Xplornet lobby blitz fights 3.5 GHz clawback proposal

Xplornet Communications Inc. will not be able to service thousands of its rural customers with fixed-wireless service if the government follows through on a consultation proposal that recommends taking back the majority of its 3.5 GHz spectrum for its future auction, a company spokesperson said. Innovation Canada released the 3.5 GHz consultation in early June, which is considering “different approaches” when it comes to the amount of spectrum that will be licensed to incumbents. It said it wants to make efficient use of the spectrum to allow incumbents to continue providing wireless services, allow other players to acquire flexible-use spectrum, and facilitate its use for 5G services. But it also said improved deployment efficiencies and new technologies will allow licensees to maintain current service with a “reduced amount of spectrum.” Therefore, it’s proposing to take back some spectrum to use for a future auction process, even if it’s already deployed. “The Department has proposed taking 3500 MHz spectrum away from ISPs who are using it to deliver service to rural Canadians,” James Maunder, vice-president of communications and public affairs at Xplornet said in an email. “Based on the recommendations proposed, Xplornet would lose between 25 per cent and 66 per cent of its spectrum.” If implemented, the measure “would disconnect hundreds of thousands of rural Canadian homes who rely on Xplornet and others to connect them every day,” Maunder added. ISED announced last month that the 3.5 GHz auction for flexible-use -- for both fixed and mobile services -- will take place in 2020. Its consultation proposes two ways of handling it. The first option is to issue flexible-use licenses for one-third of an incumbent’s existing holdings while taking back the rest (two-thirds) for the auction. The second is to issue a fixed amount of spectrum per licence area for existing licensees. The government is also soliciting comments on alternative options. Xplornet filed its criticism with ISED in response to the consultation, suggesting ISED made critical errors in its assessment. It said both options would cause harm to its operating areas, with the second one being less damaging than the first. It said the second option would return spectrum in about 90 of its operating areas, particularly in Alberta and Ontario, and force it to forfeit over 25 per cent of its 3.5 GHz holdings. In either case, it would have to suspend its rollout of 5G services in rural areas, it said. It also said there are no alternative spectrum bands to which it could move its rural customers. The move, it said, would be the first time the government would take away spectrum from providers who are using it. It is urging the government to commit to the Hippocratic Oath when approaching the auction and “do no harm to rural Canadians.” The 3.5 GHz spectrum was first auctioned off in 2004 for fixed-wireless use. In recent weeks, telecoms have taken to the altar to preach its importance for 5G services. Xplornet is the largest user of 3.5 GHz spectrum in Canada, Jonathan Black, executive director of the Canadian Association of Wireless Internet Services Providers (CanWISP), said in an email. That’s because of the company’s extensive fixed-wireless network, which uses LTE among other technologies. So in June, Xplornet took its issues to the government -- and it didn’t hold back. Historically a relatively quiet telecom when it comes to lobbying, the New Brunswick-based company filed 18 lobby communications in June. It’s the highest number of filed government communications in at least two years for the company. It’s second-highest total in that span was 14 communications in March last year. Since then, it peaked at nine in June 2017. “The lobbying you see was a direct result of making the Government aware” of these proposals, Maunder confirmed. CanWISP filed its own submission urging ISED to ensure small regional entities are still considered “incumbents” even though a lot of them lease the frequencies with the bigger incumbents, otherwise known as “subordinated” spectrum agreements. It said it favours having spectrum allocations that are fixed at a certain amount. Xplornet is not alone in its concerns with the proposal. In replies to the consultation, posted on ISED’s website Monday, Rogers Communications Inc. and BCE Inc. were also critical of the amount of the spectrum the government proposes to claw back. “Rogers believes that no more than one-third of the spectrum held by an eligible incumbent should be required to be returned to the Department,” it said in its submission, adding jurisdictions like Spain and the United Kingdom have both allowed their incumbents to retain all of their 3.5 GHz spectrum and to use it for 5G. Allowing incumbents to apply for new flexible use licences for two-thirds of its existing holdings is a “key component,” it said. Rogers filed four government communications in June, one with Finance Minister Bill Morneau. Bell has deployed the 3.5 GHz spectrum for new initiatives, including rural developments that led to a trial of its so-called wireless-to-the-home (WTTH) service. It said it’s looking to expand this program. As such, it noted in its submission, dated July 12, that ISED’s proposal is “inappropriate,” as it would negatively impact availability and quality of service in rural areas. “Thus, seizing a portion of existing licence holders’ spectrum as proposed by the Department is contrary to the Department’s own rural broadband objectives and is entirely unnecessary given that the 3500 MHz spectrum band can be expanded to make more spectrum available,” Bell said. ISED has used its Connect to Innovate program to fund internet infrastructure projects in underserved areas. Bell, which filed 11 government communications in June, further argued that simply taking back spectrum when incumbents have spent millions on it would discourage future investment and innovation. It also said the government’s reasoning for taking back spectrum to make available for 5G is flawed because existing licenses can develop 5G services with their current holdings. If the government must take spectrum back, Bell argued, it should only do so for one-third of an incumbent’s current holdings, echoing Rogers’ comments. The concept of taking back spectrum is not new. In fact, ISED put telecoms on notice in an August 2014 consultation that, in the event of a spectrum reallocation, it would need to take spectrum back. To be clear, it was referring to the 3.5 GHz band in that particular decision. Furthermore, this isn’t the first time Xplornet cautioned ISED about the move. Almost to a tee, following that 2014 consultation, it raised concern about the clawback of spectrum that would just go to service telcos in urban areas at the expense of internet access for its rural customers. In that consultation, ISED said it would divide the use of the spectrum into urban and rural areas, with the former having mobile service and the latter fixed. Then-Minister of Industry (now called ISED) James Moore said at the time that “under no circumstances will our government take spectrum licences away from any local Internet service provider that is providing Internet service to rural Canadians." He said suggestions that rural Canadians would lose internet services as a result are “completely false.” From that, Telus Corp. seized the opportunity to offer a third option for the clawback in its submission, dated July 12, based on a geographical differentiation. The proposal is to essentially recall all 3.5 GHz spectrum within 5G “initial deployment zones” because fixed-wireless doesn’t compete there anyway, it argued. It said about 25 per cent of wireless internet service providers (WISPs) hold 3.5 GHz spectrum in those 30 large population centres. “Even partial retention of this spectrum would create an ‘undersupply’ of 5G spectrum in Canada’s top 30 large population centres that would serve no purpose for FWA providers, while compromising Canada’s 5G future,” the submission said. Along similar lines, Shaw Communications Inc. also argued for a reclamation of “as much spectrum as possible” for 5G’s sake. It argued in its submission for ISED’s first option, calling the take-back of two-thirds of currently licensed spectrum as a “very reasonable accommodation of existing users.” It also said that the spectrum should only be available to those who are currently using the band to provide services to “a material number of consumers,” in line with past arguments about making use of spectrum -- “use it or lose it.” A company spokesperson declined to comment beyond what it said in its submission when asked how much 3.5 GHz spectrum it has. Shaw only recently entered the wireless business with its purchase of Wind Mobile, now Freedom, in 2016. Shaw filed 19 lobby communications with government officials in June, most among the telecoms and related largely to telecom-related matters and security. Cogeco Inc., which doesn’t have a wireless business but is contemplating one, proposed a version of ISED’s first option. It said the department should issue the license for one-third of current holdings but cap the amount of spectrum at 50 MHz, with a minimum of 20 MHz. This way, it said, competition could be ensured. — With reporting by Ahmad Hathout at ahathout@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Xplornet lobby blitz fights 3.5 GHz clawback proposal

News | July 23, 2018

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Xplornet lobby blitz fights 3.5 GHz clawback proposal

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