Notice of Upcoming Auction of Residual Spectrum Licences

1. Through the release of this document, Innovation, Science and Economic Development Canada (ISED), on behalf of the Minister of Innovation, Science and Industry (the Minister), announces an upcoming auction of residual spectrum licences, consistent with decisions published in Canada Gazette Notice SLPB-003-21, Decision on a Streamlined Framework for Auctioning Residual Spectrum Licences (the Streamlined Framework or Framework).

2. This document (hereinafter referred to as the Notice) sets out the parameters of the licences to be auctioned. This includes information related to the band plans, pro-competitive measures, and conditions of licence for the licences made available through this process. Given the decisions outlined in this notice, ISED will not hold a consultation for this upcoming auction of residual spectrum licences.

3. The Minister, 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.

4. The Framework for Spectrum Auctions in Canada (FSAC) describes the general approaches that ISED uses to auction spectrum licences. In August 2021, ISED published the Streamlined Framework as a complement to the FSAC in accordance with the policy objectives of the Telecommunications Act and the Spectrum Policy Framework for Canada (SPFC).

5. In the Streamlined Framework, ISED adopted a notice-based approach to minimize elements requiring consultation and facilitate access to residual licences, while establishing a predictable and consistent format for future auctions of residual licences.

6. The most recent auction of residual licences, the Auction of Residual Spectrum Licences in the 700 MHz, 2500 MHz, 2300 MHz and PCS-G Bands, conducted in 2018, made previously unsold licences available in the 700 MHz, 2500 MHz, 2300 MHz and PCS-G bands. Since that auction, ISED has also held auctions for the 600 MHz and 3500 MHz bands, in 2019 and 2021 respectively, resulting in additional licences that went unallocated.

7. In the Streamlined Framework, ISED specified that this Framework would only be used to auction residual spectrum licences, defined as: spectrum licences that remain unallocated at the conclusion of an auction process; licences that have not been renewed; licences that were previously assigned but have been cancelled by ISED; and licences that have been returned to ISED by a licensee prior to the end of the licence term.

8. The following 42 licences will be available in this auction:

• Nine (9) 2500 MHz licences in Northern Ontario, Manitoba, British Columbia and the North (Tiers 3 and 4);
• Eight (8) 600 MHz licences in Newfoundland and Labrador, Northern Ontario, Manitoba and the North (Tiers 2 and 4); and
• Twenty-five (25) 3500 MHz licences in Quebec, Manitoba and the North (Tier 4).

9. Two (2) residual licences for wireless communication services (WCS) in the 2300 MHz band also remain unassigned following the conclusion of an auction in May 2018, in accordance with the Licensing Framework for Residual Spectrum Licences in the 700 MHz, 2500 MHz, 2300 MHz and PCS-G Bands. As ISED expects to issue an upcoming consultation on the renewal of licences in this band, including the applicable conditions of licence, these two licences will not be made available in this auction, but in a future residual auction.

10. In the Streamlined Framework, ISED specified that, in general, the tier sizes used in the initial auction process will be maintained when auctioning residual licences. In this auction, ISED considers it appropriate to maintain the original tier sizes of each licence.

2500 MHz band

11. Licences for broadband radio services (BRS) in the 2500 MHz band were most recently auctioned in May 2018, in accordance with the Licensing Framework for Residual Spectrum Licences in the 700 MHz, 2500 MHz, 2300 MHz and PCS-G Bands. Nine (9) licences in this band, listed in Table 1, remained unassigned at the end of that auction and will be made available again in this auction. This includes two (2) blocks of 20 MHz (10+10 paired), two (2) blocks of 10 MHz (unpaired), two (2) blocks of 15 MHz (unpaired) and three (3) blocks of 25 MHz (unpaired).

Note: * Includes a 5 MHz restricted band.

600 MHz band

12. Licences in the 600 MHz band were auctioned in March 2019, in accordance with the Technical, Policy and Licensing Framework for Spectrum in the 600 MHz Band. The following eight (8) licences of 10 MHz (5+5 paired), listed in Table 2, remained unassigned at the conclusion of the 600 MHz auction and will be made available in this auction.

3500 MHz band

13. Licences in the 3500 MHz band were auctioned in June 2021, in accordance with the Policy and Licensing Framework for Spectrum in the 3500 MHz Band. The following twenty-five (25) licences of 10 MHz (unpaired), listed in Table 3, remained unassigned at the conclusion of the 3500 MHz auction or have since been returned and will be made available in this auction.

* Denotes licences that were set-aside in the 3500 MHz auction and remain set-aside in this auction.

14. In the Streamlined Framework, ISED indicated that it will generally not consult on competitive measures prior to an auction of residual licences where the relevant competitive measures are maintained from the initial auction process or in cases where ISED elects to remove competitive measures for licences that have already gone unallocated in at least one previous auction of residual licences.

15. The 2500 MHz auction (2015) included a spectrum aggregation limit (cap) of 40 MHz, excluding restricted bands at 2570-2575 MHz and 2615-2620 MHz, applicable to all licensees, with the exception of licences in the Northwest Territories, Yukon and Nunavut, where there was no limit. This cap, maintained in the residual auction in 2018, was applicable for five years from the date of issuance of the licence, and has therefore expired for licences issued through the original auction or will expire in 2023 for licences issued through the first residual auction. In addition, and as noted in the Streamlined Framework, ISED may, without consultation, elect to remove competitive measures for licences that have already gone unallocated in at least one residual auction. Accordingly, ISED will remove the spectrum aggregation limit for the 2500 MHz licences available in this auction.

16. The 600 MHz auction (2019) included a set-aside of 30 MHz in each service area. Eligibility to bid on set-aside spectrum was limited to those registered with the CRTC as facilities-based providers that were not national incumbent service providers as defined in the Technical, Policy and Licensing Framework for Spectrum in the 600 MHz Band, and that were actively providing commercial telecommunications services to the general public in the relevant Tier 2 service area of interest, effective as of the application date to participate in the 600 MHz auction.

17. The 3500 MHz auction (2021) included a set-aside determined by the amount of spectrum available in a given service area. For tiers containing a large population centre (or large urban population centre as defined by the 2016 Census), the set-aside was equal to the lesser of 50 MHz or all blocks available in the tier. For tiers without a large population centre, 50 MHz was set-aside in service areas with at least 50 MHz available. No blocks were set-aside in tiers without a large population centre where less than 50 MHz of spectrum was available. Similar to the 600 MHz auction, eligibility to bid on set-aside spectrum was limited to those registered with the CRTC as facilities-based providers that are not national mobile service providers as defined in the Policy and Licensing Framework for Spectrum in the 3500 MHz Band, 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.

18. All 600 MHz licences and the nine (9) 3500 MHz licences in the North (in service areas 4-170, 4-171, and 4-172) that will be made available in this auction were set aside in their initial auctions. Given that these licences were auctioned in 2019 and 2021, respectively, ISED is of the view that the competitive measures established for these bands remain relevant, given the recency of the original auctions and as this will be the first time these licences will be offered in a residual auction. In accordance with the Streamlined Framework, ISED will not consult on competitive measures and will maintain the set-asides from the original licensing frameworks for the 600 MHz and 3500 MHz bands. Consistent with these original frameworks, set-aside licences would also not be transferable to set-aside-ineligible entities for the first five years of the licence term, except under certain conditions as set out in section 6.3 of this Notice.

19. The remaining 16 3500 MHz licences available in this auction in Quebec and Manitoba were transitioned licences that were subsequently returned to ISED. In accordance with the set-aside determination for service areas without large population centres established in the Policy and Licensing Framework for Spectrum in the 3500 MHz Band and set out in paragraph 17 above, 50 MHz of spectrum was already set-aside in 4-036 La Tuque, 4-060 La Sarre, 4-066 Chibougamau and 4-118 Thompson, and no spectrum was set-aside in 4-054 Mont-Laurier/Maniwaki, as less than 50 MHz was available. The Policy and Licensing Framework for Spectrum in the 3500 MHz Band also specified that where less than 50 MHz of spectrum was available for the auction, ISED would not implement a set-aside even if spectrum was subsequently returned by an incumbent in the service area. Accordingly, all 16 licences will not be set-aside and will be open to all qualified bidders.

20. Consistent with their original frameworks, eligibility to bid on set-aside 600 MHz and 3500 MHz licences in this auction process will remain limited to those registered with the CRTC as facilities-based service providers, that are not national mobile service providers (NMSPs), 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 this auction of residual licences. NMSPs are defined as companies with 10% or more of the national wireless subscriber market share, determined by the 2021 CRTC Communications Market Report.

21. In their application to participate in the auction, applicants will be required to indicate how they qualify as a set-aside-eligible bidder in each relevant Tier 2 service area. An applicant may be eligible to qualify as a set-aside-eligible bidder based on the eligibility of its affiliated entities or, where an applicant is a partnership, on the eligibility of the partners who control the applicant. For the purposes of this decision, “general public” can include businesses, enterprises and institutions, as well as “traditional” residential consumers and includes all services regulated under the Telecommunications Act.

22. In its assessment of an applicant'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 applicant. Applicants 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.

23. ISED will assess the eligibility to obtain set-aside licences, based on the relevant Tier 2 service areas of interest, and may request further information and/or verify the information. Following the initial review period, ISED will provide applicants with an opportunity to correct any errors or inconsistencies in their application. Potential auction participants concerned with their set-aside eligibility status are strongly encouraged to submit their application in advance of the final application deadline to provide ISED with time to assess their application and provide any necessary feedback or concerns.

24. For additional details on set-aside eligibility and how it will be assessed by ISED, please refer to the Technical, Policy and Licensing Framework for Spectrum in the 600 MHz Band and the Policy and Licensing Framework for Spectrum in the 3500 MHz Band, as well as the Responses to Clarification Questions on the Technical, Policy and Licensing Framework for Spectrum in the 600 MHz Band and the Responses to Clarification Questions on the Policy and Licensing Framework for Spectrum in the 3500 MHz Band.

25. Finally, the Policy and Licensing Framework for the 3800 MHz Band implemented a cross-band cap of 100 MHz that will apply to the total of a licensee’s 3500 MHz and 3800 MHz spectrum licences for a period of five years starting from the date of issuance of 3800 MHz licences. In addition, in licence areas where a licensee already holds 3500 MHz licences equal to or in excess of this cap, such a licensee will not be eligible to bid for additional licences in the 3800 MHz band in those service areas in the auction, but will not be required to divest any 3500 MHz licences in order to fall within the spectrum cap.

26. Similarly, for this residual auction, in any available 3500 MHz licence areas where a licensee already holds 3500 MHz licences equal to or in excess of this cap, such a licensee will not be eligible to bid for additional 3500 MHz licences. In addition, a bidder will not be allowed to submit bids that would result in its holdings in the 3500 MHz band exceeding the 100 MHz cap, as any 3500 MHz licences obtained in this auction process will count towards the cross-band cap for the 3800 MHz auction. For this measure, 3500 MHz licences held by any affiliate of the licensee would count as part of the cross-band cap.

27. Given the decision to apply the cross-band cap to both the 3500 MHz and 3800 MHz bands, in addition to the existing conditions for existing 3500 MHz licences, ISED will amend the condition on licence transferability, divisibility, and subordinate licensing set out in thePolicy and Licensing Framework for Spectrum in the 3500 MHz Band to reflect the addition of the cross-band cap, set out further in section 6.3 below. ISED will amend the 3500 MHz licences at the same time as the 3800 MHz licences are issued.

28. Licences are subject to the relevant provisions in the Radiocommunication Act and the Radiocommunication Regulations. The Minister continues to have the power to amend the terms and conditions of spectrum licences pursuant to paragraph 5(1)(b) of the Radiocommunication Act, and may do so for a variety of reasons, including furtherance of the policy objectives related to the band. Such action would normally only be undertaken after consultation.

6.1 Licence term

29. The Licensing Framework for Residual Spectrum Licences in the 700 MHz, 2500 MHz, 2300 MHz and PCS-G Bands, the Technical, Policy and Licensing Framework for Spectrum in the 600 MHz Band, and the Policy and Licensing Framework for Spectrum in the 3500 MHz Band established licence terms of 20 years for licences in the 2500 MHz, 600 MHz and 3500 MHz bands.

30. In the Streamlined Framework, ISED specified that it will not consult on licence terms and will align the expiration date of residual licences with the expiration date of licences obtained through the initial auction process. ISED also noted that aligning the expiration date of licences within the same band would require residual licensees to meet the end-of-licence deployment requirements at the same time as licensees who obtained their licence through the initial auction process. Given the time horizon for meeting this requirement (e.g., in the context of a 20-year licence), this would generally be sufficiently distant as to not disadvantage residual licensees.

31. Accordingly, ISED will align the expiration dates of licences issued through this auction to the expiration date of licences issued through their initial auctions, or, in the case of 2500 MHz licences, through the more recent residual auction. As such, ISED will align the expiration date of 2500 MHz licences issued through this auction with those issued at residual auction in 2018 (June 29, 2038). ISED will also align the expiration date of 600 MHz licences issued through this auction with those issued at auction in 2019 (May 26, 2039). Finally, ISED will align the expiration date of 3500 MHz licences issued through this auction to the expiration date of licences issued at auction in 2021 (December 16, 2041). This is also consistent with the conditions of licence established in the Policy and Licensing Framework for Spectrum in the 3500 MHz Band, which stated that the term of these licences is 20 years from the date that the first licences are issued immediately following the auction process, whether the licence was issued on the initial licence date or issued at any later time. Note that in the cases of 600 MHz and 3500 MHz licences, this will also affect end-of-licence deployment requirements as described in section 6.2.

32. As indicated in the original licensing frameworks, at the end of this 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 spectrum to a new service is required, or an overriding policy need arises.

6.2 Deployment requirements

33. Deployment requirements generally require licensees to provide coverage to a percentage of the population or of the licensees’ existing mobile broadband footprint within a given time period. This is to encourage licensees to put the spectrum to use and to deter acquisition of spectrum licences by speculators or those whose intent is to prevent access to spectrum by their competitors. Licensees can meet deployment requirements either by putting the spectrum to use as the primary licensee, through subordinate licensing, or through other types of arrangements such as the transfer or division of licences that would see the spectrum used by others. Timelines for deployment milestones commence from the date of issuance of the licence.

34. In the Streamlined Framework, ISED indicated that it will not consult on deployment requirements prior to an auction of residual licences, particularly when they are maintained from those established in the initial auction process for those licences.

35. The deployment requirements for licences in the 2500 MHz band were established in 2015 in the Licensing Framework for Broadband Radio Service (BRS) — 2500 MHz Band and maintained in 2018 in the Licensing Framework for Residual Spectrum Licences in the 700 MHz, 2500 MHz, 2300 MHz and PCS-G Bands. While ISED has moved to increase deployment requirements in recent licensing processes, given that the available 2500 MHz licences remain unallocated from both an initial and a residual auction, ISED is of the view that maintaining the original deployment requirements is appropriate to meet ISED’s objective to facilitate deployment and availability of services across the country.

36. The deployment requirements for 600 MHz licences issued at auction in 2019 were established in the Technical, Policy and Licensing Framework for Spectrum in the 600 MHz Band, while the deployment requirements for 3500 MHz licences issued at auction in 2021 were established in the Policy and Licensing Framework for Spectrum in the 3500 MHz Band. Given the recency of these two auctions, ISED will not make changes to the deployment requirements for the 600 MHz and 3500 MHz licences available in this process, other than to align the end-of-licence deployment requirements with their expiration dates, as set out below.

37. Population figures are based on data available through the 2016 Census.

2500 MHz

38. ISED will retain the 10-year deployment requirements adopted previously for the 2500 MHz band as specified in Table 4.

600 MHz

39. For licences in the 600 MHz band, ISED required licensees to meet specific deployment requirements based on Tier 2 service areas (Tier 4 in the North) by year 5 (Table 5), Tier 3 service areas (Tier 4 in the North) by year 10 (Table 6), and Tier 4 service areas by year 20 (Table 7). Accordingly, these year 20 deployment requirements are now end-of-term deployment requirements.

3500 MHz

40. ISED adopted two deployment requirements for the 3500 MHz band:

• a general deployment requirement for each area based on a percentage of the population of the Tier 4 licence area that applies to all flexible-use licensees at years 5, 10 and 20; and
• an additional requirement for licensees that currently operate a mobile LTE network, which requires them to cover 90% of the population within its mid-band LTE network within five years and 97% within seven years of the initial licence issuance date in tiers that contain a large population centre; or 90% of the population within its mid-band LTE network within seven years and 97% within ten years of the initial licence issuance date in tiers that do not contain a large population centre.

41. ISED will retain the deployment requirements used in the 3500 MHz auction for the 3500 MHz licences available in this auction process (Table 8), noting that the 20-year deployment requirement for 3500 MHz licences available in this auction is now an end-of-term requirement.

6.3 Licence transferability, divisibility and subordinate licensing

42. Licences allocated in this process may be transferred in whole or in part (divisibility), in both bandwidth and geographic dimensions, subject to Ministerial approval. A Subordinate Licence may also be issued in regard to these licences. The Minister’s approval is required for each proposed Subordinate Licence.

43. 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, a licensee must make a Transfer Request in writing to the Minister. In all cases, the licensee must follow the procedures as outlined in CPC-2-1-23, and all capitalized terms in this section have the meaning ascribed to them in CPC-2-1-23.

44. 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.

45. 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.

46. 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 previous Decisions and Frameworks are maintained.

47. Set-aside licences: The following additional provisions will continue to apply to set-aside licences:

• 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 this Notice and the original licensing frameworks) with two exceptions:
  1. 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
  2. an exchange of equal amounts of 600 MHz or of 3500 MHz spectrum within the same band and 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.
• 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.

48. Cross-band cap: As noted in section 5, ISED has adopted a 100 MHz cross-band cap in the 3500 MHz and 3800 MHz bands for the 3800 MHz auction. Accordingly, 3500 MHz licensees will be subject to the following additional provisions under the 100 MHz cross-band cap established in the Policy and Licensing Framework for the 3800 MHz Band:

• The cross-band cap is applicable to a licensee’s total 3500 MHz and 3800 MHz spectrum holdings immediately following the issuance of 3800 MHz licences and extends for a period of five years.
• No transfer of licences or issuance of new licences will be authorized during this period if it would result in a licensee exceeding the 100 MHz cross-band spectrum cap or causes a licensee whose prior holdings already exceed the spectrum cap to further exceed the spectrum cap.
• A spectrum licence may only be transferred during the five-year period set out above once the licensee has satisfied the first mid-term deployment requirement.
• Subordinate licences will not count towards the subordinate licensee’s spectrum cap if the primary licensee and the subordinate licensee demonstrate to the satisfaction of ISED that they will be separately and actively providing services to customers in the applicable licence area. Where such approval is granted and for at least the duration of the spectrum cap being in place, licensees must implement their plans to the satisfaction of ISED. Any modifications to these plans must be submitted to ISED for approval.
• An expedited exchange of licences involving equal amounts of 3500MHz and/or 3800MHz spectrum as well as within each spectrum band may be permitted  provided they are within the same service area, and meet certain conditions as set forth by ISED using a streamlined process set out in the Policy and Licensing Framework for the 3800 MHz Band for a period immediately following the 3800 MHz auction, subject to the provisions ofsection 5.6ofCPC-2-1-23.

6.4 Other conditions of licence

49. Licences available in this auction process remain subject to other conditions of licence in addition to licence term, deployment requirements and rules for transferability, divisibility and subordinate licensing.

Treatment of existing spectrum users

50. 2500 MHz: The licensee must comply with all displacement and/or transition policies set out in SMSE-005-11, Decisions on the Band Plan for Broadband Radio Service (BRS) and Consultation on a Policy and Technical Framework to License Spectrum in the Band 2500-2690 MHz. In addition, the licensee must not cause harmful interference to grandfathered stations in Manitoba, as per DGSO-001-10, Decisions on the Transition to Broadband Radio Service (BRS) in the Band 2500-2690 MHz and Consultation on Changes Related to the Band Plan.

51. 3500 MHz: As set out in 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), existing licensees are permitted to continue to operate in absence of a formal displacement notice given by the Minister. Once a displacement notice has been issued, the licensee must deploy their system(s) in accordance with the submission plan provided to the Minister. This displacement process is set out in ISED’s 3500 MHz Transition Manual.

52. Except as authorized by ISED as set out in the 2019 Decision, licensees will not be permitted to operate on a flexible-use licence in areas where they hold a fixed-use licence in this band.

Radio station installations

53. The licensee must comply with Client Procedures Circular CPC-2-0-03, Radiocommunication and Broadcasting Antenna Systems, as amended from time to time.

54. Provision of technical information: The licensee must provide, and maintain, up-to-date technical information on a particular station or network in accordance with the definitions, criteria, frequency and timelines specified in Client Procedures Circular CPC-2-1-23, Licensing Procedure for Spectrum Licences for Terrestrial Services, as amended from time to time.

55. Compliance with legislation, regulation and other obligations: The licensee is subject to, and must comply with, the Radiocommunication Act and the Radiocommunication Regulations, as amended from time to time. The licensee must use the assigned spectrum in accordance with the Canadian Table of Frequency Allocations and the spectrum policies applicable to this band, as amended from time to time. The licence is issued on condition that all representations made in relation to obtaining this licence are all true and complete in every respect.

Technical considerations, and international and domestic coordination

56. The licensee must comply on an ongoing basis with the technical aspects of the appropriate Radio Standards Specifications (RSS) and Standard Radio System Plans (SRSP), as amended from time to time. Where applicable, the licensee must use its best efforts to enter into mutually acceptable agreements with other parties for facilitating the reasonable and timely development of their respective systems, and to coordinate with other licensed users in Canada and internationally.

57. The licensee must comply with the obligations arising from current and future frequency coordination agreements established between Canada and other countries and shall be required to provide information or take actions to implement these obligations as indicated in the applicable SRSP. Although frequency assignments are not subject to site licensing, the licensee may be required through the appropriate SRSP to furnish all necessary technical data for each relevant site.

Lawful interception

58. A licensee operating as a telecommunication common carrier using the spectrum for voice telephony systems must, from the inception of service, provide for and maintain lawful interception capabilities as authorized by law. The requirements for lawful interception capabilities are provided in the Solicitor General's Enforcement Standards for Lawful Interception of Telecommunications (Rev. Nov. 95). These standards may be amended from time to time.

59. The licensee may request the Minister to forbear from enforcing certain assistance capability requirements for a limited period of time. The Minister, following consultation with Public Safety Canada, may exercise the power to forbear from enforcing a requirement or requirements where, in the opinion of the Minister, the requirement is not reasonably achievable. Requests for forbearance must include specific details and dates indicating when compliance with the requirement can be expected.

Research and development

60. The licensee must invest, at a minimum, 2% of its adjusted gross revenues resulting from the use of this licence, averaged over the term of the licence, in eligible research and development (R&D) activities related to telecommunications. Eligible R&D activities are those which meet the definition of scientific research and experimental development adopted in the Income Tax Act, as amended from time to time. Adjusted gross revenues are defined as total service revenues, less inter-carrier payments, bad debts, third party commissions, and provincial goods and services taxes collected. The licensee is exempt from R&D expenditure requirements if it, together with all affiliated licensees that are subject to the R&D condition of licence, has less than $1 billion in annual gross operating revenues from the provision of wireless services in Canada, averaged over the term of the licence. For this condition of licence, an affiliate is defined as a person who controls the carrier, or who is controlled by the carrier or by any person who controls the carrier, as per subsection 35(3) of the Telecommunications Act.

Deployment requirements

61. The licensee will be required to demonstrate to the Minister that the spectrum has been put to use, as set out in the relevant licensing frameworks unless specified in this Notice. 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.

62. 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.

63. 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.

64. Where a licence is transferred, the requirement for the new licensee to deploy will continue to be based on the initial licence issuance date. Deployment by a subordinate licensee will count towards the requirement of the primary licensee.

Mandatory antenna tower and site sharing

65. The licensee must comply with the mandatory antenna tower and site sharing requirements set out in Client Procedures Circular CPC-2-0-17, Conditions of Licence for Mandatory Roaming and Antenna Tower and Site Sharing and to Prohibit Exclusive Site Arrangements, as amended from time to time.

Mandatory roaming

66. The licensee must comply with the roaming requirements set out in Client Procedures Circular CPC-2-0-17, Conditions of Licence for Mandatory Roaming and Antenna Tower and Site Sharing and to Prohibit Exclusive Site Arrangements, as amended from time to time.

Annual reporting

67. In addition to any reporting requirements required by any CPC, Technical Standard, SRSP or RP the licensee must submit an annual report for each year of the licence term, which includes the following information:

• a statement indicating continued compliance with all conditions of licence
• an update on the implementation and spectrum usage within the area covered by the licence
• existing audited financial statements with an accompanying auditor's report
• a statement indicating the annual gross operating revenues from the provision of wireless services in Canada and, where applicable, the annual adjusted gross revenues resulting from the use of this licence, as defined in these conditions of licence
• a report of the R&D expenditures as set out in these conditions of licence (the Minister may request, at its discretion, an audited statement of R&D expenditures with an accompanying auditor's report)
• supporting financial statements where a licensee is claiming an exemption based on, together with all affiliated licensees that are subject to the R&D condition of licence, it having less than $1 billion in annual gross operating revenues from the provision of wireless services in Canada, averaged over the term of the licence
• a copy of any existing corporate annual report for the licensee's fiscal year with respect to the authorization
• other information related to the licence as specified in any notice updating the reporting requirements as issued by the Minister

All reports and statements are to be certified by an officer of the company and submitted, in writing, within 120 days of the licensee's fiscal year-end. Confidential information provided will be treated in accordance with subsection 20(1) of the Access to Information Act.

Reports are to be submitted to the Minister at the following address:

Innovation, Science and Economic Development Canada
Spectrum Management Operations Branch
Manager, Operational Policy
6th Floor, East Tower
235 Queen Street (6th Floor, East Tower)
Ottawa ON  K1A 0H5

Where a licensee holds multiple licences, spectrum implementation reports should be broken down by licence area. This information, including the extent of implementation and spectrum usage, is important for analyzing each licensee's individual performance against its conditions of licence. In addition, it allows the Minister to monitor the effectiveness of these conditions in meeting the policy objectives regarding the band and the Minister's intent that the spectrum be deployed in a timely manner for the benefit of Canadians.

Amendments

68. The Minister retains the discretion to amend these terms and conditions of licence at any time.

69. As indicated in the Streamlined Framework, ISED will generally use a sealed-bid auction with a second-price rule for auctions of residual licences, while retaining the option to allow combinatorial bidding. For the licences available in this auction, given their bands, limited number, and different geographic areas, ISED is of the view that complementarity between the available blocks is limited. As such, ISED will be adopting the sealed-bid auction format without combinatorial bidding.

7.1 Sealed-bid auction

70. In a sealed-bid auction, bidders simultaneously submit sealed bids on the licence(s) they are interested in, so that no bidder knows the bids of any other participant. To be considered valid, applicants must submit their bids to ISED prior to the receipt deadline. Following the bid submission deadline, departmental officials will open the bids, rank them, and provisionally award each licence to the highest bidder.

71. To mitigate the possibility of a tie, bidders are encouraged not to bid in round figures. In the event of a tie, tied bidders will be requested to enter a second sealed bid in an attempt to break the tie. Should there be subsequent ties, bidders will be requested to continue submitting bids until there is no tie.

7.2 Second-price rule

72. As outlined in the Streamlined Framework, ISED will use a second-price rule to determine the prices that winning bidders will be required to pay in the upcoming auction of residual licences. This results in each winning bidder paying an amount that is sufficient to ensure that no other bidder in the auction was willing to pay more for the licence(s) they won. As the upcoming auction of residual licences will be for individual licences only, licences will be awarded to the highest bidder for each licence. A winning bidder will be required to pay the second highest bid on each licence it won, or the reserve price in the absence of other bids.

7.3 Reserve prices

73. Reserve prices are the minimum amounts that will be accepted for each licence. While the reserve prices for the 2500 MHz licences in this auction were set in 2015, given they have gone unallocated in both an initial and a residual auction, and given the removal of competitive measures for these licences, ISED is of the view that the existing reserve prices for these licences remain appropriate. In addition, given the recency of the 600 MHz and 3500 MHz auctions, ISED will not change the original reserve prices for licences in these bands.

74. The reserve prices for each licence available in this auction process are as follows:

75. This section sets out the general process for submitting an application to participate in the upcoming residual auction, the general requirements, and the rules that apply prior to, during and after the auction.

8.1 Auction Timing

76. 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.

8.2 Application to participate

77. To participate in an auction, all applicants must submit a completed application form, along with a financial deposit, details of the applicant's beneficial ownership, information on any affiliations and associations as discussed in section 7 of this document, and other corporate documentation as required. ISED will publish the list of applicants on its website soon after the application deadline.

78. 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 5, 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 area of interest, and to provide relevant documentation along with the rest of the materials.

8.3 Pre-auction financial deposits

79. In order to enhance the integrity of the auction, ISED will require that all bidders submit a pre-auction financial deposit with their application to participate in the auction.

80. Each participating bidder will be required to submit a financial deposit equal to the reserve price(s) of the licence(s) on which it intends to bid. These amounts will be kept confidential.

81. Financial deposit(s) will be returned to any applicant not found to be a qualified bidder, any applicant that provides written notification to ISED of its withdrawal from the process prior to the auction's commencement, and any bidder that fails to win a licence during the auction.

8.4 Submissions

82. 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 this 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 postauction relationships of 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. All other application material and other material requested by ISED will be kept confidential. Applicants are not permitted to change their beneficial ownership during the period beginning 10 days prior to the sealed bid deadline and ending once the provisional results have been announced by ISED.

83. 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. 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.

84. 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.

8.5 Process to submit applications and financial deposit

85. The applications 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 the residual auction application form), 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.

86. For previous auction processes, in an effort to streamline the submission of application forms and associated documents, ISED used Canada Post’s ePost Connect service. As Canada Post is discontinuing this service in late 2022, ISED will select a new secure service to send confidential messages and documents over the Internet for this auction process. Information regarding this service will be provided to potential applicants upon request of application forms.

87. Similar to previous auction processes, the pre-auction financial deposit must be received by the Manager, Auction Operations by the date specified.

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

89. 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. In the event that a qualified bidder does not become a provisional licence winner, 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, as a cheque from the Receiver General for Canada will need to be processed.

90. 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.

91. 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.

92. A list of all applications 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.

8.6 Bidder qualification

93. ISED will review the application forms (and 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 their set-aside eligibility in the relevant Tier 4 areas, based on the relevant Tier 2 service areas of interest. ISED may also request further information.

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

95. 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 and to physically deliver this to the Manager, Auction Operations, by the date specified in the written statement.

96. Applicants that do not comply with this request 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 are still found to be deficient, may be returned to the applicant outlining the deficiencies, along with the applicant’s deposit.

97. Those applicants that have submitted acceptable application materials, including the accompanying financial deposit, will receive a confirmation letter confirming that they are considered a qualified bidder.

98. 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. Qualified bidders will be sent all information and directions required to submit their bids, including an auction bid form.

8.7 Withdrawal of application forms

99. Applicants wishing to withdraw their application materials and have their financial deposits returned may do so, without prejudice, by sending a written request to the Manager, Auction Operations, before 12:00 p.m. noon (EST) on the business day preceding the receipt deadline for sealed bids.

8.8 Change of information

100. The Auction Authorized Representative is the individual that is nominated by the applicant in its application to receive all documentation pertaining to this licensing process.

101. 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. Written notification must be sent by the Auction Authorized Representative within five business days of such changes.

8.9 Submission of auction bids

102. Completed bid form(s), which include the bid amount for each licence for which the bidder is placing a bid(s), must be received by the Manager, Auction Operations, by the receipt deadline. The amount of each bid must reflect the amount that the bidder is willing to pay for the associated licence(s). All bids must be in dollars only, not cents. No bids will be accepted after 12:00 p.m., EST, on the receipt deadline for sealed bids. Following the auction, ISED will publish a list of all bids received on its website.

8.10 Determination of provisional licence winners

103. Bids will be examined by ISED officials following the receipt deadline. To be considered valid, a bid must be at least equal to the reserve price; the previously submitted deposit must be at least equal to the sum of the reserve prices of each licence being bid upon; the bid form(s) must be completed correctly; and the bid must be submitted by a qualified bidder. Note that, in all instances where there is no second bid, the reserve prices noted in section 7.3 will be considered the second highest bid. Where a bid is placed on a licence on which the bidder is not eligible to bid, that bid will be ignored.

104. The auction will be considered closed upon the publication of provisional winning bidder(s).

105. The following information will be made publicly available on the ISED website following the conclusion of the auction process:

• the list of winning bidders, licences won, and the prices to be paid; and
• the list of all bids received in the auction, and the licence(s), if any, that did not receive bids.

8.11 Final payment

106. Each provisional licence winner will be required to submit 20% of its final payment within 10 business days following the publication of provisional licence winners. The remaining portion, 80% of the final payment, will be due within 30 business days of the announcement of the provisional licence winners. Failure by the winning bidder to make these final payments 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 8.12). Final payments will be non-refundable. If the licence winner fails to make these payments within the specified period, then the provisional winner’s irrevocable standby letter of credit will be drawn upon.

107. 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.

108. These bid payments for the initial licence terms are in lieu of any fees fixed for radio authorization under the Radiocommunication Act or any other act.

8.12 Forfeiture penalties

109. Following the conclusion of the auction, winning bidders that fail to comply with the specified payment schedule or fail to come into compliance with the eligibility requirements of the Radiocommunication Regulations, will be considered disqualified and will forfeit their ability to obtain licences through this process. Furthermore, noncompliant bidders 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.

110. In the event of licence 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 amount bid for the licence(s) forfeited . 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.

111. A winning bidder that forfeits on a licence (or any of that bidder’s affiliated and associated entities) will not be eligible to bid on any subsequent licensing process for the related band.

112. In addition to forfeiture penalties, the Applicant and/or its representatives may be subject to administrative monetary penalties under the Radiocommunication Act if auction rules set out in this Notice are breached.

8.13 Enforcement of auction rules

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

1. the applicant may be disqualified from bidding or continuing to bid
2. the applicant's bids may be deemed invalid
3. any and all licences issued to the applicant under this Framework may be revoked
4. the applicant may be subject to the appropriate forfeiture penalties as outlined in section 8.12 and
5. the applicant may be subject to administrative monetary penalties or prosecution under the Radiocommunication Act.

114. This section describes the general rules relating to participation of affiliated and associated entities in order to ensure that each bidder is an independent bidder.

115. Affiliated entities will not be allowed to participate separately in the auction. Associated entities will 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. Applicants will be required to publicly disclose information about their beneficial ownership, affiliations and associations.

9.1 Affiliated entities

116. Definition of affiliated entities: 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.

117. 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.

118. 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.

119. Upon receipt of the material, ISED will either make a ruling based on submitted materials or ask the applicant for further information (and provide a timeline within which to do so).

120. 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.

121. 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.

9.2 Associated entities

122. Definition of associated entities: 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.

123. As in past auctions, the rules will allow prospective bidders 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. Rules regarding communication between prospective bidders who are seeking to form a consortium are discussed further in section 9.4.1 below.

124. 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, agreements related to joint equipment purchases or joint backhaul networks would not be captured under the definition unless they relate to the licences being auctioned.

125. Eligibility to participate separately in the auction: Associated entities may apply to participate separately. Allowing associated entities which demonstrate that they are competitors in the market to bid separately would likely 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 sections 9.3 and 9.4).

126. 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.

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

128. All entities participating in the auction will be subject to the same prohibition of collusion rules, as stated in this Notice.

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

130. 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:

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

131. 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:

1. all agreements relating to the transfer of, use of and access to the bands available in this auction
2. business plans for the area in which the agreement(s) will provide access to spectrum and
3. business and financial results, including investments and customer acquisition.

132. ISED may request additional documentation to complete its assessment and may require that documents be certified by an officer of the company. Where associated entities are competing, each associated entity may provide its documentation separately on a confidential basis. The material related to the request, except for the narrative described in section 9.3 below, will remain confidential.

9.3 Auction integrity and transparency

133. In order to ensure auction integrity and transparency, all entities wishing to participate in the auction process are required to disclose in writing, as part of their application, the names of affiliated and associated entities. A narrative must also 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 the said entities. The narrative must include arrangements with another potential bidder that relate in any way to the future use of the spectrum being auctioned in this process directly or indirectly.

134. Some examples of arrangements that would require disclosure include, but are not limited to, agreements to establish a joint network using spectrum licences in this auction that may be acquired by each of the entities, and agreements with respect to a joint backhaul network if they relate to the use of the licences being auctioned. 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. Where a prospective bidder has previously attempted to form or has dissolved a consortium, that bidder must disclose this fact and indicate the other entities that were part of the consortium or negotiations thereto.

135. 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 communications rules

136. 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.

137. In order to maintain the integrity of the auction, bidders are prohibited from signalling either publicly or privately, their bidding intentions or planned post-auction market structure related to the spectrum licences being auctioned. 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 would be making a public announcement regarding which licences the company intends to bid on or its rollout intentions.

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

1. 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 postauction market structure, including frequency selection, bidding strategy and postauction market strategy, until after the public announcement of provisional licence winners by ISED.
2. 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.
3. 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 Notice.

9.4.1 Communication during the auction process

139. 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 disclose or comment on bidding strategies, including but not limited to, the intent of bidding and post-auction market structures, the progress of the auction, and potential auction revenues shall be considered contrary to the Notice 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.

140. Prior to the auction, an applicant who wishes to participate separately in the licensing process but has approached another potential bidder to discuss a joint infrastructure build, a joint equipment purchasing agreement or a potential spectrum sharing agreement related to the spectrum being auctioned, such that communications that fall within the definition of associated entities have taken place, must disclose the nature of this association. 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.

141. Forming a consortium: If a consortium has been established, any entity involved in the discussions related to the formation of the consortium would no longer be eligible to participate separately in the auction. However, the entity participating in the auction would not be deemed to have contravened the collusion rules. In this case, the entities forming the consortium would no longer be deemed competitors for the purpose of the auction, and discussions regarding issues that would otherwise contravene the anti-collusion rules, such as bidding strategies, may then take place. However, each entity in the consortium would continue to be subject to the prohibition of collusion rules outside of the consortium itself.

142. Where potential bidders enter into negotiations toward forming a consortium, those communications may breach collusion rules and will also fall within the definition of making the entities associated. As noted in section 9.3, this association must be disclosed. In a case where consortium discussions are not successful, entities involved in these discussions will not be allowed to participate as separate bidders in the auction; only one of the entities could participate and that entity must disclose the existence and nature of the consortium discussions.

9.4.2 Discussion regarding beneficial ownership

143. 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.

144. 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.

145. 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

146. 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.

147. 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.

148. 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.

149. ISED will consider making unassigned licences available for licensing through an alternative process, which could include another auction of residual spectrum licences or a first-come, first-served licensing process. The timing and form of such a process will depend on the demand for remaining licences. ISED may conduct a public consultation should it consider it necessary.

150. As in previous auctions, ISED will accept written questions soliciting clarification of the rules and policies set out in this Notice from the date of publication up to the deadline specified in the Table of Key Dates. Written questions and ISED responses will be made available on ISED’s website. Questions that are of a similar nature and subject matter may be grouped and summarized. Questions regarding bidding procedures will be addressed in 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. Applicants are encouraged to submit questions as soon as possible.

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

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

153. 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 Policy Branch
235 Queen Street (6th Floor, East Tower)
Ottawa, Ontario K1A 0H5
Telephone: 343-551-0539
TTY: 1-866-694-8389
Email: spectrumauctions-encheresduspectre@ised-isde.gc.ca