortium would not be eligible to bid on set-aside spectrum.

263. The spectrum and network efficiencies that can be achieved through various forms of associations and arrangements may help to address the high demand for capacity by customers and the high cost of network deployment. In support of the policy objectives stated in section 3 and the spectrum and network efficiencies that can be achieved through such arrangements, ISED recognizes the need to provide increased flexibility in the treatment of a certain subset of associated entities, as long as this would not have an adverse impact on the integrity of the auction.

264. Depending on the nature of the association, it may not preclude the ability of the entities to participate separately in the auction. It should be noted that under the definition above, entities are only deemed to be associated with respect to arrangements that relate to the acquisition or use of spectrum licences being auctioned in this process. For example, significant joint equipment purchase agreements and joint backhaul networks would not be captured under the definition unless they relate to the licences in question.

265. Eligibility to participate separately in the auction: Associated entities may apply to participate separately in the 3500 MHz auction. ISED is of the view that allowing associated entities that are competitors in the market to bid separately would not have an adverse impact on the integrity of the auction provided that auction participants comply with the information disclosure and anti-collusion rules (see section 9.3 and section 9.4).

266. To obtain approval to participate separately in the auction, associated entities will be required to demonstrate to ISED’s satisfaction that they intend to separately and actively provide services in the applicable licence area. Associated entities wishing to participate in the auction separately are required to submit their application at least two weeks in advance of the final application deadline. This requirement provides ISED with the additional time necessary to assess the nature of the association between the entities. Should the request be denied, only one of the associated entities will be eligible to apply to participate in the auction. 

267. Bidders are reminded that the provisions of the Competition Act apply independently of, and in addition to, the Framework.

268. Please note that all entities participating in the auction will be subject to the same prohibition of collusion rules, as stated in this Framework.

269. ISED’s review will not extend to an overall assessment of the effects of the agreement between associated entities on competition in the marketplace.

270. Assessment factors: ISED will consider a broad range of criteria so as to determine the associated entities’ intent and actions to actively and independently provide wireless services. Assessment criteria may include, but is not limited to:

  • the companies’ intent and actions to provide services (coverage) in the area in which the sharing occurs
  • the level of investment, including in distribution, marketing and customer service, in order to acquire and serve customers and
  • the companies’ demonstration of separate presences in the marketplace.

271. Documentation: Associated entities would be invited to provide all relevant documentation to ISED in regard to the above-noted assessment factors. These may include, but would not be limited to:

  • all agreements relating to the transfer of, use of and access to the 3500 MHz spectrum
  • business plans for the area in which the agreement(s) will provide access to spectrum and
  • business and financial results, including investments and customer acquisition.

272. ISED may request additional documentation to complete its assessment and may require that documents be certified by an officer of the company.

9.3 Auction integrity and transparency (Information disclosure pre-auction)

273. In order to ensure auction integrity and transparency, all entities wishing to participate in the auction process will be required to disclose in writing, as part of their application, the names of affiliated and associated entities. A narrative is also required to be submitted, describing all key elements and the nature of the affiliation or association in relation to the acquisition of the spectrum licences being auctioned and the post-auction relationships of said entities. The narrative must include arrangements with other potential bidders that relate in any way to the future use of the licences being auctioned directly or indirectly.

274. Some examples of arrangements that require disclosure include, but are not limited to, agreements to establish a joint network using spectrum licences acquired by each of the entities and agreements regarding a joint backhaul network if they relate to the use of the licences being auctioned. Agreements, such as significant joint equipment purchases, must be disclosed. In addition, any financing arrangements in relation to the above must be disclosed. Typical roaming and tower sharing agreements and other agreements, such as the purchase of backhaul capacity, would not cause entities to be deemed associated entities and hence need not be disclosed.

275. The submitted narrative will be made available to other bidders and to the public on ISED’s website prior to the auction in order to ensure transparency of the licensing process.

9.4 Prohibition of collusion and other communication rules

276. As in previous auctions, in order to ensure the integrity of the bidding process, all applicants are prohibited from cooperating, collaborating, discussing or negotiating agreements with other bidders regarding the licences being auctioned or the post-auction market structure. As a general rule, any such discussions occurring at any time prior to the public announcement of provisional licence winners by ISED are prohibited.

277. In order to maintain the integrity of the auction, bidders are prohibited from signaling either publicly or privately, their bidding intentions or post-auction market structure related to spectrum in the 3500 MHz band. This includes for example, comments or any communication with or via the media, other government departments, or government officials that do not have a mandated or delegated authority related to the auction process, including at the municipal, provincial, territorial and federal levels. An example of prohibited communications would be making a public announcement regarding which licences the company intends to bid on or its rollout intentions.

278. Given the decisions outlined in section 6.4 of the 2019 Decision regarding the transfer of licences prior to the auction, discussions related to the transfer of existing 3500 MHz spectrum licences, which take place prior to the auction, may be permitted as long as the discussions are restricted to existing licences and do not disclose bidding strategy or post-auction market strategy, as described in the paragraph below. These discussions are prohibited after the transfer deadline as specified in the Table of Key Dates and until after the public announcement of the provisional auction results (unless ISED requests additional information from entities that submitted transfer requests).

279. Given that ISED is allowing the participation of some associated entities as separate bidders in this auction process, the proposed prohibition of collusion rules are as follows:

All applicants, including affiliated and associated entities, are prohibited 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 ISED.

Prospective bidders will note that the auction application forms contain a declaration that the applicant will be required to sign certifying that the applicant has 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 competitors will or will not bid. For the purposes of this certification, “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.

Prospective bidders should note that the definition of “affiliate” for the purposes of this licensing process (defined by reference to “control in fact”) differs from “affiliate” for the purposes of the Competition Act. The provisions of the Competition Act apply independently of, and in addition to, the policies contained in this Framework.

9.4.1 Communication during the auction process

280. ISED sought comments on the proposed rules prohibiting collusion and other communication rules, which would apply to bidders in the 3500 MHz auction, as outlined below.

281. In order to preserve the integrity of the auction process, any communications from an applicant, its affiliates, associates or beneficial owners or their representatives that discloses or comments on bidding strategies, including but not limited to the intent of bidding and post-auction market structures, shall be considered contrary to the licensing framework and may result in disqualification and/or forfeiture penalties. Statements that indicate national or particular licence areas of interest will generally be found to be in contravention of the rules on prohibition of collusion. This will include communications with or via the media. This prohibition of communication applies until the public announcement of provisional licence winners by ISED.

282. 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 circumstances outlined in the following two paragraphs.

283. 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.

284. 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.

9.4.2 Discussion regarding beneficial ownership

285. Information regarding the beneficial ownership of each applicant will be made publicly available so that all bidders have knowledge of the identity of other bidders. Any discussions involving two bidders or any of their affiliates or associates regarding an addition or a significant change of beneficial ownership of a bidder, including matters such as mergers and acquisitions, from the receipt deadline for applications until the public announcement of provisional licence winners by ISED, would fall into the area of prohibited discussions and would be considered contrary to the auction rules.

286. However, an applicant may discuss changes in beneficial ownership with parties who are completely unrelated to other applicants, as long as:

  • any change to the beneficial ownership of the applicant that provides a new party with a beneficial interest or which significantly alters the beneficial ownership structure is effected at least 10 days before the commencement of bidding
  • the applicant informs the Minister immediately in writing of any change in beneficial ownership, which will be reflected in its published qualified bidder information on ISED’s Spectrum Management and Telecommunications website

287. Bidders must cease all such negotiations at least 10 days before the commencement of bidding until the public announcement of provisional licence winners by ISED.

9.4.3 Other communication rules

288. Discussions on tower sharing: The prohibition of communication includes discussions about tower and site sharing regarding the licences that are the subject of this auction until after the public announcement of provisional licence winners by ISED. Discussions concerning new arrangements or the expansion of existing sharing arrangements that relate to spectrum outside of licences being offered in this auction process are not prohibited.

289. Communication with local exchange carriers: The prohibition of communication includes discussions regarding interconnection services with a local exchange carrier (LEC) that is a qualified bidder (or one of its affiliates/associates) in this auction, where the services relate to spectrum in the bands offered in this auction process.

290. Consulting services, legal and regulatory advice: Separate bidders may not receive consulting advice from the same auction consulting company. Separate bidders may receive legal and regulatory advice from the same law firm provided that the law firm complies with the conflict of interest and confidential information requirements of the applicable law society and that the applicants otherwise comply with the provisions set forth in the licensing framework.

Summary of comments

291. Xplornet, SaskTel, Iristel, BCBA, Eastlink and Bell supported ISED’s proposed rules prohibiting collusion and other communication.

292. Cogeco noted that the proposed rules effectively preclude any new bidding consortia. Cogeco pointed to the anti-collusion rules prohibiting discussions regarding the licences being offered and the post-auction market structure.

Discussion

293. In previous auctions, in order to ensure the integrity of the bidding process, all applicants were prohibited from cooperating, collaborating, discussing or negotiating agreements with other bidders regarding the licences being auctioned or the post-auction market structure. This includes divulging information about the progress of the auction process, such as the status of auction rounds and stages. Any such discussions occurring at any time prior to the public announcement of provisional licence winners by ISED are prohibited. In addition, if any prospective applicants or their representatives contravene any of these rules, they will not qualify to participate in the auction.

294. ISED maintains the view that the proposed rules maintain the integrity of the auction and notes that the proposed rules are consistent with other auction processes.

Decision
D23
ISED is adopting the rules regarding prohibiting collusion and other communication rules as set out in section 9.4 above.

10. Conditions of licence for flexible-use spectrum licences in the 3500 MHz band

295. ISED sought comments on the conditions of licence that would apply to flexible-use licences issued though the auction or transition process for the 3500 MHz band.

10.1 Licence term

296. ISED proposed that all flexible-use licences be valid for 20 years from the date that the first licences are issued immediately following the auction. Whether a licence was issued on the initial issuance date or at any later time due to the transition process, all licences would terminate on the same date, 20 years after the initial licence issuance date. At the end of this term, the licensee would have a high expectation that a new licence will be issued for a subsequent term through a renewal process unless a breach of licence condition has occurred, a fundamental reallocation of spectrum to a new service is required, or an overriding policy need arises.

Summary of comments

297. The majority of respondents supported ISED’s proposal for a 20-year licence term and agreed that a 20-year licence term promotes investment certainty. There were, however, some differing views on having all licences expire on the same date.

298. Cogeco, SaskTel and TELUS agreed with the proposal to terminate all flexible-use licences on the same date, whether they were issued through the auction process or the transition process. Cogeco added that the proposal would harmonize all flexible-use licences and simplify the licence renewal process in due course.

299. Bell recommended that all licences expire 20 years after they “become useable”, in other words, after the expected transition period (six months, two or three years) is over. In order to have all licences expire on the same date, Bell recommended that ISED add an amount of time that would cover the longest protection period of three years so that licences would expire 23 years after the auction date. Rogers supported this recommendation, adding that this approach would achieve the policy goals of promoting investment in telecommunications infrastructure.

300. In the combined submission by Joseph and McNally, they suggested that a 20-year licence term does not foster competition and allows incumbents to effectively block new entrants or competitors from entering the market for a substantial period of time, perpetuating the ongoing lack of access to modern high-speed broadband services for rural and remote Canadians.

Discussion

301. The Framework for Spectrum Auctions in Canada, states that ISED will adopt a flexible approach in determining licence terms (up to 20 years) based on the specific spectrum being offered and subject to a public consultation preceding the specific auction or renewal process.

302. This policy was based on the recognition that licence terms in excess of 10 years would create greater incentive for financial institutions to invest in the telecommunications industry and for the industry itself to further invest in the development of network infrastructure, technologies and innovation.

303. The 3500 MHz band has the potential to facilitate the offering of 5G mobile broadband and fixed broadband services to Canadians. Given that the use of this band for 5G technologies is being adopted globally, there is little risk that there will be any usage changes to this spectrum in the foreseeable future. It is also unlikely that any developments in technology would result in a change to another use that is incompatible with mobile broadband and fixed broadband services. In light of the above and the support from a majority of stakeholders, the 20-year licence term will remain as proposed.

304. In the Consultation, it was also proposed that all flexible-use licences would expire on the same date, regardless of when they were issued. This would mean that if licences are issued through the transition process after the auction, licensees may have a reduced period of time to access the spectrum and satisfy the deployment conditions.

305. ISED is of the view that its proposal to align all licence end dates would harmonize all flexible-use licences and simplify the licence renewal process. This approach would achieve both the policy goals of promoting investment incentives and aligning expiry dates to streamline any future reorganization of this band. Prospective licensees should consider the different protection periods when developing valuations for various licences available in the auction. Considering the high expectation of renewal for compliant licensees, the effect of a delay caused by protection periods is expected to be negligible over a 20-year term. It is also noted that the certainty provided by the protection and notification periods will allow auction participants to plan in advance by giving consideration to the existing operations and minimizing delays to deployment. Given the general support noted in the Consultation and the added simplification and efficiency that harmonization will bring to the renewal process, all licences will terminate on the same date, 20 years after the initial auction licence issuance date.

306. ISED recognizes that the current rate of wireless technology development is ever evolving and these developments, such as cognitive radio and dynamic spectrum access, are expected to provide opportunities for increased efficiency for spectrum access. As a result, it is expected that although long-term spectrum licences will continue to provide priority access to spectrum, future consultations will likely explore the possibility of providing for opportunistic access to licensed spectrum.

Decision

D24

The condition of licence relating to the licence term is as follows:

The term of this licence is 20 years from the date that the first licences are issued immediately following the auction procedure (the initial licence issuance date) set out in the Framework. Whether the licence was issued on the initial licence issuance date or issued at any later time, in accordance with the transition provisions of the Framework, all licences will terminate on the same date, 20 years after the initial licence issuance date.

At the end of the term, the licensee will have a high expectation that a new licence will be issued for a subsequent term through a renewal process unless a breach of licence condition has occurred, a fundamental reallocation of spectrum to a new service is required, or an overriding policy need arises.

The process for issuing licences after this term and any issues relating to renewal, including the conditions of the new licence, will be determined by the Minister following a public consultation.

10.2 Deployment requirements

307. In the Consultation, ISED proposed to use two deployment requirements for the 3500 MHz band. The first is a general deployment requirement for each licence area based on a percentage of the population of the Tier 4 licence areas as listed in the Consultation, and that would apply to all flexible-use licensees at year 5, 10 and 20 after the initial issuance date. The second is an additional requirement for licensees that currently operate a mobile LTE network. Specifically, ISED proposed that licensees that acquire 3500 MHz flexible licences and currently provide mobile LTE services to the general public (general public includes retail residential and retail business customers, in the relevant service area of interest) will be required to meet the following deployment requirements regardless of the service that they plan to deploy using the licence(s):

  • Timely 5G coverage:
    • to provide service coverage to 90% of the population of their mobile LTE footprint as of June 5, 2019, within five years of the initial issuance date
    • to provide service coverage to 97% of the population of their mobile LTE footprint as of June 5, 2019, within seven years of the initial issuance date
  • 5G in rural areas around urban centres:
    • in the 24 Tier 4 service areas, which contain at least one large population centre (as defined by 2016 Census of Population from Statistics Canada) licence holders in these areas will be required to provide service coverage to 95% of the population outside the large population centre within 10 years of the initial issuance date

308. As well, in the 2019 Decision, it was decided that all flexible-use licences would expire on the same date, regardless of when they were issued. Since licences will be issued through the transition process at various times after the auction, it is noted that some licensees would have a reduced period of time to satisfy the deployment conditions. To address this issue, ISED proposed to use the following deployment conditions for licensees that are only subject to the general deployment requirements (i.e. where the proposed mobile LTE deployment requirements do not apply) and are issued flexible-use licences through the transition process:

  • For licences issued between years 4 and 5 of the licence term, licensees will only be required to meet the 10 and 20-year deployment requirements
  • For licences issued between years 5 and 10 of the licence term, licensees will only be required to meet the 20-year deployment requirement
  • For licences issued after year 10 of the licence term, ISED may deem other deployment levels as acceptable to meeting the condition of licence. This would be determined on a case-by-case basis factoring in the remaining time frame, on a graduated basis, to the end of the licence term

Summary of comments

309. General deployment requirement: Most respondents who commented on the proposed general deployment requirements were in support of the proposal, while some proposed minor adjustments to the timing of the mid-term deployment assessment. Specifically, concerns were raised regarding the ability to meet the mid-term requirements, given the potential delays in accessing the spectrum due to the proposed protection periods for existing licensees. These stakeholders suggested that the timeline for deployment should not begin until after the protection period has elapsed.

310. Additional deployment requirement for mobile LTE network operators: Most mobile wireless operators, including Bell, TELUS, Shaw, SaskTel, Eastlink, Québecor and Iristel opposed the proposed additional deployment requirements for those that operate a mobile LTE network. Bell, TELUS, SaskTel, Shaw, Québecor and Eastlink disagreed with the principle of separate deployment requirements for this group of entities and proposed that they be eliminated. Bell and TELUS further put forward the idea of increasing the general deployment requirements instead. TELUS supported the 95% population coverage outside the large population centres, stating that this requirement encourages rural deployment or subordination and suggested expediting this requirement from Year 10 to Year 5. Shaw however, expressed concern over meeting the 95% population coverage requirement outside large population centres (as defined by Statistics Canada) stating that building this coverage would represent an enormous capital investment for Shaw.

311. Bell and TELUS stated that national operators have been building out mobile LTE networks since 2011, including in rural areas, and would be effectively punished for providing mobile LTE coverage to 99% of Canadians using a variety of spectrum bands, including low band spectrum.

312. SaskTel stated that in order for 3500 MHz to match low band coverage in rural and remote areas, not only will new towers be required, but also buildings, access roads, power lines and backhaul facilities, resulting in far more expensive building costs for a typical rural cell site in comparison to a new urban cell site.

313. Bell, Shaw and SaskTel contended that it would be very challenging to meet the deployment requirement schedule, considering the extensive rural deployments required for existing LTE service providers, and the potential late start imposed by the two and three-year protection periods in these areas. 

314. Iristel maintained that ISED should modify the deployment conditions for those that operate a mobile LTE network so that remote communities are excluded from the requirements listed in the Consultation, as these areas are often served through the use of low-band spectrum. As an alternative, Iristel suggested that ISED modify the conditions for remote communities to 25% for the five-year deployment requirement, and 50% for the seven-year requirement, down from 90% and 97% respectively.

315. Rogers recommended that ISED require mobile LTE network operators to provide coverage to 90% of the population within their mobile LTE network footprint as provided by their Personal Communication Services (PCS), Advanced Wireless Services (AWS) and Broadband Radio Service (BRS) spectrum bands within 10 years of the initial licence issuance date and 13 years to cover 97% of the population. Rogers argued that the 3500 MHz band has much closer propagation characteristics to the PCS, AWS and BRS spectrum bands, which form the capacity layer for facilities-based mobile networks. Rogers contended that matching low-band LTE coverage using mid-band spectrum is cost prohibitive and resource intensive.

316. CanWISP suggested that if Tier 5 areas are not used for licensing, successful bidders should still be required to deploy on a Tier 5 basis in each of the Tier 4 service areas obtained in the auction. Ecotel stated that areas of unused spectrum within Tier 4 areas should be made available to other stakeholders on a Tier 5 basis.

317. Rogers disagreed with both CanWISP and Ecotel on the use of Tier 5 service areas for measuring deployment requirements, stating that ISED’s proposed deployment requirements were very aggressive in a band that will not propagate as far as spectrum below 1 GHz.

Discussion

318. Deployment requirements state the minimum population coverage that licensees are required to meet at specific times. ISED maintains the view that graduated deployment requirements support the objective of facilitating deployment and timely availability of services across the country, including rural areas, so that all Canadians can have high-quality services at affordable prices.

319. General deployment requirements: The general deployment requirements proposed in the Consultation are similar to the requirements applied to previously auctioned spectrum bands (e.g. 600 MHz, 2500 MHz and AWS-3).

320. ISED understands the concerns raised regarding the potential delays to a new licensee’s deployment plans given the length of the protection periods in certain areas. To address stakeholder concerns over protection period delays, and to enhance the predictability of the deployment requirement schedule, ISED is extending the first mid-term deployment milestone from five to seven years, specifically in the Tier 4 service areas that do not contain a large population centre. This will lengthen the time for stakeholders to meet deployment requirements in areas that are subject to longer protection periods. In the Tier 4 service areas that contain a large population centre, the five-year deployment timeline will be maintained as the protection period is shorter in these areas. The general deployment conditions are listed in annex F.

321. Note that deployment requirements will be assessed against the population of the entire unencumbered licence area, not only the areas that have been transitioned to flexible-use licences.

322. Late transitions: Due to the where and when necessary principle of the transition process, existing licensees could be displaced anytime after the protection period and during the licence term. This could affect their ability to satisfy the deployment requirements by the specified timelines.

323. As proposed, ISED will allow an exception to the above requirements and will apply modified deployment requirements for licensees that are only subject to the general deployment conditions, and that are displaced and issued flexible-use licences through the transition process four years or more after the initial issuance of flexible-use licences as outlined further below. This applies to all licence areas, whether the first mid-term requirement is five or seven years. This will provide reasonable milestones that support the overall objective of maximizing coverage. 

324. Additional deployment requirements for licensees currently offering LTE mobile services: In addition to the general deployment requirements, ISED proposed that licensees that acquire 3500 MHz flexible-use licences and currently provide mobile LTE network services would be required to meet additional deployment requirements. This additional set of deployment requirements recognizes the fact that these existing network operators are in the best position to deliver 5G services to Canadians in an expedited fashion.

325. As noted above, some stakeholders raised concerns with the additional deployment requirements proposed for mobile LTE network operators. ISED recognizes the concerns raised regarding the prohibitive costs that could be incurred by mobile operators if they are required to match low-band LTE coverage using mid-band spectrum. ISED also recognizes the concerns raised regarding the ability of mobile LTE operators to meet the additional five-year deployment requirement in areas that are protected for two or three years. For this reason, ISED will adjust some of the timing requirements and will also base the LTE coverage area on a licensee’s current mid-band LTE coverage, instead of a coverage area based on all-bands, as originally proposed.

326. To address stakeholder concerns over protection period delays for licensees that currently operate an LTE network, ISED is increasing the first mid-term deployment milestone from five years to seven years in the Tier 4 areas that do not contain a large population centre.

327. In Tier 4 service areas that include large population centres, the timelines will be as proposed, as the protection periods are six months or two years at most, thereby limiting the potential deployment delays.

328. LTE mobile network footprint definition: Some network operators argued that 3500 MHz spectrum is not well-suited to serving rural areas that are currently being served with wireless services through far-reaching low band spectrum. ISED recognizes that the propagation characteristics of 3500 MHz spectrum are different than low-band spectrum. ISED also acknowledges that the infrastructure costs associated with a requirement to make use of mid-band spectrum to cover areas that are currently served with low-band spectrum could be substantial. As a result, ISED is modifying the LTE footprint definition for this deployment requirement to be based on spectrum with similar propagation characteristics.

329. For the purpose of this licensing framework, the definition of LTE network footprint will include the areas covered by spectrum bands above 1 GHz. This includes the areas covered by service providers using AWS-1, AWS-3, AWS-4, PCS, BRS and WCS deployments. The LTE deployment requirements will be assessed against the cumulative coverage footprint of these bands within each service area. This coverage criteria is now defined as the mid-band LTE mobile network footprint.

330. As stated in the Consultation, the mobile LTE network footprint would be the coverage in effect as of June 5, 2019 for the bands mentioned above. As part of the application to participate in the auction, licensees will be required to provide documentation to ISED defining their mid-band mobile LTE network footprint. ISED will consider network sharing arrangements such as Multi-Operator Core Network (MOCN) networks to count as part of this LTE network footprint, but standard roaming agreements do not count towards this network footprint.

331. As the LTE mobile network footprint definition has been significantly reduced, and the timeline for the first mid-term deployment requirements extended slightly for licence areas that do not contain a large population centre, the population percentage requirements of the first two mid-term deployment milestones will be maintained at 90% (first milestone) and 97% (second milestone) of the population covered in their LTE mid-band network footprint.

332. Additional rural 5G deployment requirement for LTE mobile network operators: Shaw expressed concern over meeting the 95% population coverage requirement outside large population centres within 10 years as proposed in the Consultation. This proposed rural deployment requirement would only apply in the 24 Tier 4 service areas that contain a large population centre.

333. To establish this proposal, ISED analysed existing infrastructure in and around the large population centres. ISED expects that licensees offering mobile LTE services will first deploy in the large population centres. Once these deployments are established, ISED expects that the next set of 5G deployments will occur in the suburban commuter areas surrounding these large population centres. 

334. The proposed requirement leading to 5G deployment in rural areas around urban centres was intended to address two specific concerns: first, that deployment targets were previously being met by serving only urban populations; and second, that licensees have had little or no incentive to subordinate spectrum that they have no intention of using to serve rural areas. Stakeholder comments regarding the difficulty of achieving the 95% target within 10 years reinforce the view that not all spectrum is likely to be used in all portions of a given tier, even in the longer term. In such circumstances, it would be in the public interest for unused spectrum to be made available to service providers willing and able to put it to use.  Licensees are encouraged to enter into subordinate licensing agreements or licence transfers to help meet their deployment requirements.

335. ISED notes specifically that the provision of fixed broadband services will count toward reaching the deployment requirements. Therefore, the requirement to provide service coverage to 95% of the population outside the large population centre within 10 years of the initial issuance date will be maintained. When assessing compliance with this condition, ISED will take into account any spectrum subordinations. ISED may also consider evidence of efforts to reach subordination agreements and efforts to communicate a willingness to subordinate to other service providers.

Summary of deployment conditions

336. The following table illustrates the revised LTE mobile network operator deployment requirements for Tier 4 service areas. The revised general deployment requirements and timelines are provided in annex F.

Table 1: Summary of additional deployment requirements to percentage of population for LTE Mobile Network Operators**
Within 5 years* Within 7 years* Within 10 years* In rural areas outside urban centres within 10 years
Tiers with a large population centre 90% 97% n/a 95%
Tiers without a large population centre n/a 90% 97% n/a

* For deployment within the existing mid-band mobile LTE network footprint as of June 5, 2019.

** Deployment requirements will be calculated based on the most recent census information available at the time of assessment.

337. ISED will require that six months prior to the end of the 20-year licence term, all licensees wishing to undergo the future licence renewal process for their 3500 MHz licences must provide proof to ISED that they meet, or will meet the 20-year deployment requirements for their licence by the specified timelines.

338. Where a licence is transferred, the requirement for the new licensee to deploy will continue to be based on the initial licence issuance date. Impacts of licence transfers and subordinate licensing on deployment requirements is addressed in section 10.3 below.

339. ISED may invoke various compliance and enforcement measures if a licensee fails to meet their deployment requirement at any point in the licence term, including when ISED carries out its compliance and verification audit.

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

Decision

D25

The condition of licence on deployment conditions is as follows:

Deployment requirements

The licensee will be required to demonstrate to the Minister that the spectrum has been put to use, as specified below. In all cases, the licensee is required to meet the relevant conditions and to continuously provide services throughout the term of the licence in accordance with these requirements. For services to be considered "continuously provided", the service provider must maintain an active service offering throughout the term of their licence.

General deployment requirements

In Tier 4 areas that include a large population centre (as listed in annex G), all licensees will be required to demonstrate to the Minister that the spectrum has been put to use to actively provide service to a minimum percentage of the population as specified in table F1 of annex F, within 5, 10, and 20 years of the initial licence issuance date. In all other Tier 4 areas, licensees will be required to demonstrate to the Minister that the spectrum has been put to use to actively provide service to a minimum percentage of the population as specified in table F2 of annex F, within 7, 10, and 20 years of the initial licence issuance date.

As an exception to the above deployment requirements, ISED will use modified timelines for licensees that are displaced through the transition process after year four of the initial flexible-use licence issuance date.  These exceptions will be as follows:

  1. For licences issued between years 4 and 5 of the licence term, licensees will only be required to meet the 10- and 20-year deployment requirements.
  2. For licences issued between years 5 and 10 of the licence term, licensees will only be required to meet the 20-year deployment requirement.
  3. For licences issued after year 10 of the licence term, ISED may deem other deployment levels as acceptable to meeting the condition of licence. This would be determined on a case-by-case basis factoring in the remaining time frame, on a graduated basis, to the end of the licence term.
Additional deployment requirements for mobile LTE service providers

In addition to the general deployment requirements, a licensee offering mobile LTE services will be required to demonstrate to the Minister that the spectrum has been put to use to cover the following deployment requirements within its mid-band mobile LTE network footprint (coverage in effect as of June 5, 2019), using the 3500 MHz band.

In tiers that contain a large population centre as listed in annex G:

  • 90% of the population within its mid-band mobile LTE network footprint  within five years, and
  • 97% within seven years of the initial licence issuance date

In tiers that do not contain a large population centre:

  • 90% of the population within its mid-band mobile LTE network footprint within seven years, and
  • 97% within 10 years of the initial licence issuance date

In the tiers that contain a large population centre as listed in annex G:

  • 95% of the population outside the large urban population centres within 10 years of the initial licence issuance date. (When assessing compliance with this condition, ISED will take into account any spectrum subordinations. ISED may also consider evidence of efforts to reach subordination agreements and efforts to communicate a willingness to subordinate to other service providers.)

The general deployment requirements continue to apply to all licences by default, and must be satisfied in all cases where the requirements for mobile operators listed above may be lower than the general requirements.

Licensees will be required to provide to ISED, their mid-band mobile LTE network footprint as of June 5, 2019, as defined by the service provider's AWS-1/3/4, BRS, PCS, and WCS deployments, when requested by ISED.

The licensee is required to meet these conditions at all relevant times during the licence term and to continuously provide services throughout the term of the licence in accordance with these requirements.

Where a licence is transferred, the requirement for the new licensee to deploy will continue to be based on the initial licence issuance date.

The licensee must provide the Minister with any documentation or information related to spectrum access or LTE network footprints at the Minister's request.

Six months prior to the end of the 20-year licence term, all licensees wishing to undergo the future licence renewal process must provide proof to ISED that they meet or will meet the 20-year deployment requirements for their licence.

ISED will review licensees' compliance with their deployment conditions at the dates noted above. Where, at any point in the licence term, the licensee is not in compliance with its deployment conditions, ISED may invoke various compliance and enforcement measures.

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

10.3 Licence transferability, divisibility and subordinate licensing

341. In the Consultation, ISED proposed that the 3500 MHz flexible-use licences be treated like all other commercial mobile spectrum licences with regard to transferability, divisibility and subordination, and may be transferred or subordinated in accordance with Client Procedures Circular, CPC-2-1-23, Licensing Procedure for Spectrum Licences for Terrestrial Services (including section 5.6.4).

342. Furthermore, to facilitate fixed wireless access use, ISED also proposed that in instances where a licensee will offer only fixed wireless services following a licence transfer or subordination, then only the general terms conditions, and guidelines pertaining to transfers in CPC-2-1-23 would apply (excluding 5.6.4).

343. ISED also proposed that in the case where a set-aside is applied, transfers of 3500 MHz spectrum would not be permitted where they would result in a set-aside-ineligible entity obtaining a set-aside spectrum licence for the first five years of the licence term. After the first five years, it was proposed that set-aside spectrum licences would be treated like all other commercial mobile spectrum licences and may be transferred in accordance with the provisions of section 5.6 of CPC-2-1-23. Similarly, it was proposed that transfers between set-aside-eligible entities may take place at any time, subject to the provisions of section 5.6 of CPC-2-1-23. As part of its review of any proposed transfer, ISED would analyze, among other factors, the change in spectrum concentration levels that would result from the licence transfer, and would examine the ability of the licence transfer applicants and other existing and future competitors to provide services, given the post-transfer concentration of commercial mobile spectrum in the affected licence area(s).

344. Despite the general restriction on transfers of set-aside licences, it was proposed that a subordinate licence may be granted to a non-set-aside-eligible entity in support of an agreement to share spectrum. In order for a subordinate licence to be granted in these cases, it was proposed that two conditions be met. First, licensees would need to demonstrate that the conditions under section 5.6.3 of CPC-2-1-23 are fully met. Second, licensees would be required to demonstrate to the satisfaction of ISED that they intend to, and will continue to, make use of the 3500 MHz spectrum to actively and independently provide services in the applicable licence area.

345. In the Consultation, ISED proposed wording for the condition of licence on transferability and divisibility consistent with the wording used in the Transfer Framework and in other commercial mobile licences.

Summary of comments

346. Cogeco, Ecotel, Québecor, Rogers, SaskTel, TekSavvy and Xplornet were generally supportive of ISED’s proposal on the conditions of licence related to transferability, divisibility and subordinate licensing. However, some minor modifications were suggested.

347. Cogeco suggested that unique deployment conditions as proposed by ISED, such as general requirements and additional requirements for LTE network operators, should stay with the original licensee in cases of transfers. Cogeco further recommended that where such unique deployment conditions exist, the swap of identical amounts of spectrum between set-aside-eligible and set-aside-ineligible licensees be permitted if the unique deployment conditions remain with the original licensee and not be transferred with the licence. According to Cogeco this would allow the spectrum licences to be equivalent and a swap of equal amounts between a set-aside-eligible and a set-aside-ineligible entity would be acceptable. TELUS supported this recommendation.

348. SaskTel supported the proposal that licensees that offer only fixed services should be able to transfer or subordinate fixed spectrum licences without including the requirements that apply to commercial mobile wireless spectrum licence transfers. However, SaskTel also recommended that instead of issuing a new flexible-use licence with an amended condition of licence restricting operation to fixed services only, ISED should instead issue a new fixed spectrum licence. According to SaskTel, issuing a fixed spectrum licence would be more straightforward, less confusing, and carry more weight in potential enforcement scenarios compared to simply restricting operations to fixed services only.

349. Ecotel and CanWISP commented that new licences should come with mandated subordination requirements when spectrum remains unused. Ecotel also specified that this should be the case even in situations where the primary licensee has met its deployment requirements.

350. Rogers and Bell disagreed with mandatory subordination and argued that subordination should remain on a voluntary basis to ensure that the primary licensees' deployed wireless networks and future deployment plans are not negatively impacted to the detriment of current and future wireless consumers. Rogers further argued that over the years it has voluntarily entered into multiple agreements, subordinating spectrum to small regional carriers serving rural and remote areas. Rogers also indicated that there is no evidence to substantiate the need for mandatory subordination. Bell made the argument that the current policy framework and deployment requirements continue to be an effective method of facilitating spectrum use and that ISED should not alter its approach.

Discussion

351. Licensees are strongly encouraged to make use of all of their spectrum holdings in all areas, including rural, either by putting the spectrum to use as the primary licensee or through subordinate licensing or other types of arrangements, such as the transfer or division of licences that would see the spectrum used for the benefit of Canadians. As commercial mobile services will be permitted in the 3500 MHz band, all flexible-use licences within the band will be treated as commercial mobile for the purpose of assessing spectrum holdings and concentration. This includes fixed-use licences in relation to their eligibility for flexible-use licences. As such, the provisions outlined in section 5.6 of CPC-2-1-23 will apply to requests for transfers or subordinations in this band (with 5.6.4 excluded for fixed only service providers).

352. Licences acquired by set-aside-eligible licensees will be considered as “set-aside licences” as set out in section 8 of this Framework. However, in tier areas where there are no set-aside licences available, licences in these tier areas will not be subject to the set-aside limitations on transferability irrespective of the licensee having been qualified as a set-aside-eligible bidder.

353. Impact of transfers on deployment requirements: As noted in section 10.3, there are two categories of deployment conditions: 1) general deployment requirements that apply to all licensees and 2) those that apply only to service providers with an existing LTE mobile network within the licence area.

354. Cogeco suggested that unique deployment conditions should stay with the primary licensee, in order to ensure a vibrant secondary market. For example, if an LTE mobile network operator is the primary licensee, and the licence is transferred to a non-LTE network operator, the original deployment requirements may not be attainable by the non-LTE network operator. This could hinder the secondary market by limiting the transfer of licences to only existing LTE mobile network operators, as other licensees may not be able to meet the LTE deployment requirements.

355. In the reverse situation, if a network operator has a licence with general deployment requirements, which is subsequently transferred to an LTE mobile network operator, the LTE mobile network operator would hold a licence with deployment conditions that are intended for a non-LTE mobile network operator. This would go against the intent of having categories of deployment conditions based on the types of services offered and the level of existing network infrastructure established.

356. In the event of a licence transfer, ISED intends to impose deployment conditions on the new licensee that conform to the two-tiered deployment condition structure, with conditions based on the type of provider and services offered.

357. Impact of subordinations on deployment requirements: Subordination between mobile LTE network operators and other types of operators is permitted; however, deployment requirements are the obligation of the primary licensee. Therefore, regardless of the type of the deployment requirement that would apply to the subordinate licensee’s network structure, it is the obligation of the primary licensee to ensure that it meets the deployment requirements mandated in its licence. This will ensure that the policy objectives related to usage of this band are not hindered by subordination agreements.

358. In addition, the possible impacts on services to Canadians for other types of arrangements also need to be considered. There may be cases that involve both a transfer and a subsequent subordination arrangement back to the original licensee, where the deployment requirements may be different from what was originally assigned. In such cases, ISED may impose deployment conditions such that the intention of the two-tiered deployment condition structure is maintained.

359. Furthermore, to mitigate the risk of this and other types of transfer/subordination arrangements that are carried out solely to minimize a licensee’s deployment requirements, ISED, as per its usual practice, will continue to assess all transfers and subordinate requests with respect to CPC-2-1-23, which includes the following clause:

The Minister has the authority to consider any and all matters deemed relevant to the request for a transfer, and to grant the transfer as requested, to fix additional terms and conditions, or to refuse the transfer.

360. As with transferred spectrum, upon licence subordination, ISED intends to impose deployment conditions such that the intention of the two-tiered deployment condition structure is maintained.

361. Fixed use only: To facilitate access to spectrum for fixed wireless access, it was proposed in the Consultation that should the applicants for a transfer advise ISED that only fixed services will be provided by the proposed transferee, then only the general terms, conditions and guidelines of CPC-2-1-23 pertaining to transfers would apply to that request (i.e. section 5.6.4 would be excluded from the analysis). Moreover, any associated subordinate licence would also be limited to fixed services where a licence was specified as “fixed-use only”.

362. To simplify the process, SaskTel recommended that fixed licences be issued in these cases, rather than a flexible-use licence with an added condition restricting use. Since ISED is seeking to have one class of licence in the band with the flexibility for both fixed and mobile applications, the proposal will be maintained and a condition of licence will be added to the licence limiting the use of the spectrum for fixed services only. Note that fixed only service providers must meet the general deployment requirements according to the appropriate timelines in section 10.2, and that the restriction for fixed use only will follow the licence when transferred until an application is made to have the restriction removed, and is approved by ISED.

363. Additionally, ISED has considered the comment made by Cogeco regarding assurances from the fixed-use only providers that the spectrum continues to be used for fixed services only. This would be administratively simple to add to the regular annual reports and would help to maintain clarity on the services being offered under each licence. Therefore, fixed-use only service providers will have an annual attestation to file along with their annual reports, indicating that they continue to use the spectrum for fixed services only.

364. If, during the term of the licence, the licensee requests that ISED remove the authorization restriction for fixed service use, ISED will assess the request using the factors outlined in section 5.6.4 of CPC-2-1-23 and may remove the restriction, maintain the restriction or remove the restriction with specific conditions. In addition, the licensee will also be required to provide proof to ISED that it meets the closest prior LTE deployment requirements milestone. For example, if a licensee, that is subject to the LTE deployment requirements, wants to remove the authorization restriction to fixed services at year six from the initial licence issuance date in a Tier 4 area where the first mid-term LTE deployment milestone is at year five, it must meet the LTE deployment requirements for year five.

365. Mandatory subordination: Comments were mixed regarding the concept of mandatory subordination suggested by Ecotel and CanWISP in the initial comments. In the reply comments, Bell and Rogers opposed this suggestion, writing that subordination should remain voluntary, citing a multitude of past subordinations and indicating that deployment requirements encourage subordination agreements.

366. Mandatory subordination to address underutilized spectrum is a broad concept that could apply to all spectrum bands. Due to this far-reaching impact, it would require careful consideration and consultation and should not be decided in the short term on this band alone. ISED notes that this is the initial licence term for the 3500 MHz band as commercial mobile spectrum, and conditions such as mandating subordinate licences are premature at this time. However, ISED notes that the Minister may modify licence conditions, particularly to ensure that policy objectives are met, and that the mandatory subordination concept could be revisited in the future if circumstances require.

367. ISED notes that efforts have been made to support service in rural and remote areas through a rural deployment requirement as described in section 10.2. This condition encourages deployment outside of urban centres and also emphasizes accelerated deployment by having a 10-year timeline rather than 20 years. ISED encourages stakeholders to coordinate subordination and transfer agreements wherever possible to meet this requirement.

368. Provisions applicable to set-aside licences: As detailed in section 6, transfers will not be permitted for the first five years of the licence term where they will result in a set-aside-ineligible entity obtaining a set-aside spectrum licence. After the first five years, set-aside licences may be transferred in accordance with the provisions of section 5.6 of CPC-2-1-23, and the rules below.

369. The five-year restriction on set-aside transfers is to ensure that auction participants are not speculating on licences in order to hold them for later re-sale without providing service to Canadians. The initially proposed five-year deployment requirement would support the provision of services to Canadians as the primary licensee would not be able to transfer the licence unless it has met its first mid-term deployment condition.

370. As described in section 10.2, some tiers have had the first deployment milestone moved to year seven. In spite of this, ISED has concluded that set-aside licences may still be transferred to set-aside-ineligible entities after the five-year restriction has elapsed to allow for a robust secondary market. However, the first deployment milestone should be satisfied in order to transfer the licence, regardless of whether the first deployment milestone is required at year five or year seven. For clarity, a set-aside licence with a seven year initial deployment milestone may be transferred to a set-aside-ineligible entity after the five year transfer restriction on set-aside licences has elapsed, provided that the licensee demonstrates to ISED’s satisfaction that it has met the seven year deployment requirement and subject to the provisions of section 5.6 of CPC-2-1-23.

371. Transfers between set-aside-eligible entities may take place at any time, subject to the provisions of section 5.6 of CPC-2-1-23 (with 5.6.4 excluded for fixed only service providers). As part of its review of any proposed transfer, ISED will analyze, among other factors, the change in spectrum concentration levels that would result from the licence transfer, or will examine the ability of the licence transfer applicants and other existing and future competitors to provide services, given the post-transfer concentration of commercial mobile spectrum in the affected licence area(s).

372. Despite the general restriction on transfers of set-aside licences, a subordinate licence from a set-aside-eligible to a set-aside-ineligible entity may be granted in support of an agreement to share spectrum. In that case, there are two conditions that must be met. First, licensees must demonstrate that the conditions under section 5.6.3 of CPC-2-1-23 are fully met. Second, licensees will be required to demonstrate to ISED’s satisfaction that they intend to, and will continue to, make use of the 3500 MHz spectrum to actively and independently provide services in the applicable licence area, based on the assessment factors set out below. If at any point in the licence term, the licensee is not in compliance with any condition, ISED may invoke various compliance and enforcement measures. These measures may include administrative monetary penalties, licence amendments, suspensions, revocations, or prosecution of an offence in accordance with the provisions of the Radiocommunication Act.

373. Assessment factors for active and independent service: ISED will consider a range of criteria to determine whether the applicants for a transfer provide, or intend to provide, wireless services. Assessment criteria may include, but will not be limited to:

  • the companies’ intent and actions to provide services (coverage) in the area in which the sharing occurs;
  • the level of investment, including in distribution, marketing and customer service, in order to acquire and serve customers; and
  • the companies’ demonstration of separate presences in the marketplace.

374. Documentation: Where required, applicants for a transfer will be invited to provide all relevant documentation to ISED in regard to the above-noted assessment factors. These may include, but will not be limited to:

  • all agreements relating to the transfer of, use of and access to the 3500 MHz spectrum
  • business plans for the area in which the agreement(s) will provide access to spectrum and
  • business and financial results, including investments and customer acquisition.

375. ISED may request additional documentation to complete its assessment and may require that documents be certified by an officer of the company.

376. Licensees must apply to ISED for the issuance of subordinate licences prior to the implementation of any spectrum sharing agreements or any agreement that provides for another party to operate the licensee’s spectrum.

377. Exchange of spectrum licences: In recognition of the principles for promoting the efficient use of spectrum, ISED may also permit, after the announcement of the provisional licence winners, an exchange (through a transfer request) of equal amounts of 3500 MHz spectrum within the same licence area, including between a set-aside-eligible entity and a set-aside-ineligible entity, subject to the provisions of section 5.6 of CPC-2-1-23. When considering the exchange of licences, stakeholders should note the above discussion regarding the treatment of deployment conditions when licences are transferred.

378. For further information on all of the requirements related to transfers, refer to CPC-2-1-23, as amended from time to time. These requirements are subject to revision and amendment for reasons including furtherance of the policy objectives related to the 3500 MHz band. Licence transfers may also be subject to the provisions of the Competition Act.

Decision

D26

The condition of licence on transferability and divisibility is as follows (see annex H):

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

The licensee must make the Transfer Request in writing to the Minister. The Transfer Request will be treated as set out in Client Procedures Circular CPC-2-1-23, Licensing Procedure for Spectrum Licences for Terrestrial Services as amended from time to time. In all cases, the licensee must follow the procedures as outlined in CPC-2-1-23.

The licensee must apply in writing to the Minister for approval prior to implementing any Deemed Transfer, which will be treated as set out in CPC-2-1-23. The implementation of a Deemed Transfer without the prior approval of the Minister will be considered a breach of this condition of licence.

Should the licensee enter into any Agreement that provides for a Prospective Transfer with another holder of a Licence for commercial mobile spectrum (including any Affiliate, agent or representative of the other licence holder), the licensee must apply in writing to the Minister for review of the Prospective Transfer within 15 days of entering into the Agreement, which will be treated as set out in CPC-2-1-23. Should the Minister issue a decision indicating that the Prospective Transfer is not approved, it will be a breach of this condition of licence for a licensee to remain in an Agreement that provides for the Prospective Transfer for a period of more than 90 days from the date of the decision.

Upon licence transfer or subordination, the Minister may impose specific conditions on any new licence, including additional deployment conditions, in order to ensure that the intent of the 2019 Decision and Framework is maintained.

Set-aside licences: The following additional provisions apply to set-aside licences as defined under the Framework:

  1. For the first five years of the licence term from the initial licence issuance date a set-aside licence is not transferable to a set-aside-ineligible entity (as defined in the Framework) with two exceptions:
    • a Subordinate Licence to a set-aside-ineligible entity may be granted in support of a spectrum sharing agreement provided that the requirements in section 5.6.3 and section 5.6.4 (in cases where the licence being issued allows for mobile services) of CPC-2-1-23 are met and that the Minister is satisfied that the relevant entities will actively and independently provide wireless services in the applicable licence areas, based on the assessment factors set out in the Framework; and
    • an exchange of equal amounts of 3500 MHz spectrum within the same licence area between a set-aside-eligible entity and a set-aside-ineligible entity may be allowed through a licence transfer application, subject to the provisions of section 5.6 of CPC-2-1-23.
  2. A set-aside spectrum licence may only be transferred to a set-aside-ineligible licensee after the five-year period set out above and once the licensee has satisfied the first mid-term deployment requirement.

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

The condition of licence outlined in annex I will be applied to licences in the 3500 MHz band that are deemed as fixed-use services only and will not be subject to section 5.6.4 of CPC-2-1-23 as long as this condition applies.

10.4 Other conditions of licence

379. ISED also sought comments on other conditions of licence. These conditions were based on existing policies and procedures that would apply to licences issued through the auction and transition process for spectrum in the 3500 MHz band.

Summary of comments

380. Stakeholders generally agreed with ISED’s proposals, however, some disagreed with specific conditions of licence as indicated below.

381. Annual reporting: Bell, TELUS and Québecor all proposed modification or removal of the annual reporting condition of licence in order to help reduce administrative burdens for both ISED and licence holders.

382. Rogers supported an alternative model for reporting requirements such as moving to an “as-requested” or “periodic reporting” model, where carriers are only obligated to provide those documents specifically requested by ISED each year, or increasing the length of time between the submissions of certain reports. According to Rogers, these changes would reduce the regulatory and engineering burden on operators, as well as ISED, while still ensuring that ISED can adequately monitor spectrum licensees to fulfill its mandate.

383. Mandatory roaming: Bell recommended eliminating the mandatory roaming condition of licence in its entirety. Both Bell and TELUS believe that ISED's wholesale roaming regulations are redundant given the CRTC's wholesale roaming regulations, and that eliminating duplicative wholesale roaming regulations between ISED and the CRTC would be consistent with the policy objectives and priorities related to competitive market forces.

384. Bell further stated that if ISED does not adopt its recommendation to eliminate mandatory roaming for all carriers, then it should, at a minimum, do so for the national mobile service providers. TELUS asked that ISED commence a general review and reconsideration of the mandatory roaming condition of licence for all commercial mobile spectrum bands.

385. Rogers commented against the removal or modification of the mandatory roaming condition of licence. According to Rogers, Client Procedures Circular CPC-2-0-17, Conditions of Licence for Mandatory Roaming and Antenna Tower and Site Sharing and to Prohibit Exclusive Sites Arrangements covers important areas not duplicated by the CRTC Telecom Regulatory Policy 2015-177.

386. Rogers, Shaw and Québecor shared the opinion that the mandatory roaming condition of licence remains as necessary today as when it was first introduced.

387. Research and development: Rogers, Bell, TELUS, Québecor and Shaw called for the elimination of the research and development (R&D) condition of licence. These carriers believe that the R&D requirement is no longer appropriate in today’s mature wireless industry where carriers require greater flexibility over investment decisions. Both Bell and Rogers believe that at a minimum, ISED should at least reduce the requirement to a lower percentage or discontinue using the definition of eligible R&D claims. Shaw did not support this alternative proposal.

Discussion

388. As mentioned above, the conditions of licence regarding Annual Reporting, Mandatory Roaming and R&D investments outlined in the Consultation were based on existing policies and procedures that apply to multiple frequency bands.

389. Annual reporting: Spectrum licences currently include a requirement to submit an annual report to ISED to provide some basic information on spectrum use as well as existing company reports. Some respondent comments indicated that annual reporting should be removed or modified to reduce the frequency of reporting, thus lowering the administrative burden on licensees.

390. While this reporting provides ISED with valuable information, the concerns of respondents have been noted. ISED may consult in the future to review the annual reporting requirements. However, at present, the annual reporting condition of licence will remain as proposed.

391. Mandatory roaming: The mandatory roaming condition of licence applies to all commercial mobile spectrum bands. Therefore, it would be impractical not to apply it to one particular band. Recognizing the opposing views received on the proposed condition of licence, ISED may consult in the future to review this condition of licence in the context of all commercial mobile bands. At present, the mandatory roaming condition of licence will remain as proposed.

392. Research and development: R&D continues to be recognized as a significant contributing factor to the ongoing success of the digital economy in Canada. Maintaining the R&D requirement supports research, technology and investment for the current and future prosperity of Canadians. As such, the R&D condition of licence will be adopted as proposed.

Decision

D27
The conditions of licence outlined in annex H will be applied to licences in the 3500 MHz band issued through this licensing process.

11. Amending the conditions of licence for all current fixed wireless access licences

393. In the Consultation, ISED proposed standardizing conditions of licence on all existing licences in the band to harmonize the treatment of all licensees. ISED proposed to implement this amendment on June 5, 2020.

Summary of comments

394. There was general support from stakeholders for ISED’s proposal to amend all fixed wireless access conditions of licence based on the proposed conditions of licence as outlined in the Consultation, as well as the timing of the amendment to occur on June 5, 2020.

395. Cogeco supported these proposals as they would update and harmonize the conditions of all fixed-use licences.

396. Rogers stated that ISED should provide clarity on how the deployment condition of licence would apply through the transition period as licences are converted from fixed-use to flexible-use, and operators look to convert their current spectrum for fixed services to mobile 5G use.

397. CanWISP, TekSavvy and Xplornet recommended that the amended condition of licence only remain in place until the transition process is complete and then the new conditions of licence for flexible-use licences should apply. Bell stated that if an existing fixed-used licensee decides to request flexible-use licences through the transition process and is successful, then the new conditions of licence should apply.

Discussion

398. ISED’s proposal of harmonizing and updating the licence conditions would ensure more consistent treatment of existing licences in the 3500 MHz band.  All existing Tier 4 and grid cell licences will be subject to the conditions of licence as set out in annex J of this Framework on June 5, 2020. This decision further provides that new tier 5 licences will be issued after the auction to both existing tier 4 and grid licensees, no matter when the licences were originally issued.  Grid cell licensees are currently subject to fees calculated in accordance with DGRB-008-99, Radio Authorization Fees for Fixed Wireless Access Systems in Rural Areas in the Frequency Range 3400-3550 MHz, and this was reflected in the proposed conditions.  Licensees must pay applicable annual licence fees by March 31, prorated fees will not be available. However, once the tier 5 licences are issued, they will be issued with a harmonized and simplified provision indicating that: any new licences issued will be subject to fees once they are established through future consultation. Therefore, once the tier 5 licences are issued, no existing fixed-use licensees will be subject to the above noted fee order.

399. The “where and when necessary” principle of displacement may result in some licences remaining un-transitioned for long periods of time in certain areas. By updating the conditions of licence for fixed-used licences, ISED can ensure that spectrum is being put to use and that all current applicable conditions as they relate to the Radiocommunication Act and Radiocommunication Regulations are applied to these licences.

400. Based on the comments received, ISED is of the view that these changes to the conditions of licence are minimal and are not expected to negatively impact licensees who intend to continue to use the spectrum to serve Canadians. Furthermore, applying these standardized conditions of licence provides clarity on the timing of the changes and will allow the affected stakeholders (both existing licensees and auction participants) certainty for business planning.

401. ISED notes that current fixed-use licences have differing expiry dates. To simplify the licence renewal process and the tracking of licences for existing licensees, all annual licence expiry dates will be modified to expire on March 31. Once this alignment occurs, all fixed-use licences will be renewed at the same time on an annual basis provided that the conditions of licence have been met.

402. There were additional comments concerning how conditions of licence will be applied during the transition process that will occur post-auction. Clarity on how licences will be treated during the transition period will be provided in the 3500 MHz Transition Manual, which will be released by ISED prior to the deadline for application to participate in the auction, in accordance with the Table of Key Dates.

403. In developing the transition process, it has become clear that it will be important for all licensees to provide updated and timely information to ISED on the deployment of new stations, in accordance with existing rules. It is further necessary that up-to-date contact information is available for all licensees. Changes to the proposed conditions dealing with these issues are reflected in the final version of the conditions in annex J.

Decision

D28
The conditions of licence outlined in annex J of this Framework will be applied to all current licences in the 3500 MHz band on June 5, 2020. All licence expiry dates will be modified to occur annually on March 31.

12. Auction process

404. The following section outlines the general process for submitting an application to participate in the 3500 MHz auction, as well as the general requirements and rules that would apply prior to, during and following the auction.

405. The schedule for the auction process, referred to as the Table of Key Dates, is available on ISED’s Spectrum Management and Telecommunications website. Items and time frames included in the schedule may be updated from time to time. Interested parties are advised to check the website regularly for any updates to the schedule of events.

12.1 Application to participate

406. To participate in an auction, all applicants, including existing licensees applying to participate only in the assignment stage, must submit:

  • completed application forms
  • a financial deposit
  • details of their beneficial ownership
  • information on any affiliations and associations as discussed in section 9 of this document
  • other corporate documentation as required

ISED will publish the list of applicants on its website soon after the application deadline.

407. The application forms for participating in the auction will be available on request by email. Additional documentation may be required in support of the application forms. As discussed in section 8.1, applicants will be required to indicate in their application if they are applying to bid as a set-aside-eligible bidder in the relevant Tier 2 service area of interest, and to provide relevant documentation along with the rest of the materials.

12.2 Submissions

408. In the interest of providing ISED and other bidders with adequate information on the identity of all bidders, each applicant is required to fully disclose the beneficial ownership for every entity of which it owns, directly or indirectly, 10% or more of the applicant’s voting shares, non-voting shares, partnership interests, or any other beneficial interests, as the case may be. Applicants are required to disclose any explicit or implicit arrangements or agreements where financing, security or guarantees have been, or may be, provided to the applicant or any of its affiliates, by another likely applicant or its affiliates, relating to the acquisition or use of any spectrum licences being auctioned in processes. Associated entities wishing to participate separately in the 3500 MHz auction are required to disclose the names of their associated entities within their application, and to provide narratives describing all key elements and the nature of the association regarding the acquisition of the spectrum licences being auctioned, and the post-auction relationships of the said entities. A list of applicants, their beneficial ownership information and the narrative on any associated entity relationships will be made available on ISED’s Spectrum Management and Telecommunications website, prior to the auction, so that all bidders have knowledge of the identity of the other bidders. Applicants are not permitted to change their beneficial ownership during the period beginning 10 days prior to the start of the auction and ending once the provisional results have been announced by ISED.

409. Entities are encouraged to approach ISED at least two weeks prior to the application date if seeking guidance or a predetermination as to whether their arrangement or proposed arrangement would be considered to give rise to a finding of association under this Framework. Any guidance or predetermination will not constitute a binding decision; however, potential applicants may benefit from an early opportunity to approach ISED with their proposed arrangements.

410. Applicants must also provide a certificate of incorporation or other applicable documentation to demonstrate that they are eligible to hold a licence under section 9 of the Radiocommunication Regulations. For example, corporate applicants must provide a copy of their certificate of incorporation or similar documentation, partnerships must provide an up-to-date partnership agreement, and individuals must provide a copy of their passport or other applicable documentation as described in section 9 of the Radiocommunication Regulations.

12.3 Pre-auction deposits

411. In order to enhance the integrity of the auction, ISED requires that all bidders submit a pre-auction financial deposit with their auction application.

412. In the Consultation, ISED proposed to determine the value of the pre-auction financial deposit based on the licences on which the applicant wishes to be eligible to bid. Each licence has been assigned a specific number of eligibility points that are approximately proportionate to the opening bid prices, as shown in table D1 of annex D. For spectrum licences to be auctioned in the 3500 MHz band, ISED proposed that the financial deposit be equal to $5,000 per eligibility point.

Summary of comments

413. BCBA, CanWISP, Eastlink, Ecotel, SaskTel and TekSavvy supported ISED’s proposal on the pre-auction deposits.

414. Iristel noted that pre-auction deposits place a significant financial burden on smaller players who must prove to the potential investors that they have sufficient viability to obtain financing for the deposit. Xplornet also noted that the pre-auction deposits are highly burdensome to smaller bidders. It believed that set-aside-eligible bidders should only be required to provide pre-auction deposits representing 50% of the amounts set out in the Consultation. Bell and Rogers opposed this proposal in their reply comments. They agreed that the pre-auction financial deposits proposed by ISED will enhance the integrity of the auction.

415. TELUS proposed that licensees eligible to be issued full Tier 4 service area licences through the transition process be given the option to apply to participate only in the assignment stage with an appropriate deposit (such as 5% of what the cost of the deposit would be to bid on their converted licences if they are seeking them in the auction). TELUS also proposed that ISED include these eligible licensees in the published list of qualified bidders or publish a separate list of participants who intend to bid only in the assignment stage.

416. Rogers, while generally agreeing with the proposed approach suggested that, prior to commencing bidding, ISED publish the identities of all bidders, the licences on which they are eligible to bid and each bidder’s initial levels of eligibility points. Rogers is of the view that revealing this information will aid price discovery, allow bidders to interpret competitive dynamics and refine valuations, thereby promoting a level playing field.

Discussion

417. The value of the pre-auction financial deposits is based on the licences and associated eligibility points on which the applicant intends to bid. Applicants will not be able to increase their eligibility points after the application deadline.

418. The proposed pre-auction financial deposits enhance the integrity of the auction by ensuring that auction participants have access to funds that will generally cover the opening bid amounts. This reduces the probability that bidders will bid for spectrum that they cannot afford, which would result in defaulting on their winning bids at the end of the auction. Considering that the price in the auction is expected to increase in comparison to opening bids, the required amount of financial deposits based on the opening bid prices does not appear to be excessive. Lowering of the pre-auction financial deposits would run contrary to the purpose of this requirement.

419. However, with regard to those participating only in the assignment stage of the 3500 MHz auction, ISED agrees that the deposit based on the opening bid prices may be excessive. Historically, in three Canadian auctions with separate allocation and assignment stages (auctions of the 700 MHz, 2500 MHz and 600 MHz bands) the amount of revenue raised in the assignment stages represented only 1.29% of the amount of revenue raised in the allocation stages.

420. In order to establish an adequate deposit amount for bidders that wish to participate only in the assignment stage, ISED will reduce the opening bids in terms of $/MHz/pop by the factor of 0.0129 and will calculate the amount of deposit that such a participant must provide (table D3 of annex D). These calculations are based on the amount of spectrum that each licensee holds and for which it can bid in the assignment stage as shown in “Spectrum for transition process and available for frequency selection in the assignment stage” column of table A1 of annex A. The deposit amounts were: rounded to the nearest $10 if they were less than $1000; were rounded to the nearest $100 if they were greater than $1000 but less than $10,000; and were rounded to the nearest $1000 if they were greater than $10,000.

421. For an existing 3500 MHz spectrum licensee who also wishes to bid for additional spectrum in the allocation stage (clock rounds), the pre-auction deposit amount will be based on the number of points that this bidder requires for the participation in the allocation stage or the amount specified in table D3 of annex D for this bidder, whichever is greater.

422. ISED will publish a list of all applicants, but in order to maintain the anonymity of the auction and to discourage anti-competitive behaviour, ISED will not publish the list of the set-aside-eligible bidders, the amount of the pre-auction deposits or the number of eligibility points that each bidder has at the beginning of the auction.

Decision

D29

For spectrum licences to be auctioned in the allocation stage (clock rounds) of the auction, the financial deposit will be equal to $5,000 per eligibility point. The eligibility points per service area are listed in table D1 of annex D. As part of its application, a bidder will be required to submit its total pre-auction financial deposit. The deposits are to be made in the form described in section 12.4.

An individual bidder requesting to be eligible to bid on the equivalent of one national block of 10 MHz in the allocation stage will be required to submit deposits covering 9,325 points, which will equate to $46,625,000 (i.e. $5,000 x 9,325). Financial deposit(s) will be returned to any applicant that is found not to be a qualified bidder and to any applicant that provides written notification to ISED of its withdrawal from the process prior to the auction's commencement. Financial deposits will be returned to unsuccessful bidders once the auction has closed.

Table D2 of annex D lists the opening bid prices and eligibility points for encumbered blocks.

An existing 3500 MHz spectrum licensee who wishes to participate only in the assignment stage must provide a deposit in the amount listed in table D3 of annex D.

For an existing 3500 MHz spectrum licensee who also wishes to bid for additional spectrum in the allocation stage (clock rounds), the pre-auction deposit amount will be based on the number of points that this bidder requires for participation in the allocation stage or the amount specified in table D3 of annex D for this bidder, whichever is greater.

The detailed instructions on determining pre-auction deposits will be provided with the application form for participation in the auction.

Consistent with previous auctions, ISED reserves the right to request additional financial deposits during the auction. This will be determined by considering factors such as the bids’ value and the bidding activity. The additional financial deposit will be based on a percentage, not exceeding 50%, of the value of the bidder’s total amount of bids for licences in a specified round. Bidders will be provided three business days to submit their additional financial deposits to ISED. The financial deposit must be in the form of a certified cheque, bank draft, money order, wire transfer, or an irrevocable standby letter of credit, payable to the Receiver General for Canada, drawn on a financial institution that is a member of the Canadian Payments Association.

12.4 Process to submit the applications and financial deposit

423. The application forms, the associated documents (as per the instructions provided on the application forms), and the total pre-auction financial deposit are to be delivered to the Manager, Auction Operations (address provided in section 16 of this Framework), by the date specified in the Table of Key Dates. ISED reserves the right, under exceptional circumstances, to accept additional documentation after the deadline, but prior to the publication of the list of applicants. Applications that are received without the total financial pre-auction deposit will be rejected.

424. For this licensing process, in an effort to streamline the submission of the application forms and associated documents, ISED will use Canada Post’s epost Connect service as it has for the most recent auctions. The epost Connect service is a way for business and government to securely send confidential digital messages and documents over the Internet with bank-grade encryption. The service is certified to transmit documents up to the Protected B classification level. Canada Post certifies that all data sent through their service stays within Canada, on Canadian servers.

425. Requests for auction application forms are to be sent by email to ISED’s Spectrum Auctions address. Upon receipt of requests, ISED will set up an epost Connect account for each prospective applicant.

426. Through a standard web browser, ISED (the administrator) and the auction applicant (the client) will log in to a secure web application. Through this site, ISED will send an initial message to the auction applicant who will receive a notification by email that contains a link. The auction applicant will then click on the link, which will bring it to the secure epost Connect website where it will be prompted to log in. If the auction applicant already has an epost Connect account, it can immediately log in. Otherwise, the auction applicant will be required to create an account before logging in. Once the applicant logs in, ISED’s initial message sent to the applicant becomes associated with the applicant’s epost Connect account. Canada Post calls this a conversation.

427. Once the conversation is established, messages can be initiated by either ISED or the auction applicant. A message could be simple text or it could also include files. This will allow ISED to send the application and bid forms to each auction applicant. In turn, the auction applicants will be able to respond to ISED and send their completed forms and other relevant documents.

428. For more information, refer to Canada Post's epost Connect website.

429. Similar to previous auction processes, the pre-auction financial deposit must be received by the Manager, Auction Operations by the date specified in the Table of Key Dates.

430. Upon receipt of the application and the associated documentation, ISED will send a notification to the applicant, stating that the application materials have been received. This notice will in no way mean that the application materials or the deposit have been approved.

431. The financial deposit must be in the form of a certified cheque, bank draft, money order, wire transfer, or an irrevocable standby letter of credit, payable to the Receiver General for Canada, drawn on a financial institution that is a member of the Canadian Payments Association. The elements required in a letter of credit, as well as a sample letter of credit acceptable to ISED, will be provided as part of the application forms. Multiple letters of credit (or other forms of payment) from one or more financial institutions will be permitted within reason. ISED will treat the financial deposit for an applicant as being the sum of the amounts of each accepted letter of credit, certified cheque, bank draft, money order or wire transfer. Each letter of credit must comply with the conditions laid out herein concerning letters of credit. No letter of credit shall have any conditions requiring ISED to draw on the letters in any particular order of priority, or requiring any letter to be drawn upon completely before drawing upon any other letter. If a qualified bidder is unsuccessful in the auction, the financial deposits that were submitted in the form of a letter of credit will be returned. Refunds of deposits submitted in the form of a certified cheque, bank draft, money order or wire transfer will likely take longer (perhaps several weeks longer) than a refund submitted by way of a letter of credit, since a cheque from the Receiver General for Canada will need to be processed.

432. If, prior to the application deadline, an applicant wishes for any reason to amend any of the forms that it has submitted and/or its financial deposit, it may submit one or more amended forms and/or financial deposit with an accompanying letter explaining that the enclosed form(s) and/or financial deposit are to replace the one(s) previously submitted. Any such amendments are to be received by the Manager, Auction Operations, by the receipt deadline for applications to participate in the auction.

433. Upon receipt of an amended form(s) and/or financial deposit, ISED will send a notification to the applicant that the amended form(s) and/or deposit have been received. The notification will state the amount of the new deposit that has been submitted. Where the financial deposit is in the form of an irrevocable standby letter of credit, the initial irrevocable standby letter of credit will also be returned to the applicant where applicable. Where the financial deposit is in a form other than an irrevocable standby letter of credit, any partial reimbursement of the financial deposit may take several weeks.

434. A list of all applicants will be made public on the Auctions section of ISED’s Spectrum Management and Telecommunications website. The publication of this list in no way means that the applicants have been approved as qualified bidders.

12.5 Bidder qualification

435. ISED will review the application forms, any associated documents, and the accompanying financial deposit after the closing date for the submission of applications. In this initial review, ISED will identify any errors in the application forms or financial deposit. It will also determine whether any additional information related to any affiliate or associated entity of the applicant is required. For applicants applying to be set-aside-eligible, ISED will also assess the eligibility to obtain set-aside licences in the Tier 4 areas, based on the relevant Tier 2 service areas of interest, and may request further information and/or verify the information.

436. Applications that are received without the appropriate deposit by the application deadline will be rejected. 

437. Following the initial review period, ISED will provide applicants with an opportunity to correct any errors or inconsistencies in their application and will request any additional information related to affiliated or associated entities if required. A copy of the original applications may be returned to the applicant with a brief statement outlining any discrepancies and/or omissions or requesting additional information. The applicant will be invited, in writing, to resubmit the corrected form and/or the additional information, by the date specified in the written statement.

438. Applicants that do not comply with ISED’s written requests will have their application to participate in the auction rejected. Applications that are rejected, including those for which an opportunity has been provided to correct errors or inconsistencies identified by ISED but that are still found to be deficient, may be returned to the applicant outlining the deficiencies, along with the applicant’s deposit.

439. Applicants that have submitted acceptable application materials, including the accompanying total pre-auction deposit, will be informed that they have qualified to participate in the auction. Qualified bidders will receive additional information related to their participation in the auction through separate mail-outs at a later date. This information may include, among other items, a bidder information document, a user manual and the schedule for the information session and mock auctions.

440. A list of all qualified bidders, along with information related to their beneficial ownership, affiliates and associated entities, will be made public via ISED’s website in accordance with the timelines stated in the Table of Key Dates. The number of eligibility points and the financial deposit amounts will not be published prior to the auction as the information could provide an indication of bidding intentions. Sharing any of this information is strictly prohibited in accordance with the anti-collusion rules outlined in section 9.4.

12.6 Withdrawal of application forms

441. Applicants wishing to withdraw their application materials and have their financial deposit returned may do so, without penalty, by sending a written request to the Manager, Auction Operations, at the address provided in section 16. This request is to be received before 12:00 p.m. noon (EDT) on the business day preceding the start of bidding in the auction.

12.7 Change of information

442. An Auction Authorized Representative is an individual authorized by the bidding company, for the 3500 MHz auction, to sign, submit information and make any changes on behalf of the applicant. 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. Material changes include any changes to the names and contact information of qualified bidders and designated bidders.

443. Written notification must be sent by the Auction Authorized Representative to the address provided in section 16 within five business days of any such material changes.

12.8 Backup procedures

444. Bidders are strongly advised to prepare contingency plans and backup facilities and locations, including multiple means of accessing the Internet, in the event of technical difficulties at their primary bidding locations. The final detailed provisions concerning backup procedures will be made available to qualified bidders prior to the start of the auction. However, ISED reserves the right to extend the length of a round at its discretion, or to alter the bidding schedule, for example, if 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.

445. In the application forms, applicants must designate up to three individuals who will have the authority to place bids on their behalf. Each designated bidder will receive individual codes to participate in the auction. Having more than one individual designated as a bidder will strengthen backup contingency plans for applicants in the case of unforeseen problems. ISED cannot guarantee any specific turnaround time for changes or additions submitted after the application date.

446. As a last resort, provisions will be made for ISED staff to submit bids on a bidder’s behalf. This is intended to serve as a limited contingency plan for bidders who experience technical difficulties that prevent them from accessing the auction system. Only the individuals listed as designated bidders will be able to use this option. Details of these provisions will be provided to qualified bidders prior to the start of the auction.

12.9 Bidder payment

447. Within 10 business days following the announcement of provisional winners, each provisional licence winner will be required to submit 20% of its final payment. Financial deposits may not be applied to the initial payment, unless the financial deposit was sufficient to cover both the initial and the final payments.

448. The remaining portion, 80% of the final payment, will be due within 45 business days of the announcement of the provisional auction results. Failure by the provisional winning bidder to make this final payment in a timely fashion will result in the licence not being issued, and the bidder will be subject to the applicable forfeiture penalty (see section 12.10). In the case of a provisional winning bidder from the assignment stage only, failure to make this final payment will result in the loss of its eligibility to apply for a flexible-use licence through the transition process, and the bidder will be subject to the applicable forfeiture penalties (see section 12.10). These final payments will be non-refundable. If any of the provisional winners outlined above fail to make the final payment within the specified period, then the provisional winner’s irrevocable standby letter of credit will be drawn upon.

449. All payments must be made by certified cheque, bank draft or wire transfer, payable to the Receiver General for Canada, drawn on a financial institution that is a member of the Canadian Payments Association.

450. These payments for the initial term of licences won through the auction process are in lieu of any fees that will be fixed for radio authorization under the Radiocommunication Act or any other act.

12.10 Forfeiture penalties

451. Following the conclusion of the auction, provisional winning bidders that fail to comply with the specified payment schedule or with the eligibility requirements of the Radiocommunication Regulations will be considered disqualified and will forfeit their ability to obtain licences through this process or will lose their eligibility to apply for flexible-use licences through the transition process until all applicable penalties are paid. Furthermore, non-compliant provisional winning bidders of auctioned licences will be subject to a forfeiture penalty in the amount of the difference between the forfeited bid and the ultimate price of the licence, to be determined by a subsequent licensing process, and may be subject to administrative monetary penalties. Non-compliant assignment stage provisional winning bidders will be subject to a forfeiture penalty in the amount of the forfeited assignment price and may be subject to administrative monetary penalties.

452. In the event of forfeiture, the bidder’s irrevocable standby letter of credit will be drawn upon for the full amount of the interim proxy forfeiture penalty, which will be the full winning bid amount. If the interim proxy forfeiture penalty is greater than the full amount of the bidder’s irrevocable standby letter of credit, combined with any partial payment, or if the letter of credit has been returned or has expired, then the difference will be owing and payable to the Receiver General for Canada.

453. A winning bidder that forfeits on a licence or frequencies determined by the assignment stage (as well as any of that bidder’s affiliated and associated entities) may not be eligible to bid on any subsequent licensing process for the related band.

12.11 Enforcement of the auction rules

454. Applicants and/or their representatives who fail to comply with the requirements or rules set out in any section of this Framework may be subject to one or more of the following outcomes depending on the circumstances:

  • the applicant may be disqualified from bidding or continuing to bid
  • the applicant’s bids may be deemed invalid
  • any and all licences issued to the applicant under this Framework may be revoked
  • the applicant may lose the eligibility to apply for flexible-use licences through the transition process
  • the applicant may be subject to the appropriate forfeiture penalties as outlined in section 12.10
  • the applicant may be subject to administrative monetary penalties or prosecution under the Radiocommunication Act

455. Applicants should note that in the case where an administrative monetary penalty is applied, the effect of the breach of the auction rules on the licensing process and on all of the other bidders may be considered in assessing the nature and scope of the violation for the purposes of determining the amount of the penalty.

12.12 Issuance of licences

456. ISED will issue spectrum licences to provisional licence winners upon receipt of the payment of the sum of their bids and the sum of their penalties.

457. Through the 3500 MHz transition process, existing licensees that comply with all of their conditions of licence will be eligible to apply for new flexible-use licences in the frequencies determined by the assignment stage of the 3500 MHz auction.

12.13 Bidder training and support

458. Qualified bidders will receive the necessary information to participate in the auction several weeks prior to the start of the auction. Resources will include, but will not be limited to, an information session, a user manual for the auction system, instructions and passwords to access the secure auction system, along with the schedule for training, mock auctions and the start of the bidding process.

459. Mock auction(s) will be held, likely during the weeks prior to the start of the auction, in order to allow qualified bidders to better familiarize themselves with the auction system.

460. The full schedule for the auction process is included in the Table of Key Dates on ISED’s Spectrum Management and Telecommunications website.

13. Post-auction licensing process for unassigned licences

461. ISED will consider making unassigned licences available for licensing through an alternative process, which could include a subsequent auction at a later date following the close of the initial auction. The timing and form of such a process will depend on the demand for the available licences. ISED may conduct a public consultation should it consider it necessary.

14. Licence renewal process

462. In the Consultation, ISED proposed a renewal process that includes a public consultation process commencing approximately two years prior to the end of the licence term.

Summary of comments

463. Stakeholders that provided feedback on the licence renewal process generally supported ISED’s proposal.

Discussion

464. Following the end of the initial licence term, licensees will have a high expectation that a new licence will be issued for a subsequent term through a renewal process unless a breach of licence condition has occurred, a fundamental reallocation of the spectrum to a new service is required, or an overriding policy need arises.

465. As part of the licence renewal process, the Minister retains the power to fix and amend the terms and conditions of spectrum licences during the term of the licence and at the end of the term in accordance with subsection 5(1) of the Radiocommunication Act. As noted in the FSAC, licence fees that reflect some measure of market value will apply to licences issued through a renewal process. Accordingly, the renewal process will serve to determine whether new licences will be issued, the terms and conditions that will apply to the new licences and the applicable licence fees.

466. Approximately two years prior to the end of the licence term, ISED will review whether there is a need for a fundamental reallocation of the spectrum to a new service, or whether an overriding policy need has arisen. A review of the licensee’s continued compliance with the conditions of licence will also begin, including compliance with the deployment requirement levels at the end of the licence term. During the renewal process, ISED may consider factors such as changing technology and an individual licensee’s efforts to meet the conditions of licence.

467. As noted in section 10, ISED will require that six months prior to the end of the 20-year licence term, all licensees wishing to undergo the future licence renewal process for their 3500 MHz licences must provide proof to ISED that they meet, or will meet the 20-year deployment requirements for their licences by the specified timelines.

Decision

D30
Approximately two years prior to the end of the licence term, ISED may launch a public consultation to discuss whether or not, in light of the above-noted issues, new licences should be issued for a subsequent term. The consultation paper will also propose, and invite comments on, licence conditions and fees that would apply during the subsequent licence term.

15. Transition process general guidelines

468. As stated in the 2019 Decision, ISED will publish a Transition Manual (the “Manual”) on its website prior to the upcoming 3500 MHz spectrum auction, as indicated in the Table of Key Dates. The Transition Manual will provide details on the procedures and timelines related to both voluntary transitions and displacements and all other transition related elements. A high-level summary of the transition process is outlined below.

469. Voluntary agreements: ISED has set out minimum protection periods and notification timelines for existing fixed-use licensees that are required to transition. It is also noted that where deployment or transition of one licensee impacts on another licensee’s operations, ISED encourages licensees to come to voluntary agreements as part of the transition process. This kind of arrangement will provide the opportunity to establish mutually agreeable timelines and foster good working relationships between licensees, which facilitates the transition process. Flexible-use licensees requiring the displacement of fixed systems must always respect the protection periods and notification provisions set out in the 2019 Decision unless a voluntary agreement has been reached between all affected licensees. Voluntary agreements must be submitted to ISED for review and approval prior to implementation. Note that ISED may require changes before approving a voluntary agreement. All decisions relative to voluntary agreements will be posted on ISED’s website at time of approval.

470. Note that any communications regarding potential voluntary agreements that involve one or more potential bidders in the auction is not permitted at any time prior to the announcement of the provisional auction winners by ISED.

471. Structured where and when necessary process: In the 2019 Decision, ISED stated that the transition will be based on the “where and when necessary” principle and that the transition policy will allow existing licensees to continue operating where such operations do not prevent flexible-use deployments. In the same Decision, ISED also stated that other spectrum management factors may be considered in determining the size of the displacement zone and the development of the transition process in general.

472. In this context, ISED recognizes that simple and clear principles must guide the transition process for over 3,400 newly awarded flexible-use licences resulting from the auction, as well as for the affected fixed-use licences that will be displaced as part of the process. In an effort to provide a standardized and clear starting point, shortly after the auction has concluded, ISED will issue new licences, effectively converting all existing Tier 4 fixed-use licences to equivalent Tier 5 fixed-use licences in terms of both area and spectrum holdings (MHz). For those with authorizations that do not convert precisely to full Tier 5 licences (i.e. grid cell or subdivided tier licences), the new licence(s) will be defined as a subdivision of the applicable Tier 5 area. Licensees with subdivided or grid-cell licences that cross Tier 5 boundaries will receive multiple licences to cover their original licence area.

473. The conversion of existing fixed-use licences from Tier 4 areas to Tier 5 areas will be undertaken by ISED, therefore, no application is required by the current licensees. Existing subordinate licences will also be processed to align with the new Tier 5 licences. Following these amendments, those wishing to continue their subordinate agreements will be required to file an extension request with ISED in the usual manner, when the licence is up for annual renewal.

474. Using the established Tier 5 service areas will significantly increase operational efficiency and will simplify the communication of the transition progress for stakeholders. This approach to defining displacement areas is expected to better align with stakeholder business operations and facilitate expansion strategies by providing a level of clarity and predictability for existing operators and new licensees on the parameters for the transition and displacement processes. Given that Tier 5 areas are more granular than Tier 4 areas, ISED is of the view that the use of Tier 5 boundaries are well suited for the purpose of the transition process. ISED anticipates issuing Tier 5 licences with substantially the same conditions of licence. The new updated Tier 5 fixed-use licence conditions will be published in the Transition Manual.

475. Displacement requests will be assessed on a Tier 5 basis and displacements will occur according to the existing fixed-use 25 MHz blocks. As a result, regardless if a licence is divided based on geography or frequency, all such subdivided licences will be displaced across the entire Tier 5 service area and the original fixed-use 25 MHz blocks. Licensees are reminded that they are not permitted to operate on both a flexible-use and fixed-use licence in the same geographic area (within the same Tier 5 area), either through ownership of the licences or through subordination, except for a short time during the transition period. Licensees will be required to notify ISED of deployment to new areas or new frequency assignments using their Tier 4 flexible-use licence. At that time, all of their Tier 5 fixed-use licence(s) in those areas will be cancelled.

Decision

D31
After the auction has closed, ISED will convert all existing Tier 4 fixed-use licences to equivalent Tier 5 fixed-use licences in terms of area and spectrum holdings (MHz). For those with authorizations that do not convert precisely to full Tier 5 licences (i.e. either grid cell licences or subdivided tier licences), the new licence(s) will be defined as a subdivision of the applicable Tier 5 area. Licensees with subdivided or grid-cell licences that cross Tier 5 boundaries will receive multiple licences to cover their original licence area.

476. Predictable schedule for build plan submissions and displacement notifications: To design an orderly transition process, where displacements are required in order to deploy services on flexible-use licences, ISED will require the submission of deployment plans on a scheduled basis. Plans for new deployments or transitions to the new band plan will be coordinated by ISED according to a 6-month cycle. Voluntary agreements between licensees will not be constrained to these 6-month intervals.

477. For the initial displacement of operations within large population centres and the buffer area, which may occur as early as six months after the initial issuance of licences, ISED will provide an accelerated schedule. In order to accommodate these early deployments, ISED will accept displacement requests within the first two weeks after the auction results are announced. A second displacement request intake period will open up shortly after the flexible-use licences are issued. Following notification to other affected licensees and review of the deployment plans, ISED will issue displacement notices for the affected Tier 5 area(s) that contain a large population centre plus buffer area as appropriate. These applications for displacement notices will be processed on an expedited basis to minimize any delays to deployments, however, those submitting applications for displacement are reminded that justification for displacement must be provided to the satisfaction of ISED.

478. Protection periods and interference at area boundaries: It is expected that as transitions occur, there will be a need to manage interference across service area boundaries with different protection periods and/or notification periods. For example, in a service area with large population centres plus buffer area, there could be areas with both six month and two year protection periods. In other service areas, there could be adjacent areas with different protection periods of two years and three years. ISED encourages stakeholders to establish coordination agreements between adjacent geographic areas during the transition process. In the absence of such coordination agreements, however, the following principles will apply:

  • Once a large population centre plus buffer area has had its transition initiated, fixed-use licensees in adjacent areas may be required to adjust their network to not cause harmful interference to the flexible-use licensee; this can occur as early as six months after auctioned licences are issued or a voluntary agreement for early deployment has been reached.
  • Prior to the end of the two year protection period, flexible-use deployments within the large population centre may not interfere with fixed-use licensees operating outside the 10 km buffer area. After the end of the two year protection period outside the large population centre buffer area, fixed-use licensees cannot claim protection from flexible-use licensees.
  • In all other cases, fixed-use licensees will not be required to modify their network prior to the end of their protection period, with flexible-use licensees being required to adjust accordingly. After the relevant period has concluded, fixed-use licensees will not be permitted to cause interference into adjacent areas, and cannot claim protection from flexible-use licensees. Beyond the protection period, adjacent fixed-use licensees may choose to transition as a result of interference from adjacent flexible-use licence areas or may choose to accept the interference on the existing deployment, as long as they are not causing any interference to flexible-use systems.
  • All scenarios described above where an incumbent in an adjacent area may be impacted will be subject to notification requirements. Further details on the notification process will be laid out in the Transition Manual.

479. Transition manual: The Transition Manual will provide further details on the approaches outlined above, as well as details on the following:

  • the specific procedures and timelines to apply for flexible-use licences
  • the submission process and information required when submitting new build plans
  • the procedures and timelines associated with the displacement process including notification and displacement letters and coordinated system changeover
  • policies and procedures on voluntary coordination between new and existing licence holders
  • the treatment of existing licences once a transition has been triggered
  • all other relevant information to ensure an efficient transition process

480. To ensure a smooth transition process, all existing 3500 MHz licensees must continue to submit their latest site upload data to the Radiocommunication Licensing Services website and must keep this information up-to-date. ISED may request additional information on specific sites. Failure to submit requested information or to keep the Spectra database up to date may result in existing sites receiving interference from other licensees.

481. ISED will require all existing 3500 MHz licensees to provide points of contact in order to facilitate coordination of the transition process and potential displacement of existing systems. Contact information is to be sent by email by the date indicated in the Table of Key Dates. Any modification to this contact information in the future, must also be provided to ISED as soon as it is known.

16. Clarification questions process

482. ISED will accept written questions seeking clarification of the rules and policies set out in this Framework until the deadline specified in the Table of Key Dates. Every effort will be made to post the questions received, along with ISED’s written responses, in the shortest time frame possible. Questions that are of a similar nature and subject matter may be grouped and summarized. Questions regarding bidding procedures will be addressed in mail-out packages intended for qualified bidders and will not be included in this clarification process unless they are deemed to be critical information for potential bidders requiring an immediate response. These answers will be considered as clarification of the policies set out in this Framework. Applicants are encouraged to submit questions as soon as possible.

483. ISED may also amend or supplement the auction rules and procedures contained in this Framework. Any such amendment or supplement will be published on ISED’s website and will be sent to all qualified bidders.

484. Questions regarding the 3500 MHz auction process may be sent to the Manager, Auction Operations, by email.

485. All questions should cite the Canada Gazette, Part I, the publication date, the title and the notice reference number (SLPB-001-20). Questions and responses will be posted on ISED’s Spectrum Management and Telecommunications website.

17. Obtaining copies

486. All spectrum-related documents referred to in this paper are available on ISED’s Spectrum Management and Telecommunications website.

487. For further information concerning the process outlined in this document or related matters, contact: 

Innovation Science and Economic Development Canada
c/o Senior Director, Spectrum Licensing and Auction Operations
235 Queen Street (6th Floor, East Tower)
Ottawa ON K1A OH5
Telephone: 613-302-3436
TTY: 1-866-694-8389
Email: ic.spectrumauctions-encheresduspectre.ic@canada.ca
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