Effect of 3.5 GHz clawback on rural broadband to vary across Canada

In recent weeks, telecom issues haven’t escaped the increased rhetoric that comes with pre-election periods, with topics including rural broadband — and the clawback of 3.5 GHz spectrum — generating discussion in committee meetings and on the floor of the House of Commons. Last week in the House industry committee, Conservative innovation critic Dan Albas said the government effectively took a “hatchet” to rural connectivity with its decision to take back and re-auction a variable amount of the 3.5 GHz spectrum from current spectrum holders. On Monday, he declared during debate in the House of Commons that “Liberals are knee-capping rural and remote communities where small and regional players have designed networks, have innovated and are supplying services.” But what becomes clear in speaking to those directly involved in providing rural broadband access, the relationship between rural broadband and the spectrum is not a fixed one, but differs from place to place across Canada. The Ministry of Innovation, Science, and Economic Development (ISED) announced last week that it was going with one of two options for the clawback. Under the option it chose, existing license holders will lose a variable amount of spectrum, prorated according to how much spectrum they currently hold, known as Option 2. The abandoned Option 1 would have clawed back two-thirds of all spectrum licenses, across the board. Complicating matters is the fact that different providers are using the spectrum for different purposes. The upcoming auction of the 3.5 GHz spectrum, expected in 2020 and for which the government is clawing the spectrum back, is generally believed to be crucial for the deployment of 5G. Currently, however, the 3.5 GHz spectrum is licenced and used to bring fixed wireless internet to customers in rural communities. After the auction, current licence-holders will be able to use the spectrum they’ve held onto either for mobile or fixed wireless. “The 5G rollout is not happening deep in the forests where we need spectrum,” ABC Communications president Chris Allen said in a phone interview with The Wire Report, meaning that when it comes to the spectrum, companies like his are competing for the same resource but for entirely different market spaces. In Albas’s riding in the Okanagan region of British Columbia, some of those who provide rural internet access through fixed wireless were applauding the decision. Because fixed wireless providers in British Columbia already have spectrum assets, many of them advocated the smaller clawback of Option 2, along with those from regional governments in rural areas. “Overall from our point of view, it strikes a reasonable balance,” Allen said. “Option 2 was a big relief for us.” The company is the biggest wireless internet service provider in the province by both geography and customer count, according to Allen. Allen explained that ABC, which services about 5,000 people across rural British Columbia -- including in the Okanagan -- will not lose any significant spectrum resources, because they sit right at the 50 MHz cut-off. In their submission to ISED from last year concerning the 3.5 GHz spectrum, ABC advocated for Option 2 over Option 1, though cautioned that it still posed a risk to rural connectivity. Following the decision to go with Option 2, however, Allen said ABC will retain almost all of its spectrum. In her submission to ISED from last summer, chair of the Regional District of Okanagen-Similkameen in British Columbia Karla Kozakevich also advocated for ISED to choose Option 2. “This option will protect existing broadband access in much of our rural areas,” she wrote at the time. This week in an email, she said that the board of the district didn’t have anything to add in the wake of ISED’s clawback decision, other than that “we look forward to our service providers being competitive in bringing new technology to our area.” Representatives of the British Columbia regional districts of Bulkley-Nechako, Kitimat-Sitikine, and Cariboo all advocated for Option 2 in submissions to the ministry during the consultation period last summer. In Nova Scotia however, the spectrum landscape is entirely different. Bragg Communications Inc.’s Eastlink, which provides fixed wireless internet to some of its customers in the province, had encouraged the federal government to claw back more spectrum than it had even proposed in Option 1. The BCE Inc. and Rogers Communications Inc. Inukshuk partnership and Xplornet Communications Inc. hold all of the 3.5 GHz spectrum in the province, the Eastlink submission asserted, and Nova Scotia is “almost entirely served by fibre (and Eastlink operates fixed wireless service in remote areas of the province using alternative spectrum bands).” Therefore, Eastlink argued, the government should claw back all of the spectrum, because Inukshuk and Xplornet were not using it to connect rural customers. Similarly Cogeco Inc., which operates in rural Quebec and Ontario, referred to ISED’s clawback as “timid,” adding that ISED’s decision not to take back the entire 3.5 GHz spectrum may lead to the company’s being priced out of the spectrum market entirely. “This may lead to less market entry of new service providers - and less competitive market activity - at a time where the Government is also aiming to lower prices of telecom services for Canadians,” the company wrote in a statement this week. The company that stands to be most affected by the clawback is believed to be Xplornet, which had lobbied heavily against the clawback during the consultation period. On June 4 before ISED’s announcement that it was proceeding with Option 2, Xplornet’s general counsel CJ Prudham said in front of the Industry Committee that a “significant” number of its customers would lose access through Option 1. Sixty per cent of the company’s customers are on fixed wireless and the 3.5 GHz band is the primary spectrum it uses for fixed wireless. This week the company said it was still trying to analyse the impact of the decision. Xplornet is the second largest holder of 3.5 GHz spectrum in the country, behind the Rogers and Bell Inukshuk partnership. Albas, for his part, defended his rhetoric on the clawback, saying the onus was on the government to produce numbers showing how rural customers were affected. “If I made a statement that is not correct, then they have a duty to correct the record. And so far, the Minister and representatives of the Industry Committee have not done that,” he said in a phone interview. — With reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Effect of 3.5 GHz clawback on rural broadband to vary across Canada

News | June 14, 2019

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Effect of 3.5 GHz clawback on rural broadband to vary across Canada

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