Consultation on the Auction of Spectrum Licences for Wireless Communication Services in the 2300 MHz Band and Fixed Wireless Access in the 3500 MHz Band

1. Introduction

The purpose of this document is to launch the consultation on licensing spectrum for Wireless Communications Services (WCS) in the 2300 MHz Band and Fixed Wireless Access (FWA) in the 3500 MHz Band. Industry Canada is seeking comments that will assist in the finalization of the spectrum policy and licensing process.

The Department notes that two telecommunications applications in particular require that additional spectrum be made available. The first is fixed telephony, where the high cost of implementing facilities-based service using wireline technology inhibits widespread competition from entering the market. With the advances in wireless technology, the potential for a competitive market now exists. As well, existing service providers may look to the proposed bands in order to complement their current facilities and services. The second application is advanced telecommunications services, in particular high-speed Internet access. The demand for Internet access has grown dramatically and the service providers are using many different technologies including dial-up modem, cable, Digital Subscriber Line (DSL), and satellite.

A significant level of investment and activity is being directed by the Canadian industry to provide high-speed Internet access in urban areas. Canadians are among the highest users of Internet of the leading industrialized countries. Canada has a high percentage of homes with computers on-line and has one of the lowest tariffs for high-speed Internet service. Some forecasts project that in the next 2-3 years 3040 % of Canadian households could be subscribing to high-speed Internet and that high-speed Internet access will surpass dial-up Internet modems. With this strong demand forecast for broadband Internet access, the Department believes that new terrestrial wireless technologies have an important and distinct role to play in accelerating high-speed access to the new broadband infrastructure. Hence, additional spectrum below 10 GHz is required to provide the range of interactive communication services that businesses and consumers need to fully participate in the information economy.

In the past three years the Department has licensed a number of fixed service frequency bands on a spectrum-area basis to provide opportunities for businesses and consumers to benefit from a range of advanced communications access services from a number of carriers. The Department has licensed spectrum at 24 GHz, 28 GHz and 38 GHz for a variety of broadband wireless applications. This spectrum is expected to support short distance high density high capacity wireless connections of multiple T-1 channels and will most likely serve businesses in large buildings and apartment complexes first. Some of these systems are being deployed to complement local wireline and fibre distribution networks.

In March 2000, the Department announced the winners of a licensing process for Multipoint Communication Systems (MCS) for fixed services in the band 2500-2596 MHz. This spectrum opened the door for a range of services including high-speed Internet access for consumers and small businesses. Equipment in this spectrum can provide line-of-sight transmission coverage of up to 30 km or more. The spectrum propagation characteristics at 2300 MHz and 3500 MHz permit relatively the same transmission reach as the MCS spectrum at 2500 MHz. The Department's Guidelines on the Licensing Process and Spectrum Release Plan (DGTP-04-99), identified the FWA band at 3500 MHz as one which, based on anticipated demand, would require a competitive licensing process when opened to urban areas and large communities. The spectrum at 2300 MHz designated for WCS in a recent utilization policy paper dealing with the frequency range 2285-2483.5 MHz (DGTP-003-01), has similar capabilities and anticipated demand as the spectrum for FWA at 3500 MHz. The Department expects that the demand for this spectrum will exceed the available supply in certain areas and that reliance on the marketplace to select licensees will be in the public interest. An auction was therefore selected as the most appropriate licensing process for these two bands. The similarities between the two bands makes a single consultation and licensing process efficient. Where necessary, however, issues specific to one band or the other have been dealt with individually. Interested parties are encouraged to provide comments to the Department on the various issues discussed in this consultation paper.

Once the consultation process is complete, the final policy and licensing procedures document will be published detailing the spectrum policy decisions, the spectrum auction rules, and the specifics on post-auction licensing procedures for these frequency bands.

2. Telecommunications Policy Objectives

The Minister, in exercising his discretionary powers under the Radiocommunication Act, may have regard to the policy objectives set out in the Telecommunications Act. The Telecommunications Act establishes several objectives of particular relevance to wireless telecommunications services that can be provided using WCS and FWA. These objectives include:

• to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications;
• to render reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada;
• to foster increased reliance on market forces for the provision of telecommunications services and to ensure that regulation, where required, is efficient and effective; and,
• to respond to the economic and social requirements of users of telecommunications services.

It is also noted that in the Speech from the Throne 2001, the Government has committed to work with the private sector to achieve the goal of making broadband access widely available to citizens, businesses, public institutions and to all communities by 2004.

It is clear that the telecom industry must play a key role in advancing this goal. At present, Canadians enjoy one of the world's highest levels of telephone penetration (99%), nearly 80% availability of basic cable TV and 75% availability of high speed Internet service.

With the release of this spectrum the Department is making an important step towards fulfilling the Government of Canada's goal.

3. Spectrum Policy for WCS Band - 2300 MHz (2305 - 2320 MHz and 2345 - 2360 MHz)

3.1 Background

In March 2000, the Department released a consultation paper entitled Proposed Revisions to the Spectrum Utilization Policy (SP 1-20 GHz) for Services in the Band 2285-2483.5 MHz under Gazette Notice No. DGTP-003-00. One of the proposals included the alignment of the bands 23052320 MHz and 2345-2360 MHz with the United States for WCS applications.

In the U.S., WCS is described as radiocommunications that may provide a range of services to individuals and businesses. The Federal Communications Commission (FCC) issued licences in April 1997 through an auction process in 126 markets and to 176 individual winners. Initial expectations suggested that the WCS would be used to provide a variety of services. Current activity is focussed on multipoint fixed wireless access applications with considerable interest in offering high-speed access services to residential and business customers.

The public submissions to the consultation process supported the designation for WCS and encouraged the Department to proceed expeditiously to license. The Department subsequently designated this spectrum for WCS services in June 2001 in the document Revisions to the Spectrum Utilization Policy for Services in the Frequency Range 2285 – 2483.5 MHz (DGTP-003-01).

"The spectrum in the bands 2305-2320 MHz and 2345-2360 MHz is re-assigned from conventional microwave radio systems (point-to-point) to Wireless Communication Service applications."

The Revisions document (DGTP-003-01) recognizes that the defining line between fixed and mobile services is becoming less distinct in some scenarios envisaged for local broadband networks. Provision for applications which have elements of both services, depending on the user location or situation, are included in several broadband requirements. The Department wishes to provide full flexibility for the development of local broadband networks in this band and does not want to predetermine or prescribe the type of commercial services to be offered. However, Industry Canada envisages that the spectrum designated for WCS services will be used predominantly for the provision of local broadband access applications in fixed service point-to-multipoint configurations.

As outlined in Section 7.1, suitable technical rules will need to be adopted which facilitate interference free operation between systems, services and operating areas.

3.2 Proposed Band Plan for the WCS Spectrum at 2300 MHz

In 1997, the U.S. auctioned WCS Spectrum in 5 MHz blocks. Immediately following the auctions there was very little activity, however more recently the spectrum has been consolidated into larger blocks.

With the increasing interest in Canada to have sufficient spectrum to facilitate a strong business case for wireless services, the Department proposes making this spectrum (2305-2320 MHz and 2345-2360 MHz) available in one paired block of 15+15 MHz for WCS service.

Preliminary views from industry on equipment technology indicate that segmenting the band in blocks less than the 15+15 MHz proposed would not be spectrum efficient (e.g. guard band requirements) and may be insufficient to support strong business plans.

A diagram of the band is included in Appendix A.

3.3 Incumbents in the 2300 MHz Band

3.3.1 Mobile Aeronautical Telemetry in the Band 2300-2360 MHz

In the consultation paper on the spectrum utilization policy in the band 2285-2483.5 MHz (DGTP-03-00) Industry Canada established a moratorium on any further licensing of new fixed and mobile systems (in particular, Mobile Aeronautical Telemetry Systems or MATS) in the band 2285-2360 MHz. The Department at that time designated the band 2360-2400 MHz for MATS service for use by the Government of Canada. The paper requested comments on the issue of retaining the MATS designation around major military bases of the Department of Defence and vicinities in the band 2300-2360 MHz on a secondary basis.

The Department subsequently made policy provisions for MATS operation on a secondary basis in the band 2285 - 2360 MHz in June 2001 in the document Revisions to the Spectrum Utilization Policy for Services in the Frequency Range 2285 – 2483.5 MHz (DGTP-003-01).

"Where MATS does not impact the implementation of WCS and other services, it may be authorized to the Department of National Defence, on a secondary basis, on major military bases and vicinities, in the band 2300-2360 MHz. However, if required, the Department of National Defence would have to cease MATS operation upon notification from the Department of Industry. The operation of MATS in the band 2320-2345 MHz is also subject to the conditions of the Canada/U.S. agreement on coordination with U.S. DARS."

A list of Canadian military bases where MATS operate is available at Industry Canada's Web site at: http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf05518.html

3.3.2 Fixed Systems in Bands 2305-2320 MHz and 2345-2360 MHz

The paired bands 2290-2350 MHz and 2390-2450 MHz have been used for fixed service applications. With the release of Spectrum Utilization Policy 1-20 GHz (SP 1-20 GHz) in January 1995, the Department changed the designation to pair the bands 2290-2360 MHz and 2520-2590 MHz for low-capacity (LC) and subscriber radio systems (SRS). Since that time, a number of spectrum policy decisions have limited the availability of these bands for LC, SRS and MATS. In the document Amendments to the Microwave Spectrum Utilization Policies in the 1-3 GHz Frequency Range (SP 1-3 GHz), accommodation was made for LC systems in the band 2025-2110 MHz paired with 2200-2285 MHz. SRS systems were also accommodated in these bands in remote and distant rural areas, under the Geographical Differences Policy Guideline outlined in SP 1-20 GHz.

Currently in the band 2305 - 2320 MHz there are approximately 175 frequency assignments with 120 of those assignments held by 2 companies. These two licensees have systems which are mostly located in BC and in Ontario. In the band 2345 - 2360 MHz there are approximately 41 assignments used by 6 licensees, with 3 of those licensees holding 35 of the assignments. Two of these licensees have systems which are situated in BC while the third licensee has systems located mostly in Quebec.

In order to accommodate WCS applications, it is proposed that existing fixed systems licensed in the bands 2305-2320 MHz and 2345-2360 MHz be subject to displacement under the transition policy provisions and timing described in Section 5.2.

Interested parties can locate the frequency assignments licensed to incumbents that may be impacted in this process through a search of our radio frequency licensee database at Industry Canada's Web site at: http://spectrumdirect.ic.gc.ca/engdoc/main.html

4. Spectrum Policy for the FWA Band - 3500 MHz (3400 MHz - 3700 MHz)

4.1 Background

Internationally, there is strong interest in providing FWA services in part of the 3400-3700 MHz frequency range. Commercial deployment of FWA services in the 3400-3700 MHz band has already commenced in several countries. For example, Mexico has designated the band 3400-3700 MHz for wireless local loop for telephony and has already auctioned part of the spectrum.

In the U.S., the band 3400-3650 MHz is not available for FWA services because of government use for airborne and shipborne radiolocation (radar) operations. Some FWA studies are being performed in the U.S. in the band to determine the level of compatibility between FWA and radiolocation systems. The Department is also currently studying the potential of interference between FWA and radiolocation systems. Further information on this subject is provided in section 7.2.4.

The FCC has earmarked the band 3650-3700 MHz for advanced communications and has issued a Notice of Proposed Rule Making (NPRM) for the use of this spectrum. The Department anticipates that harmonizing this spectrum would be desirable and may delay a decision on licensing this portion of the band in Canada until further progress has been made in the U.S.

In August 1998, Industry Canada released the document entitled Spectrum Policy and Licensing Provisions for Fixed Wireless Access Systems in Rural Areas in the Frequency Range 3400-3700 MHz (DGTP-013-98). The objective of this spectrum and licensing policy was to expeditiously make available some spectrum to facilitate emerging FWA technologies that promised to be cost-effective in improving telecommunications services in rural and high-cost serving areas. Of particular interest was the licensing of FWA systems on a first-come, first-served (FCFS) basis for the provisioning of single-party telephone line and Internet access. In the past year, the Department has received a number of applications to establish FWA systems in the band in rural areas and is proceeding with licensing. The Department indicated that the frequency band would be opened for service in urban and large communities when equipment became more readily available and that the spectrum would be licensed using a competitive process.

Since the Department's release of this FWA spectrum to advance communication services in rural and high-cost serving areas, there has been moderate interest shown. However, there has been a recent increase in interest in the band for a variety of reasons including the success of wireless access technology in the licence-exempt 2400 MHz band which has raised awareness of the potential of wireless for business and public access.

4.2 Proposal to Open FWA Spectrum at 3500 MHz

The Department recognizes the need for spectrum below 10 GHz with suitable propagation characteristics and transmission reach to provide advanced data services including high-speed internet access. It is also evident that equipment is now more widely available in the 3500 MHz band to support local network development for a variety of service providers and innovative access services. The Department is therefore of the view that opening spectrum at 3500 MHz in both urban and rural areas across the country is timely. It is also expected that opening this band in urban areas could ultimately increase the development of FWA systems in rural areas since increased deployment generally results in reduced costs.

There are several factors which will affect decisions on the amount of spectrum at 3500 MHz which can be made available at this time. The first is that the use of the top 50 MHz of the band is currently being defined in the U.S. for emerging technologies. The second would be the desirability of auctioning spectrum that is clear of licensees (to the extent possible) while still accommodating current applications made under the provisions of the utilization policy for rural and high-cost serving areas. Thirdly, it is important at this time to retain flexibility to designate compatible spectrum in this frequency range for services which may be displaced from lower bands, for example the 2500 MHz band, if that band were identified for 3G mobile services. (It should be noted that Canada and many other countries in the Americas strongly support the use of the bands 1710-1850 MHz and 2110-2150 MHz for additional spectrum for advanced mobile systems, including 3G.) Finally, the Department notes that the total amount of spectrum licensed in other countries intended for similar applications and opportunities has been in the order of 60 to 100 MHz.

4.3 Structure of FWA Spectrum at 3500 MHz

The current structure of the 3500 MHz band for FWA consists of 25 MHz blocks, and initially six blocks were opened in the rural and high-cost serving areas (shown as blocks A to F inclusive in Appendix A). Block pairing was not specified and flexible pairing arrangements have been developed in the technical standards to accommodate a range of equipment.

In several other countries that have licensed spectrum in the band 3500 MHz, the block size licensed has ranged from 3.5 MHz to 15 MHz. However, the Department views the 25 MHz block size to be supported by industry, and notes that pairings with 100 MHz spacing are common.¹

The Department proposes auctioning licences of 50 MHz in paired blocks of 25 MHz + 25 MHz with 100 MHz spacing.

A diagram of the band is included in Appendix A.

4.4 Interim FWA Licensing under SP 3400-3700 MHz

As previously mentioned, in August 1998 the Department opened up 3400 - 3550 MHz in rural areas only, on a first-come, first-served (FCFS) basis. The intent was to provide appropriate spectrum in order to provide single line telephone service and improved data communication capabilities in rural Canada. Although interest was slow at the outset, more recently a significant number of licences have been issued and systems have begun to be implemented.

In order to facilitate the identification of licensees in the band and enable potential bidders to assess what value they place on the spectrum, a moratorium on FCFS licensing will be required at least six months prior to the commencement of the auction. It is anticipated that the moratorium would be announced with the release of the final Policy and Licensing Procedures document. However, a moratorium could be declared at any time prior to the auction should circumstances change. Until such time, the Department will continue to process licence applications for rural and high cost serving areas in accordance with the terms and conditions specified in the policy document SP 3400-3700 MHz and CPC-2-1-19 with the following modifications.

• Licensing of FWA applications under the FCFS policy is limited to two blocks, 3425-3550 MHz paired with 3525-3550 MHz (B & F). Exceptions will be accommodated for equipment requiring spacing other than 100 MHz by pairing the B Block with C or D Block. Where the B Block is not available, no further licences will be issued.
• For TDD equipment, the B Block will be assigned. Spectrum Management staff in Industry Canada's regional offices will use their discretion as to whether it is appropriate to assign 50 MHz if the applicant with TDD equipment requests it. If 50 MHz is assigned, the second block would again be the F block. Furthermore, licences will be issued for the full 25 MHz block, rather than for spectrum on an 'as required' basis within a block as stipulated in SP 3400-3700 MHz.

Anyone interested in licensing under these interim policy measures should contact their local District or Regional Office for further information.

Post auction licensing details will be included in the final Policy and Licensing Procedures document. It is proposed that any licences that do not receive a bid during the auction be made available on a first-come, first-served basis after the auction is complete. This proposal is further discussed in Section 8.7.

4.5 Incumbent Licensees in the FWA Band

4.5.1 FWA licensees in the Band 3400 - 3550 MHz (Blocks A-F)

FWA systems licensed and installed in high-cost serving areas will be permitted to continue to operate and grow within their licensed spectrum block and service area. As detailed in SP 3400-3700 MHz, all FWA operators are required to bring their system into service within six months of the date of issue of the licence/approval in principle. Successful participants of the auction process will be required to coordinate with the incumbent FWA licensees, in accordance with the provisions of SP 3400-3700 MHz, as well as those addressed in Section 7 of this document.

4.5.2 Point-to-Point Systems in the Band 3500-3700 MHz

High capacity long haul point-to-point systems have used the frequency band 3700-4200 MHz for many years, with certain cross-sections also using the downband extension 3500-3700 MHz. These systems have been the main transmission backbone of the public networks carrying inter-city voice, data and video traffic. As a consequence, the Department has ensured over the years that this spectrum, coupled with spectrum in the 4400-5000 MHz band was available for this use. Over the course of the past 10 years, telecommunication carriers have developed extensive inter-city fibre optic facilities which carry much of the traffic once provided by heavy-route microwave systems using the 4 GHz and 6 GHz bands. Also a number of new carriers have developed extensive fibre optic backbone systems nationwide. As a result, a large number of microwave systems have been decommissioned. There has been no recent growth in this band for inter-city microwave facilities.

When Industry Canada opened the band 3400-3550 MHz under SP 3400-3700 MHz for licensing FWA systems in rural areas on a first-come first-served basis in 1998, the Department established that new point-to-point systems would not be authorized to use assignments in the band 3500-3700 MHz. Existing point-to-point systems would be permitted to continue, provided the technical characteristics were in accordance with the current Standard Radio Systems Plan (SRSP). Extensions and/or expansions of existing systems which require the use of assignments in the band 3500-3700 MHz were considered by the Department on a case-by-case basis outside of urban centres. These provisions for point-to-point systems will remain in place pending the new policy measures for the band and will be addressed in the final Policy and Licensing Procedures document.

In order to accommodate FWA applications, it is proposed that existing point-to-point systems licensed in the bands 3500-3700 MHz will be subject to displacement under the transition policy provisions and timing described in Section 5.2.

Interested parties can locate the frequency assignments licensed to incumbents that may be impacted in this process through a search of our radio frequency licensee database at Industry Canada's Web site at: http://spectrumdirect.ic.gc.ca/engdoc/main.html

4.5.3 Fixed-Satellite Service in the Band 3500-3700 MHz

The frequency band 3500-4200 MHz is allocated to fixed and fixed-satellite service (FSS) on a coprimary basis. Traditionally authorization of FSS for domestic and Canada-US traffic has been in the conventional C-band between 3700-4200 MHz. Authorizations of earth stations using foreign satellites providing international overseas traffic have included the extended C-band between 3500-3700 MHz. However, these earth stations are limited in number and are located in isolated areas, away from urban centres.

Coordination of FWA and FSS earth stations is required and studies are underway in conjunction with the Radio Advisory Board of Canada (RABC) to determine the relevant coordination criteria.

The Department proposes to limit the authorization of earth stations for FSS in the bands 3500-3700 MHz to large antenna applications such as gateways located in remote areas outside urban centres. Currently there are three Earth Stations in the band 3500-3700 MHz, one in Cowichan, BC and two in Montcalm, Quebec. Further, it is proposed that in situations where detailed coordination is required for the band 3500-3700 MHz, the precise requirements of the FSS system (current and planned) may be taken into account in terms of spectrum and orbit location.

4.5.4 Radiolocation Systems

In Canada the band 3100-3500 MHz is allocated to radiolocation on a primary basis (the band 3300-3500 MHz is limited in Canada to government use)².

The fixed service operations in the band 3400-3700 MHz need to take into account other service allocations including those in adjacent spectrum. FWA licensees may be affected by radiolocation services in the band 3100-3500 MHz. In addition, radiolocation systems are operated in the U.S. in certain parts of the 3400-3700 MHz band. These issues are further discussed in Section 7.

5. Treatment of Incumbent Licensees

5.1 General Principles

The Spectrum Policy Framework for Canada issued in 1992 outlines, among other things, the policy guidelines dealing with the allocation of spectrum resources and the displacement of radio systems. The policy states that:

"The radio frequency spectrum, as a national public resource, will be allocated and planned to advance public policy objectives, while ensuring a balance between public and private radiocommunication use to benefit the Canadian public. The allocation of and access to the spectrum resource will be adapted to meet changing user requirements, to provide spectrum that best meets the needs of the user and to facilitate new and innovative services."

As a guideline for radio system or service displacement, the policy states that:

"As a radio licence does not confer ownership nor a continued right to a particular radio frequency, the Department will continue to provide reasonable notice to inform users of any conditions or circumstances which could result in the displacement of their services or systems to other bands."

Moreover, the policy reconfirms that there is no liability or responsibility or intent by the Department to financially compensate spectrum users being displaced. Furthermore, as new services have been introduced, it has not been the practice of Industry Canada to ask new radio users to compensate existing users being displaced. Of course, private arrangements may be made between new radio users and existing users on a voluntary basis, within the provisions of the spectrum transition policy.

5.2 Transition Policy Provisions

The following provisions provide a reasonable notification period for the displacement of fixed assignments and allow for the timely deployment of WCS systems at 2300 MHz and FWA systems at 3500 MHz. These provisions apply to the incumbents identified in sections 4.5.2 and 3.3.2. They do not apply to incumbent FWA systems licensed under the FCFS policy. Moreover, the provisions advocate a "where necessary" displacement approach that links the displacement of fixed assignments to the WCS and FWA systems implementation and spectrum requirements. The provisions are as follows:

• Once the WCS and FWA licences have been awarded, the Department will be, on behalf of the licensee, in a position to issue formal notifications to the incumbent licensees for the displacement of affected fixed frequency assignments on an as-required basis.
• Following the issuance of a spectrum licence, a minimum notification period of two years will be afforded to fixed station incumbents operating in rural areas and one year for those operating in urban areas³ having a population of 25,000 or more. Earlier displacement to the formal notification date may be achieved through mutually acceptable arrangements between the WCS and FWA operators and the affected microwave operator(s).
• Fixed station operators will cease operation of the identified frequency assignments on or before the date in the served notification.
• The WCS and FWA operators will ensure that such displacements, including dates, are imperative in meeting service dates and that reasonable frequency spectrum alternatives do not exist.
• In the event the WCS and FWA operators identify a need to defer a notified displacement date due to implementation delays, an amendment to the date must be issued at least one year prior to the displacement date in effect.
• The WCS and FWA operators shall not commence service prior to the displacement date indicated in the served notification unless a mutually acceptable arrangement has been made beforehand.
• Industry Canada will retain oversight of the displacement process and will assist, where necessary, affected fixed operators in identifying new replacement frequency assignments.
• Industry Canada will develop procedures based on the policy provisions in this document for the displacement of fixed service stations in the near future and will incorporate them in the Department's WCS and FWA licence application procedure.

A significant and/or unjustified delay in the use of released frequency spectrum by WCS and FWA licensees, after the displacement date, will be viewed by Industry Canada as a serious breach of commitment, particularly if fixed stations were displaced prematurely.

Industry Canada will monitor the effectiveness of the spectrum policy provisions related to the displacement of fixed systems. Changes to these provisions may be made to ensure that the continued availability of spectrum for WCS and FWA systems is accomplished in the most efficient manner.

6. Eligibility and Spectrum Aggregation Limits

6.1 Competition Principles

Within a competitive environment, a market-based spectrum assignment mechanism is best able to select licensees who can most efficiently provide the wireless services most valued by Canadian consumers. Auctioning has the ability to award spectrum in a transparent and economically efficient manner. However, to ensure that economic benefits are maximized, it is important that potential licensees will indeed be operating in a competitive marketplace. The measures available to the government to promote a competitive post-auction marketplace for the additional spectrum include disallowing the participation of certain firms in the auction and imposing aggregation limits on the amount of spectrum that any bidder may acquire.

With regard to these two measures, the Department considers two guiding competition principles.

Principle 1:

A company that currently provides telecommunications services should be restricted from holding certain licences if:

(i) that company possesses market power in the supply of one or more telecommunications services in a region covered by the licence to be auctioned;

(ii) a new entrant is likely to use the licence to provide services in competition with that company's existing services; and,

(iii) the anti-competitive effects of the company's acquisition of a licence are not outweighed by the potential economies of scope arising from the integration of the spectrum in question into the company's existing network.

Principle 2:

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

(iv) a bidder that acquires a significant amount of spectrum would not face effective competition from providers of services that use infrastructure other than the spectrum being auctioned; and

(v) the anti-competitive effects arising from the acquisition of a significant amount of spectrum by a single bidder would not be offset by lower costs or higher valued services resulting from holding this amount of spectrum.

6.2 Eligibility to Acquire Spectrum and Spectrum Aggregation Limits

The Department proposes that all successful bidders in the auction be eligible to become a radiocommunication carrier and as such, must meet the related Ownership and Control requirements as outlined in the Radiocommunication Regulations. For more information, refer to the document Canadian Ownership and Control (CPC-2-0-15), available at: http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf01763.html.

With respect to the competition principles described above, the Department observes that there are a number of infrastructures capable of providing basic telephony and/or advanced telecommunications services including high-speed Internet. Some of these providers include Incumbent Local Exchange Carriers (ILECs), cable companies, satellite and other wireless service providers. It should be noted that the Department did not impose any restrictions on who was eligible to apply for the recent 2.5 GHz spectrum licences for MCS other than the requirement to meet the Canadian Ownership and Control provisions.

There have been views expressed to the Department that new entrants should be afforded some advantage in accessing the 3500 MHz Band in urban areas. One strategy to address this would be to set aside a certain amount of spectrum for which only new entrants would be eligible to bid. A new entrant could be described as one who does not operate as an ILEC or cable company, or its affiliate in a given service area. Those supporting such a view should provide details as to how such restrictions would be defined.

7. Technical Considerations

The following section provides technical characteristics which should be considered when responding to the proposals contained in this document or in submitting other suggestions for consideration. Comments are welcome on any technical issue. The Department will establish final technical specifications in consultation with the Radio Advisory Board of Canada after the final spectrum policy and licensing procedures document is released.

7.1 The WCS Band at 2300 MHz

Technical coordination and compliance criteria such as power limits, antenna patterns and power flux density (pfd) levels as triggers for coordination at the border of the service area will need to be established for the 2300 MHz band. It should be noted that certain applications will be subject to technical constraints on power levels and out-of-band emissions in order to ensure compatibility with other radio systems and services in adjacent bands. These constraints may limit or preclude some applications in the WCS bands. The Department will develop these rules in consultation with the RABC and interested parties are encouraged to participate. (Background information on this subject can be found in Title 47, Part 27 of the U.S. Code of Federal Regulations - "Miscellaneous Wireless Communications Services".)

7.1.1 Spectrum Blocks

In Section 3.2 of this document, the Department proposes assigning a single pair of blocks for the 2300 MHz band. This proposal eliminates the coordination issues between adjacent channel systems that would exist if the spectrum were to be licensed in smaller blocks, for example 5 MHz pairs. However, there will be situations where co-channel assignments will be made in directly adjacent service areas, thereby requiring coordination. Licensees operating in areas close to the U.S. border will be subject to Canada/U.S. sharing arrangements.

7.1.2 Co-existence Co-ordination

In the case of co-channel/adjacent area systems, licensees will be encouraged to enter into mutually beneficial arrangements to foster efficient spectrum use near their common boundaries.

The Department expects the licensees to initiate and maintain lines of communications for the purposes of coordination of systems. Licensees should develop effective arrangements with neighbouring licensees in order to minimize coordination time and resources.

It should be noted that licensees will be expected to take full advantage of interference mitigation techniques such as antenna discrimination, polarization, frequency offset, shielding, site selection, or power control to facilitate co-existence with systems of other service providers, at both, design and implementation stages and take into consideration hubs and subscriber terminals.

Return traffic will require some consideration for co-channel/adjacent-area interference from subscriber terminals into adjacent hubs and from hubs into adjacent subscriber terminals. Depending on the type of duplexing (frequency division or time division) consideration should be given to spectrum for hub stations and subscriber terminals.

7.1.3 Equipment Certification

Point-to-multipoint implementations with ubiquitous subscriber locations will require that the equipment be certified. Details of certification requirements will be developed in consultation with the RABC.

7.1.4 Sharing Issues with Other Services

There may be a need for WCS emission limits at the edges of the 2305-2320 MHz and 2345-2360 MHz bands to take into account the operation of Digital Audio Radio by Satellite (DARS) in the U.S., as well as possible future services in the 2320-2345 MHz band in Canada.

7.2 The FWA Band at 3500 MHz

7.2.1 Existing requirements

The Department established minimum technical requirements for the use of the band 3400-3700 MHz for Fixed Wireless Access (FWA). Those technical requirements are described in two documents: Standard Radio System Plan 303.4 (SRSP-303.4), Technical Requirements for Fixed Wireless Access Systems Operating in the band 3400-3700 MHz, and Radio Standards Specifications 192 (RSS-192), Fixed Wireless Access Systems in the Band 3400-3700 MHz which are available on our Web site at: http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/h_sf01375.html.

7.2.2 Adjacent Channel / Same Area Coordination

RSS-192 and SRSP-303.4 establish minimum technical requirements to permit co-existence of systems operating in adjacent channels within the same geographical area. Unless industry views indicate otherwise, the Department intends to continue to apply those technical requirements to minimize the potential for interference.

7.2.3 Co-channel / Adjacent area Coordination

The Department proposes a coordination process similar to the process used in the 2500 MHz MCS/MDS Band. Service providers in adjacent areas will be expected to develop their own mutually acceptable sharing arrangements. If this is not possible, then a procedure will be established in consultation with the RABC.

7.2.4 Radiolocation Systems

The fixed service allocation in the band 3400-3700 MHz needs to take into account other service allocations including those in adjacent spectrum. The band 3100-3300 MHz is allocated to the radiolocation service on a primary basis. There may be out-of-band emissions from radars in areas adjacent to waterways with international traffic, including the Great Lakes that may cause interference.

As mentioned previously, the band 3300-3500 MHz is allocated to radiolocation on a primary basis and is limited in Canada to government use. In the United States, the band 3300-3650 MHz is allocated to radiolocation on a primary basis for government use. Consequently, FWA systems will need to take into account in certain coastal areas and along the U.S.-Canada border, Canadian and U.S. operation of airborne and shipborne radars. As well, there are some joint U.S.-Canada operations of airborne radar in this band over both Canada and the U.S. Work is underway to determine the susceptibility of FWA systems to these operations. Upon request, the Department will provide advice to applicants, based on available information on the operation of radars in Canada and the United States and any sharing arrangements applicable to this band.

7.3 FWA Equipment Characteristics and Availability

Equipment availability at a reasonable cost is a critical element in the development of FWA systems. Business plans for broadband wireless systems depend on access to customer premise equipment that is in good supply, competitively priced and meets certain performance criteria and standards. The Department has observed, in some cases, that delays in equipment availability have contributed to some hardships experienced by operators not only in terms of deployment, but also in meeting investors' expectations. Consequently, the Department is requesting that manufacturers and vendors respond to this consultation paper in order to provide information on the characteristics and availability of FWA equipment. This information can assist potential operators in the development of business plans.

In addition, manufacturers and vendors are invited to comment on the need to consider equipment that is produced for foreign markets. Comments should address the compatibility of such equipment with respect to the proposed band plan structures for the 2300 MHz and 3500 MHz bands.

ITU-R Recommendation F.1488 provides information on the frequency block arrangements used by a number of countries for Fixed Wireless Access systems in the 3500 MHz band. This document provides a precise overview of the standard band plans and channelling that are available worldwide and is available on our Web site at: http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf05518.html

8. Licensing Process

8.1 General

Although there has been limited implementation of services in the 3400 MHz band under the first-come, first-served policy in rural areas, the Department anticipates that in the case of urban areas, demand will exceed supply and therefore will be conducting an auction for both 2300 MHz and 3500 MHz bands. Auctions offer a number of advantages such as their ability to promote economically efficient use of spectrum, their openness and objectivity as an assignment mechanism, their procedural efficiency, and their ability to return appropriate compensation to Canadian taxpayers for the use of a public resource. Auctions represent a valuable new spectrum management tool for those situations where it is appropriate to rely on market forces for the selection of licensees.

The Department proposes the use of an auction design similar to that used for the January 2001 PCS auction. The details will be provided in a revised Spectrum Auctions Framework document soon to be released and made available on our Web site (http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/home). Therefore, for any auction design details not addressed in this consultation, interested parties should refer to that document.

The licences will have the following attributes as detailed in the Framework for Spectrum Auctions in Canada document:

• Licences will be spectrum licences which are defined in subparagraph 5(1)(a)(i.1) of the Radiocommunication Act as authorizations "in respect of the utilization of specified radio frequencies within a defined geographic area".
• Licences will be assigned using a simultaneous multiple-round auction.
• Licences have a term of ten years, with a high expectation of renewal.
• Licences will be transferable and divisible in the secondary market.
• Licensees will have the maximum possible flexibility in determining the services they will offer and the technologies they will employ.
• Successful bidders in the auction will need to comply with the Canadian Ownership and Control requirements in order to qualify for a radiocommunication carrier licence.

8.2 Overview of the Simultaneous Multi-Round Auction

The auction will be run electronically over the Internet, and bidders will be able to participate remotely from their premises using a secure Internet connection. The key features of the simultaneous multiple-round auction that will be used are listed below.

• The rules for the simultaneous multiple-round auction call for a related set of licences to be offered at the same time. Bidding is organized into a series of rounds. The identities of all bidders, the licences on which they are qualified to bid, and their initial levels of eligibility points will be made public prior to the commencement of bidding. As well, full information on the bids placed by all bidders will be made available after each round.
• New bids for a licence are non-discretionary. The Department will state the exact level of an acceptable new bid. The new bid will typically be determined by raising the standing high bid by some pre-established bid increment. Bidders will have no discretion to choose a higher bid; rather, they will simply choose whether or not to submit the new bid. This non-discretionary format allows rounds to be more brief and more frequent, because the mechanics of entering and checking bids are simpler, and because the prices never "jump" by unexpected amounts, making them more predictable. This also reduces the need for frequent executive oversight during the bidding, saving costs for the bidders.
• When two or more bids are submitted on the same licence in the same round, a tie bid occurs and the standing high bidder in the next round will be determined by a random selection process designed into the auction software.
• A minimum pace of bidding in the auction is established by the "activity rule", which penalizes bidders who are inactive by reducing their "bidder eligibility points".
• The rounds continue until there is a round in stage three in which no new bids, withdrawals, or pro-active waivers are submitted. The standing high bidders on each licence at the auction's close will be deemed the provisional winners of those licences.

All these details of the auction format are discussed more fully in the document Framework for Spectrum Auctions in Canada available on our Web site at: http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf01626.html.

8.3 Service Areas

The Department has established four tiers of service areas which it uses for competitive licensing procedures. These areas cover the entire geography of Canada, ranging from a single national service area (Tier 1) down to a set of 162 more localized areas (Tier 4). These service area tiers are based on contiguous groupings of Statistics Canada's 1996 Census Divisions and Subdivisions. For full details of the tiers, please refer to the document Service Areas for Competitive Licensing, available on our Web site at: http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/h_sf01627.html.

The Department is of the view that the services likely to be offered with 2300 MHz and the 3500 MHz spectrum would be amenable to licensing on a relatively local basis and proposes that Tier 4 service areas be used to license these bands.

Furthermore, the Department intends to make all service areas available during the auction for both 2300 MHz and 3500 MHz bands, including both urban and rural areas in order to allow bidders the opportunity to purchase all licences of interest to them during a single process.

Incumbent FWA licensees may find it advantageous to acquire their own area in the auction in that their licence area would be expanded to the entire Tier 4 area. Furthermore, the licence term would be substantially longer allowing for increased certainty for future growth and development. The opening bids in rural areas have also been set low to encourage current licensees to participate in the auction.

8.4 Implementation of Services

The Department is of the view that the spectrum is a public resource which should be used in ways that serve the public interest. As such, the Department feels that licensees should be required, as a condition of licence, to demonstrate that their spectrum is being put to use at a level acceptable to the Department. The Department recognizes that a variety of business plans and technologies may be employed in these bands across markets of various sizes. In order to be technologically and service-neutral, the Department is reluctant to specify service roll-out requirements in terms of specific technical measures. In fact, there may be a number of measures that would be considered to demonstrate an acceptable level of spectrum usage. One example of what could be considered an acceptable level of spectrum usage would be the establishment of coverage of at least 50% of the population within a service area within five years.

In the event that spectrum obtained in this auction has not been put to use at a level acceptable to the Department, the Department may begin a process to afford the licensee the opportunity to demonstrate why its licence should not be revoked. The Department may also facilitate discussions between holders of the spectrum who have not deployed services and potential local service providers wanting to provide service to unserved or under-served areas through spectrum in the secondary market.

8.5 Conditions of Licence

The conditions of licence will be clearly stipulated prior to the auction. The Department proposes the following:

• Licence Term: The term of this licence will be ten years from the date of licence issuance. At the end of this term and any subsequent terms, the licensee will have a high expectation of renewal for a further ten-year term 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.

  A public consultation process regarding the renewal of the licence will commence no later than two years prior to the end of the licence term if the Department foresees the possibility that it will not renew this licence or if renewal fees are contemplated.

  It should be noted that the licence is subject to relevant provisions in the Radiocommunication Act and the Radiocommunication Regulations. For example, the Minister continues to have the power to amend the terms and conditions of the spectrum licence (paragraph 5(1)(b) of the Radiocommunication Act). Such powers would be exercised on an exceptional basis, and only after full consultation.

• Licence Transferability and Divisibility: The licensee may transfer its licence(s) in whole or in part (divisibility), in both the bandwidth and geographic dimensions. The area transferred in the geographic dimension may be no smaller than a single Spectrum Grid cell.⁴ No minimum limit will be imposed on the amount of spectrum transferred in the bandwidth dimension.

  For each proposed transfer of this licence, the licensee must provide a written notification to the Department. The transferee(s) must also provide an attestation (or other appropriate documentation) that it meets the eligibility criteria and all other conditions of this licence.

• Eligibility Criteria: A licencee must be eligible to become a radiocommunication carrier and as such, must comply on an ongoing basis with the eligibility criteria in section 10(2) of the Radiocommunication Regulations. The licensee must notify the Minister of Industry of any change which would have a material effect on its eligibility. Such notification must be made in advance for any proposed transactions within its knowledge. For more information, refer to the document Canadian Ownership and Control (CPC-2-0-15), available at: http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf01763.html.
• Displacement of Incumbents: Licensees must comply with the final transition policy requirements as set out in the final policy document.
• Radio Station Installations: While site specific radio licences will not be required for each radio station, licensees must: ensure that radio stations are installed and operated in a manner that complies with Health Canada's limits of exposure to radiofrequency fields⁵; mark antenna structures, where applicable, in accordance with the recommendations of Transport Canada; and consult with the appropriate land use authorities prior to installation of significant antenna structures. Installation of any significant antenna structure must be delayed for a period of time sufficient for departmental review where, after considering reasonable alternatives and consultation options, land-use consultation negotiations remain at an impasse.
• Provision of Technical Information: When the Department requests technical information on a particular station, or on a network, it must be provided by the licensee to the Department according to the definitions and criteria specified by the Department.
• Compliance with Legislation, Regulations and Other Obligations: The licensee is subject to, and must comply with, the Radiocommunication Act, the Telecommunications Act, the Radiocommunication Regulations and the International Telecommunication Union Radio Regulations pertaining to its licensed radio frequency bands. The licence is issued on condition that the certifications made in the application materials are all true and complete in every respect. The licensees must use the assigned spectrum in accordance with the Canadian Table of Frequency Allocations and the stated spectrum policy. Licensees will be expected to respect and abide by any current and future agreements established with other countries.
• International Coordination: Licensees must comply with the current and future agreements established with other countries. While frequency assignments are not subject to site-by-site licensing, licensees may be required to furnish all necessary technical data to Industry Canada for each relevant site in order for international coordination to be effected as per the terms of any existing or future sharing arrangement. Should international coordination be required, Industry Canada will identify the appropriate data elements, format and means of submission.
• Lawful Intercept: Licensees who will use the spectrum for circuit-switched 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. These standards may be amended from time to time following consultation with the Solicitor General of Canada and the licensees. Licensees may request the Minister to forbear from enforcing certain assistance capability requirements for a limited period. The Minister, following consultation with the Solicitor General of Canada, may exercise his power to forbear from enforcing a requirement or requirements where, in the opinion of the Minister, the requirement(s) is (are) not reasonably achievable. Forbearance requests must include specific details and dates when compliance to requirement(s) can be expected. Applicants are strongly advised to note that if standards are developed for router-based networks, the requirement to provide lawful interception capability for such traffic may be imposed via a licence condition or other future legislative provision.
• Research and Development: The licensee must invest, as a minimum, two percent of its adjusted gross revenues resulting from its operations in the 2300 MHz and 3500 MHz radio frequency bands, averaged over the term of the licence, in eligible research and development activities related to telecommunications. Eligible research and development activities are those which meet the definition of scientific research and experimental development adopted in the Income Tax Act. Adjusted gross revenues are defined as total service revenues less inter-carrier payments, bad debts, third-party commissions, and provincial and goods and services taxes collected. If the licence is transferred to any eligible entity by a radiocommunication carrier prior to the expiration of its term, the condition of licence relating to investment in research and development will continue to apply on the initial transfer of the licence and on any subsequent transfer until the term of this licence expires. Prior to a transfer, in whole or in part, of this licence, the proposed transferee must undertake to ensure that the sum of the investment it will make in eligible research and development activities and all investments made by prior licensees in eligible research and development activities⁶ equals, as a minimum, two percent of the aggregated adjusted gross revenues resulting from all operations in the 2300 MHz and 3500 MHz radio frequency bands, averaged over the term of the licence. An attestation signed by the proposed transferee setting out the undertaking must accompany the licence transfer notification to be submitted to the Department by the licensee prior to the transfer being effected. To facilitate compliance with this condition of licence, the licensee should consult the Department's Guidelines for Compliance with the Radio Authorization Condition of Licence Relating to Research and Development, available on our Web site at: http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf01638.html.
• Annual Reporting: Licensees must submit an annual report for each year of the licence term indicating continued compliance with these licence conditions including:
  • an update on the implementation of wireless services - this update should include the number of hub and subscriber sites installed, type of service delivered (high-speed Internet, voice, etc.), level of service (data rate), number of subscribers, as well as the population covered;
  • audited Financial Statements as required under the licensee's jurisdiction of incorporation, including an audited Statement of Research and Development Expenditures with an accompanying Auditor's Report, prepared in accordance with the same standards of reporting; to facilitate compliance with this reporting requirement, the licensee should consult the Guidelines for Compliance with the Radio Authorization Condition of Licence Relating to Research and Development published by Industry Canada available on the Department's Web site at: http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf01638.html; and
  • a copy of any existing corporate annual report for the licensee's fiscal year with respect to the
    authorization.
    

The reports are to be submitted, in writing within 120 days of the licensee's fiscal year end, to the local Regional Director, Spectrum, in each service area. In the case of a licensee holding multiple licences, the licensee should communicate with the local Regional Director to discuss the possibility of aggregating data for multiple licence areas. Confidential information provided will be treated in accordance with Section 20(1) of the Access to Information Act.

8.6 Post-Auction Licensing Process

It is proposed that following the auction, any licences which have not received bids during the auction process be made available on a first-come, first-served basis, including both rural and urban areas.

The initial first-come, first-served policy provided for the licensing of systems based on the identification of specific grid cells required by the licensee, at an annual fee of $60.00 per grid cell per 25 MHz block. It is proposed that by moving to a Tier 4 service area for post-auction licensing, it would facilitate both the licensing process and allow for more flexibility in the implementation and growth of the systems.

The Department proposes that post-auction licensing be offered on a first-come, first served basis in the Tier 4 service areas. The proposed expiry date for the licence would be fixed at approximately 10 years from the close of the auction, and the proposed fee for post-auction licensing would be the opening bid set out for the auction process and would be pro-rated to reflect the remaining time in the original 10 year licence term. All licensing conditions identified for the auction process would apply to post-auction licensees as well.

This proposal attempts to standardize the licensing of areas with a differing level of demand, through a process which ensures equal opportunity for access to spectrum where demand exceeds supply, namely the few urban areas, while continuing to allow access to service areas where there is sufficient supply of spectrum.

8.7 Issuance of Licences

A provisional winner of spectrum licences will have those licences issued to it on completion of the following: (1) payment of the sum of its standing high bids and the sum of any penalties; and (2) a determination by the Department that the Canadian ownership and control requirements have been met.

9. Financial Aspects of the Auction

9.1 Opening Bids

The Department believes that in certain areas of the country, the spectrum being offered in this auction has a significant value and is confident that the revenues generated will cover the relevant spectrum management costs and provide fair compensation to the Canadian public for the use of their spectrum resource, therefore the establishment of irreducible reserve bids is likely unnecessary. In order to "kick-start" the auction and avoid unnecessary delays the Department proposes the establishment of opening bids.

Each of the licences has been assigned a specific number of eligibility points ("points") that are indicative of the population covered by the licence. One eligibility point is approximately equal to 25 MHz of spectrum and a population 20,000.

To ensure that there are no significant barriers to entry in the less populated areas, the Department proposes a three-level schedule, linking the number of people in a service area to the amount of the opening bid per point as follows:

• the opening bid is $625 per point for service areas with a population less than 300,000
• the opening bid is $2,125 per point for service areas with a population of 300,000 to 2,000,000
• the opening bid is $3,750 per point for service areas with a population of over 2,000,000

The Department proposes to assign the same eligibility points for a 30 MHz licence in the 2300 MHz band as it will for a single 25 MHz block in the 3500 MHz band. In some cases, the number of points associated with a licence has been adjusted in order to provide bidders with maximum flexibility in transferring their eligibility points among the available licences. Table  2 (below) provides examples of some of the Tier 4 service areas, their population, eligibility points, and opening bids. A complete list may be found in Appendix B.

The table below provides examples of the opening bids according to the proposed blocks available, 30 MHz blocks for 2300 MHz band and two 25 MHz blocks for the 3500 MHz band (showing the paired option).

9.2 Pre-Auction Deposits

In order to enhance the integrity of the auction, the Department requires that all bidders submit a pre-auction financial deposit with their application to participate in the auction. The financial deposit is to be in the form of an irrevocable standby letter of credit.

The Department proposes 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 of the licences has been assigned a specific number of eligibility points ("points") that are approximately proportionate to the population covered by the licence. One eligibility point is approximately equal to 20,000 in population per 25 MHz of spectrum.

The Department feels that it is appropriate to require bidders to provide the Department with a deposit to ensure that the integrity of the auction is maintained. At the same time however, the Department does not want to disadvantage those applicants who may only be interested in obtaining spectrum in a few areas. Therefore, the Department proposes that the financial deposit be equal to $500 per eligibility point for the first forty (40) points and $3,000 per eligibility point requested thereafter.

The total number of points associated with all 162 WCS licences available in this auction is 1500, which would require a financial deposit of $4,400,000 (40 X $500 + 1460 X $3,000). National coverage in the FWA band which would include 162 licences of 25+25 MHz, would total 3000 points and require a financial deposit of $8,900,000 (40 x $500 + 2960 X $3,000). Appendix B of this document provides the eligibility points associated with each of the licences. Note that the opening bids (described in section 9.1) and the required deposit are, in general, different amounts. Financial deposit(s) will be returned to any applicant that is found not to be a qualified bidder, to any applicant that provides written notification to the Department of its withdrawal from the process prior to the auction's commencement, and to any bidder whose eligibility is reduced to zero during the auction and who is not potentially liable for any penalties.

9.3 Bid Payment

Winning bidders will be required to submit 20 percent of their high bids and 100 percent of any withdrawal penalties incurred within 10 business days of the auction's close. This payment will be non-refundable. If the winning bidder fails to make this initial payment in a timely manner, the licence will not be issued and the bidder will be subject to the applicable forfeiture penalty. The remaining 80 percent of the high bids will be due within 30 business days of the auction's close. Failure by the winning bidder to make this final payment in a timely fashion will also result in the licence not being issued, and again, the bidder will be subject to the applicable forfeiture penalty.

It is also important to note that beyond the payment of the winning bid, no other licence fees or payments will be required for the duration of the licence term, as per subsection 5(1)(1.3) of the Radiocommunication Act.

10. Consultation Process

10.1 Comment Period

To ensure that all comments are duly considered, submissions must be received no later than October 15, 2001. Comments submitted should be prefaced by the statement "Comments - Canada Gazette Notice DGRB-006-01".

After the closing date for receipt of comments to this consultation paper, copies of all the comments received will be made available to the public through Industry Canada's Web site and through a commercial printing and copying service. Respondents are required to provide their comments in electronic format to facilitate posting on the Department's Web site.

10.2 Reply Comments

A reply comment period will be opened once the comments have been posted on the Department's Web site. During this second period, respondents may comment on the initial comments of others. Again, the submission of reply comments in electronic format is required.

To ensure that all reply comments are duly considered, submissions must be received no later than November 1, 2001. Reply comments submitted should be prefaced by the statement: "Reply comments - Canada Gazette Notice DGRB-006-01".

After the closing date of this second period, these reply comments will also be made available to the public.

10.3 Final Policy Paper

After having reviewed all the input received, the Minister of Industry will make final policy decisions. A Notice will be published in the Canada Gazette announcing the availability of the final policy paper. The following elements will be described:

• the licences to be auctioned;
• the terms and conditions attached to the licences;
• the opening bid for each licence;
• the rules of the auction specific to this licensing process;
• the eligibility criteria and application procedures to participate in the auction; and,
• post-auction policy and licensing procedures.

11. Submitting Your Comments

11.1 Instructions for Filing

The instructions for filing comments are provided in the following sections. All comments submitted as part of this consultation should cite the following:

Canada Gazette Notice reference number DGRB-006-01

Respondents must submit comments electronically to facilitate posting on the Department's web site. The Department requests that electronic submissions be in of the following formats: WordPerfect; Microsoft Word; Adobe Acrobat (PDF);or ASCII TXT.

Comments submitted via the Internet are to be sent to the following email address:

WCS.FWA@ic.gc.ca

11.2 Public Access

All submissions received in response to this consultation paper will be made available for viewing on the Internet, at the following address:

http://www.ic.gc.ca/spectrum

12. Further Information

Links to all documents quoted in this discussion paper will be displayed on our Spectrum Web site at:

http://www.ic.gc.ca/spectrum

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

Heather Hall
phone: 613-990-4411
facsimile: 613-991-3514
hall.heather@ic.gc.ca

Footnotes

¹ For example, see Recommendation ITU-R F.1488 available on our Web site at http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf05518.html

² See footnote C5 and S5.433 in the Canadian Table of Frequency Allocations.

³ Urban areas are defined in the Statistics Canada Census Dictionary and in A National Overview - Population and Dwelling Counts (data products: 1996 Census of Population) Catalogue number 93-357-XPB.

⁴ Spectrum grid cells are defined in the Industry Canada (Spectrum Management) Client Procedures Circular 2-1-16 (CPC-2-1-16), Licensing Procedure for Local Multipoint Communications Systems (LMCS), February 1, 1997

⁵ Industry Canada (June 24, 1995), Environmental Process, Radiofrequency Fields and Land-Use Consultation (CPC-2-0-03) available at: http://www.ic.gc.ca/eic/site/smt-gst.nsf/eng/sf01031.html

⁶ As reported in the prior licensees' audited Statements of Research and Development Expenditures which would have been submitted annually to the Department.

Appendix A - Band Diagrams

Wireless Communication Services (WCS)
2305-2320 MHz and 2345 -2360 MHz

Fixed Wireless Access (FWA)
3400 MHz-3700 MHz

Appendix B - Eligibility Points and Opening Bids by Service Area