ISED issues rules for 3800 MHz spectrum auction

The Department of Innovation, Science and Economic Development (ISED) issued the rules for its next spectrum auction Thursday. The auction will begin on Oct. 24, 2023 and will feature spectrum in the 3800 MHz band. A large section of the framework is aimed at promoting competition in the wireless sector. ISED views the licensing as an opportunity to support further investments by telecom service providers (TSPs) and to improve the quality, affordability and availability of wireless service in Canada. “It also presents a key opportunity to support the ability of Canada’s service providers to offer 5G services to consumers, the ability of regional mobile service providers (RMSPs) to compete with the national mobile service providers (NMSPs) in the provision of 5G services, and the ability of wireless internet service providers (WISPs) to offer 5G fixed wireless services in rural and remote areas of the country,” the department wrote in the framework published Thursday. There were interventions from 59 interested parties, including major and smaller telecoms, industry associations and the travel industry. The call for consultation went out in August of 2020. While most intervenors supported pro-competitive measures proposed by the department, BCE Inc., Rogers Communications Inc. and Telus Corp. were in opposition. All three conceded, however, that if such measures were to be adopted, a cross-band cap would be the least disruptive mechanism for ISED to use. “For the 3800 MHz auction, ISED will implement pro-competitive measures in the form of a 100 MHz cross-band cap across the 3500 MHz and 3800 MHz bands,” read the third of the framework’s 27 decisions. The cross-band cap will apply to the total of a company’s 3500 MHz and 3800 MHz spectrum licences for five years. While a licensee will not be forced to surrender any holdings in the 3500 MHz band, if the licensee holds 3500 MHz licences equal to or greater than the spectrum cap the firm will not be eligible to bid for licences in the 3800 MHz band. There has been much controversy over whether the deployment of 5G harms the operations at airports. ISED devoted a sizable section of the 146-page document to consideration of the topic. Airlines and industry stakeholders were in favour of extending the mitigation measure currently in place to flexible use operations in the 3800 MHz band. Bell, the Canadian Wireless Telecommunications Association and Saskatchewan Telecommunications Holding Corp. countered that other nations have rolled out 5G with no reports of interference to altimeters. Several telecom industry players argued that altimeter protection rules should be evidence-based and encouraged the department to continue with its studies. They worried that the regulations are more restrictive than necessary. Rogers and Telus said any mitigation moves should be time-limited with a defined sunset date. Bell, Telus, SaskTel, Rogers and others advocated that the burden of responsibility should fall on the aviation industry’s shoulders. ISED decided to extend the mitigation measures in the 3500 MHz band to the 3800 MHz band. The department suggested that all flexible use licences should be valid for 20 years, a proposal endorsed by most intervenors. The framework’s decision adopted the proposal, adding that there is a “high expectation” that a new licence wlll be granted unless an overriding issue rears its head. In terms of deployment, TSPs are expected to offer coverage in 90 per cent of the area of Toronto, Montreal and Vancouver within five years of receiving their licences. That figure rises to 97 per cent after seven years. After 10 years, coverage must reach 95 per cent of the population outside the large population centre. For other areas with large populations, the 90 per cent standard must be hit within seven years and the 97 per cent target within 10 years. Within 10 years, coverage must be provided to 95 per cent of the population outside the centres. For the auction rules, ISED will use generic licences, offering 25 blocks of 10 MHz in all Tier 4 service areas.It will also deploy anonymous bidding for all stages of the auction. A clock auction format will be in use for the 3800 MHz bids. Each round’s clock price will be in the range of one to 20 per cent higher than the start-of-round price. Opening bids will vary depending on the size of the licence area. For service areas with a population of greater than two million people it will be $0.232/MHz/pop; a population of one to two million is calculated at $0.10/MHz/pop; less than one million with at least one census metropolitan area (CMA) will cost $0.065/MHz/pop; and all other service areas will be assessed at $0.051/MHz/pop. The pre-auction financial deposit will be $3000 per eligibility point. For one national 10 MHz block, a total of 15,564 points would be necessary, equalling a deposit of nearly $46.7 million. A Thursday research note by Drew McReynolds at RBC Dominion Securities Inc. was bullish on the departmental paper. “At first glance relative to expectations, we believe the 3800 MHz policy and licencing framework released by ISED is in line with expectations,” he wrote. “While auction dynamics and outcomes are notoriously difficult to predict, we believe the 3800 MHz framework with a cross-band cap on mid-band spectrum is a balanced approach to supporting regional wireless operators while likely moderating the amount spent by the national operators on the 3800 MHz auction.” –Reporting by Paul Park at ppark@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

ISED issues rules for 3800 MHz spectrum auction

News | June 30, 2022

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ISED issues rules for 3800 MHz spectrum auction

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