Gazette Notice DGTP-004-06

Department of Industry

Radiocommunication Act

Notice No. DGTP-004-06 - Decision to Rescind the Broadband Spectrum Cap Policy

Intent

The intent of this notice is to announce the Department of Industry's decision to rescind, effective immediately, the existing broadband spectrum cap policy applicable to certain spectrum in the 24, 28 and 38 GHz bands. The Department has concluded that the application of the spectrum cap policy for broadband spectrum has been in place for a sufficient period to foster competition and provide reasonable opportunity for all spectrum licensees. This decision takes into account the submissions received in the public consultation process initiated by the spectrum policy review of the 3-30 GHz range announced in Canada Gazette, notice DGTP-008-04 as well as the policy objectives of the Telecommunications Act.

Background

In May 1999, the Policy and Licensing Procedures for the Auction of the 24 and 38 GHz Frequency Bands was released to facilitate the implementation of wireless broadband service and access facilities in Canada. Among the policy provisions, a broadband spectrum cap (or a maximum spectrum aggregation limit) was established to encourage more competition in the provision of broadband access. (Footnote 1) At the time, the Department felt that certain spectrum limits were required to enable new entrants access to the spectrum and a reasonable opportunity to compete, especially in the serving areas of incumbent telephone companies and cable TV companies, which already had extensive broadband wireline facilities. Specifically, lower maximum limits of broadband spectrum were established for the incumbents and their affiliates in their serving areas and higher limits were established for new entrants everywhere as well as the incumbents outside their serving areas.

The broadband spectrum cap provision can be summarized, as follows:

•  In a given service area, any entity (and its affiliates) other than an incumbent local exchange carrier (ILEC), whose local exchange area or serving territory overlaps that area may hold up to 1000 MHz in spectrum licences in the Local Multipoint Communication Systems (LMCS) 28 GHz band or up to 600 MHz in spectrum licences in the LMCS 28 GHz band and the 24 or 38 GHz bands; and,

•  An ILEC (and its affiliates) in an area which is overlapped by its local exchange area or serving territory, may hold up to 200 MHz in spectrum licences in the LMCS 28 GHz band or up to 200 MHz in spectrum licences in the LMCS 28 GHz band and the 24 GHz or 38 GHz bands.

The policy stated that these broadband spectrum cap limits would be reviewed when a subsequent licensing process was announced for other wireless broadband spectrum, or three years following the close of the auction, whichever came first. Moreover, depending on the degree to which competition had developed in the local broadband services marketplace, as evidenced by factors such as the concentration of market shares or the availability of choice of local broadband services, the Department could modify or remove the established limits.

Over five years have now passed since the establishment of the broadband spectrum cap policy. The Department had anticipated that with a diversity of service providers, resulting from the 1999 auction, Canadians would be well served with new broadband services. Unfortunately, the roll-out of wireless broadband facilities using these spectrum resources has been minimal. Moreover, the LMCS 28 GHz spectrum (1000 MHz) has been returned to the Department.

Public Consultation

In October 2004, the Department initiated a public consultation and sought comments on a proposal to rescind the spectrum cap for the 24, 28 and 38 GHz bands, as part of the 3-30 GHz spectrum policy review (Revisions to Spectrum Utilization Policies in the 3-30 GHz Frequency Range and Further Consultation).

Comments were sought on whether the spectrum cap policy continued to be relevant and serve the public interest. In particular, the Department sought to establish whether the spectrum cap should remain or be rescinded as a policy instrument.

The Department received three responses to the public consultation regarding the spectrum cap issue. Two of the respondents outlined that the broadband spectrum released in the 24, 28 and 38 GHz bands, together with the additional spectrum in the 2.3 GHz, 2.5 GHz and 3.5 GHz bands provide ample spectrum and opportunity for competition to wireline broadband access. These respondents maintain that opportunity for competition and delivery of a choice of wireless services to consumers have existed for a considerable period of time and as such the spectrum cap has no consequence and is no longer required. Another respondent asked the Department not to rescind the spectrum cap but rather amend it to encourage competition and prevent spectrum warehousing, or to simply rescind the cap for operators other than the ILECs and cable operators and their respective affiliates. The respondent was of the view that new entrants have little opportunity to secure spectrum.

Discussion

Spectrum is an essential component to the wireless industry and access to spectrum can be a barrier to entry. The planning and regulation of spectrum is the responsibility of Industry Canada. In the licensing of broadband wireless carriers in 1999, the Department recognized that new entrants should have access to sufficient spectrum to have an opportunity to compete with broadband wireless facilities since wireless incumbents have a significant head start in the broadband marketplace.

The Department has allocated and designated new broadband spectrum for the expansion and evolution of broadband access. Recent additions of spectrum available for the purpose of broadband Internet access and local distribution include the 2.3 GHz and 3.5 GHz bands and recently the 5 GHz band, where double the amount of licence-exempt spectrum was made available. With access to significantly more spectrum, and 28 companies acquiring 2.3 GHz and 3.5 GHz spectrum at recent auctions, the Department has concluded that the function of the spectrum cap policy to oversee spectrum concentration and enable competition has become less relevant in the 24, 28 and 38 GHz bands.

The Department further recognizes the prospect of new technologies and facilities emerging for broadband access, such as Ka band multimedia satellites, broadband over power line and advanced radio local area networks (WiMAX). The Department is of the view that the opportunity for competition and delivery of a choice of services exists and that the spectrum cap is no longer required.

Decision

In view of the above, the Department of Industry has concluded based on public consultation, that it is time to rescind the spectrum cap policy effective immediately. This decision is consistent with the objectives of Canadian telecommunications policy and in particular, the policies of fostering increased reliance on market forces for the provision of telecommunications services and ensuring that regulation, where required, is efficient and effective.

In carrying out its role in the management of the radio frequency spectrum, the Department will continue to consult regarding the release of new spectrum resources and to monitor the industry for excessive spectrum concentration. The Department will continue to promote a range of services with flexible spectrum allocations, to encourage increased service coverage, to facilitate access to spectrum, and to provide smart and efficient regulations.

Obtaining Copies

Copies of this notice and the documents referred to are available electronically on the Spectrum Management and Telecommunications Web site at http://www.strategis.gc.ca/spectrum.

Official printed copies of Canada Gazette notices can be obtained from the Canada Gazette Web site at: http://canadagazette.gc.ca/publication-e.html or by calling the sales counter of Canadian Government Publishing at (819) 941-5995 or 1 800 635-7943.

April 28, 2006

__________________
Larry Shaw
Director General
Telecommunications Policy Branch

Footnotes

1. See Section 2.3 of the Policy and Licensing Procedures for the Auction of the 24 and 38 GHz Frequency Bands (DGRB‑003-99/DGTP-005-99) for further information.