Consultation on Amending Cellular and Personal Communications Services (PCS) Licence Conditions

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), is initiating a consultation on new conditions of licence related to spectrum usage, otherwise known as deployment requirements, and on updates to Cellular and Personal Communications Services (PCS) licences that have been or will be renewed through the Renewal Process for Cellular and Personal Communications Services (PCS) Spectrum Licences (the 2011 Renewal Process). The proposed amendments will affect all Cellular and PCS licences that are subject to the conditions of licence I3, K3 or K6 on the Conditions of licence / Appendices page.

2. 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 goals and national policies for spectrum resource use and for ensuring effective management of the radio frequency spectrum resource.

3. The Minister is provided with the general powers for spectrum management in Canada, pursuant to section 5 of the Radiocommunication Act and sections 4 and 5 of the Department of Industry Act. The Governor in Council may make regulations with respect to spectrum management, pursuant to section 6 of the Radiocommunication Act.

4. Wireless communication is an integral part of the Canadian economy. Not only are businesses, public institutions and consumers reliant on wireless services and technologies to enable day-to-day activities such as conducting business or connecting with family and friends, they are also increasingly being leveraged to enable innovative and emerging use cases.

5. In this context, ISED is committed to the objective that all Canadian consumers, businesses and public institutions have access to the latest wireless telecommunications services in a competitive market. A robust wireless telecommunications industry drives the adoption and use of digital technologies and enhances the productivity of the Canadian economy. Furthermore, connectivity has become even more critical during the COVID-19 pandemic, when Canadians have relied heavily on Internet access to stay connected, including in rural and remote regions of the country.

6. In developing this consultation, ISED was guided by the Spectrum Policy Framework for Canada (SPFC), which states that the objective of the spectrum program is to maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum resource. This objective and the enabling guidelines listed in the SPFC remain relevant for guiding ISED in delivering its spectrum management mandate.

7. The Government of Canada is also committed to promoting the delivery of broadband services to rural and remote areas across the country. In 2019, High-Speed Access for All: Canada's Connectivity Strategy was launched, which aims to make speeds of at least 50 megabits per second (Mbps) download and 10 Mbps upload available to all Canadian homes and businesses, and to improve mobile wireless access from coast to coast to coast. To reach these objectives, ISED is examining approaches to support and encourage service provision in rural and remote areas.

8. In the context of this coordinated approach to connectivity, ISED's policy objectives for this consultation are to:

• facilitate the deployment and timely availability of services across the country, with an emphasis on rural and remote regions
• foster investment and the evolution of wireless networks by enabling the development of innovative and emerging applications
• support sustained competition in the provision of wireless services so that consumers and businesses benefit from greater choice and competitive prices

9. The Cellular and PCS spectrum bands in Canada are used primarily to provide commercial mobile wireless services. Cellular licences were first issued by the Department of Communications (now ISED) in 1983, and PCS licences were first issued by Industry Canada (now ISED) in 1995. These licences were initially subject to a spectrum usage requirement that obligated the licensee to provide coverage to 50% of the population of the licence area.

10. In March 2009, Industry Canada issued Canada Gazette notice DGRB-002-09, Consultation on the Renewal of Cellular and Personal Communications Services (PCS) Spectrum Licences, which sought comments on ISED's renewal proposal and the licence conditions that would apply to Cellular and PCS licences issued through the future renewal process.

11. In March 2011, the 2011 Renewal Process was issued, establishing the renewal process for all Cellular and PCS licences, as well as their applicable conditions of licence. Licensees were required to demonstrate that they provided coverage to 50% of the population for their licence area. Licences renewed through this process have 20-year licence terms without any further spectrum usage requirements.

12. A series of licences with distinct conditions was created as a result of the 2011 Renewal Process to deal with specific use cases and to allow for the appropriate transition of existing licences. These conditions of licence are listed below and published on ISED's website:

• I3 — PCS/Cellular Long-Term Spectrum Licences issued via the 2011 Renewal Process
• K3 — PCS/Cellular Long-Term Spectrum Licences issued via the 2011 Renewal Process
• K4 — PCS/Cellular Annual (interim) Spectrum Licences issued via the 2011 Renewal Process
• K5 — PCS/Cellular Long-Term First-Come First-Served Spectrum Licences issued after the 2011 Renewal Process
• K6 — PCS Spectrum Licences (Interim) issued to Certain Members of the Ontario Telecommunications Association

13. Licences subject to the conditions of licence K4 or K5 (approximately 70) currently contain conditions to provide coverage to 50% of the population within the licence area. However, upon renewal of these licences between 2021 and 2027, the K4 and K5 conditions will be replaced with the K3 condition, which contains no deployment requirement. Ultimately, ISED aims to have all licences in the Cellular and PCS bands be subject to the same conditions of licence.

14. If no changes arise from this consultation, a significant gap will exist in terms of deployment requirements. Licences subject to the conditions of licence I3, K3 or K6 (220 licences in total) do not contain deployment requirements. The 2011 Renewal Process established that no deployment requirement would be imposed on renewed licences because ISED expected that if licensees met their deployment requirements at renewal, they would continue to provide the same coverage into the future. If the 70 licences with K4 or K5 conditions are added to those with I3, K3 or K6 conditions, approximately 290 licences would have no deployment requirements.

15. Spectrum is a scarce and valuable public resource. As outlined in the SPFC, in developing policy and licensing frameworks, ISED seeks to maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum resource. In most cases, ISED's approach has been to ensure that spectrum is used in ways that serve the public interest, in part by imposing deployment requirements.

16. ISED wishes to ensure consistency with other spectrum bands by re-introducing these deployment requirements, including the need for licensees to meet certain spectrum usage thresholds in order to be eligible for renewal and to maintain that usage for the entire term of the licence. ISED also wishes to deter licensees from acquiring spectrum for speculation, warehousing or anti-competitive purposes.

17. Given the substantial time remaining in all 20-year licences, ISED is confident that the re-introduction of these requirements will not create investment uncertainty. Licensees unable or unwilling to meet these requirements would be expected to return licences to ISED.

18. It should be noted that all spectrum licences are subject to the 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 spectrum licences pursuant to paragraph 5(1)(b) of the Radiocommunication Act. The Minister may do so for a variety of reasons, including furtherance of the policy objectives related to the bands. Such action would normally only be undertaken after consultation. The Minister will amend the relevant conditions of licence in accordance with the decisions resulting from this consultation.

19. ISED has a mandate to ensure that spectrum is put to use for the economic and social benefit of Canadians. Specifically, deployment requirements are conditions of licence that encourage timely service delivery in all regions of Canada, including rural and remote areas.

20. As a result, ISED proposes to add a deployment requirement that will ensure that Cellular and PCS spectrum is put to use throughout the licence term. The requirements would apply to existing licences and also to any new licences in the Cellular and PCS bands.

21. The reintroduction of deployment requirements would allow for greater access to spectrum in rural and remote areas, helping ensure that all Canadians can participate in the digital economy no matter where they live and work.

22. ISED is proposing that any deployment requirements arising from this consultation applicable to existing licences would be required to be met within five years from the date of the final decision resulting from the present consultation. All existing licensees subject to the conditions of licence I3, K3 or K6 will have to demonstrate that they meet the deployment requirement. The deployment must be maintained throughout the licence term, including at the end of the term, to ensure that spectrum is actively being used in ways that serve the public interest. Compliance checks will be administered to ensure that this deployment is maintained.

23. For any Cellular and PCS licences that are authorized in the future, the deployment requirement will apply five years after the issuance date. At that time, for those licences subject to the conditions of licence I3, K3 or K6, the licensee will have to demonstrate that they meet the deployment requirement. The deployment must be maintained throughout the licence term, including at the end of the term.

24. The five-year period will ensure that all licensees, regardless of licence issuance dates, have a minimum of five years to adapt to the proposed re-introduction of deployment requirements. ISED considers that five years is long enough for licensees to adapt to the reinstatement of deployment requirements.

25. Unfortunately, a significant connectivity gap can make it harder for Canadians in rural and remote areas to access important online services. Connectivity has also become increasingly important for rural economic development. In rural areas, resource extraction and other industries are major economic contributors. As new industrial applications for wireless services emerge, such as machine-to-machine communication, ensuring the availability of suitable spectrum resources will unlock the potential of these innovative uses, supporting economic development in rural areas. As such, ISED aims to set deployment requirements that will help deliver these types of services to the rural and remote regions of Canada.

26. Furthermore, given that spectrum in the Cellular and PCS bands is key for providing coverage to rural areas and that licences in these bands were first granted several decades ago, more ambitious deployment requirements than the original baseline (i.e. coverage of 50% of the licence area population) are warranted, in support of the deployment and expansion of service in rural areas of Canada. The significant amount of time elapsed since the last renewal (i.e. the 2011 Renewal Process) further supports the implementation of ambitious deployment requirements. Most licensees have had at least an additional 10 years with these licences.

27. As ISED plans to introduce new, ambitious deployment requirements, it is seeking stakeholder feedback on the most appropriate methodology for these licences. Depending on the type of service being provided, the methodology could be based on a single standard deployment requirement or a combination of requirements, or on a given metric associated with the licence area, such as population density.

28. ISED has employed a variety of deployment requirements in the past, depending on the band. For instance, ISED has typically employed deployment requirements based on a percentage of the population of the licence area, such as in the 600 MHz and advanced wireless service (AWS-1) bands.

29. To drive coverage into the rural and remote areas of Canada, ISED has also previously introduced deployment requirements at a lower tier level than that of the licence. While licences in the Cellular and PCS bands have primarily been granted on a Tier 2 level, measuring deployment requirements at a lower tier level is an approach that could further rural coverage. This approach has been used in the 600 MHz licensing process.

30. In both the 700 MHz and 3500 MHz bands, two deployment requirements were proposed. The first was a general deployment requirement for each licence area based on a percentage of the population. The second was an additional deployment requirement based on the extent of each carrier's mobile network coverage.

31. ISED recognizes that there may be other options to consider in developing deployment requirements. As such, ISED is seeking views from stakeholders on other potential deployment requirements that are more ambitious than the original requirements employed in the Cellular and PCS bands and that would encourage deployment across entire licence areas. Alternative proposals must also be applicable to all of Canada and promote the federal government's policy objectives. Submissions should include a rationale for the proposal, an explanation of how it satisfies ISED's policy objectives, and any other relevant information. Furthermore, this feedback will be taken into consideration in the design of deployment requirements resulting from the Consultation on New Access Licensing Framework, Changes to Subordinate Licensing and White Space to Support Rural and Remote Deployment.

32. ISED also recognizes that traditional deployment requirement approaches may not be suitable for new and emerging wireless applications that are further driving demand for spectrum, such as private broadband networks and Internet of Things (IoT) applications. Stakeholders, including industrial users such as mine and factory operators, agricultural users, as well as private broadband network service providers, have indicated that access to suitable spectrum is a significant challenge in unlocking the benefits of these emerging and innovative applications. As such, ISED is seeking views from stakeholders on potential new deployment requirements that are more appropriate for these novel applications.

33. ISED proposes that, at a minimum, any deployment requirements introduced must be at least as ambitious as the 20-year requirements established in SLPB-001-20, Policy and Licensing Framework for Spectrum in the 3500 MHz Band (see annex F). As such, levels equivalent to these deployment requirements, which are Tier 4 based or higher, will be applied five years from the date of the final decision resulting from the present consultation and throughout the licence term, including at the end of the term.

34. Regardless of the deployment requirement chosen, ISED will assess whether the requirement has been met based on the most recent census information available at the time of assessment. Deployment by a subordinate licensee will count towards the requirement of the primary licensee. To maximize the benefits that Canadians derive from the use of the spectrum, ISED encourages subordination in cases where the licensee does not plan to deploy services. It is proposed that, at the Minister's request, the licensee must provide the Minister with any relevant documentation or information related to deployment at any time, in addition to the already existing annual reporting requirement. The additional documentation will provide an update on the implementation and spectrum usage within the area covered by the licence.

35. As is the case with other spectrum licences, subordinate licence deployments could be counted towards the deployment requirements of the primary licence. Moreover, as is the case with all conditions of licence, the deployment requirements and time limits for the new licensee will continue to apply in the same manner in the case of a transfer, and ISED may invoke various compliance and enforcement measures at any point in the licence term if the licensee is not in compliance.

36. Other minor amendments to the conditions of licence I3, K3 and K6 are also proposed, including updating the terminology (by using "telecommunications common carrier"), clarifying the licensee eligibility, and updating the contact information and the name of the department (ISED). The intention is to modernize the conditions so that they are current and provide correct references.

37. The proposed changes would affect both existing licensees and any new licences issued after the decision.

38. ISED will review the comments received and publish its decision along with updated conditions of licence for the three licence bands in question.

39. Respondents are requested to provide their comments in electronic format (Microsoft Word or Adobe PDF) by email (spectrumoperations-operationsduspectre@ised-isde.gc.ca) and to specify if the response relates to all three conditions of licence (I3, K3 and K6), or specific ones.

40. Printed submissions should be addressed to:

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

41. All submissions should cite the Canada Gazette, Part I, the publication date, the title and the notice reference number (DGSO-003-21). Parties should ensure that ISED receives their comments no later than October 4, 2021, to ensure consideration.

42. Soon after the close of the comment period, all comments received will be posted on the Spectrum Management and Telecommunications website.

43. ISED will also provide interested parties with the opportunity to reply to comments from other parties. Reply comments will be accepted no later than November 8, 2021. Reply comments will also be posted on the Spectrum Management and Telecommunications website.

44. As all comments and reply comments will be posted on ISED's website, those making submissions are responsible for ensuring that they do not contain confidential or private information.

45. After the initial comment period, ISED may, at its discretion, request additional information, if needed, to clarify significant positions or new proposals. Should additional information be requested, the reply comment deadline may be extended.

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