Notice No. DGRB-009-99

Industry Canada

Department of Industry Act, S.C. 1995, c.1

Notice No. DGRB-009-99 — Radio Authorization Fees for Mobile Satellite Services Using Radio Spectrum Above 1 GHz –

Introduction

An emerging class of global mobile satellite service (MSS) radiocommunication networks provide Canadians with a variety of voice, data, fax and messaging services throughout Canada that complement terrestrial-based cellular and personal communication services. These mobile satellite networks use radio frequency bands above 1 GHz and normally use 2 to 30 MHz of radio frequency spectrum for communications between subscriber earth stations and the space stations. MSS networks must operate in a manner that permits the mutual operation of competing services when MSS networks share the use of assigned spectrum.

On June 13,1998, Industry Canada issued Gazette Notice DGRB-001-98 - Spectrum Licence Fees for Mobile Satellite Services Using Radio Spectrum Above 1 GHz. The notice announced that the Minister will grant spectrum licences to authorize the use of radio spectrum for this class of mobile satellite service provided by earth and space stations. The spectrum licence also permits the service provider to operate an unlimited number of subscriber earth stations.

This approach eliminates the administrative burden of issuing individual licences to each subscriber. It also seeks to treat equitably service providers who now use domestic satellites and pay radio licence fees for the space station, user terminal and gateway stations with service providers who use foreign satellites and pay only radio licence fees for user terminals and gateway stations.

Industry Canada invited comments on a proposed annual authorization fee of $18,000 per 500 kHz, or portion thereof, of assigned radio spectrum for the use of MSS radio frequency bands above 1 GHz to provide mobile satellite services in Canada. The proposed authorization fee and regime took into consideration the need to fix fees for foreign mobile satellite systems that operate in Canada, reduce fees when assigned spectrum is shared, prorate the annual fees and recover a fair return for the use of the assigned spectrum.

In response to the Notice, nine submissions were received from interested parties such as Canadian service providers, telecommunications associations, international satellite operators and consultants. All of the respondents support Industry Canada’s broad policy objectives of fostering sustainable competition and innovative services by facilitating the timely and orderly implementation of MSS networks in Canada. Most respondents also favoured charging fees in accordance with the economic value of the assigned spectrum.

A few respondents favoured maintaining the current fee of $41 per terminal. However, many of the respondents agreed with the proposed fee structure, provided the fees could be reduced so they do not impact negatively on MSS customers, and would be comparable or lower than those charged by other administrations such as the United States or Australia. Others suggested ways of treating more equitably existing MSS operators and those who use spectrum assigned to the fixed satellite service (FSS), or those with plans to enter the Canadian market. Some respondents also suggested clarification of certain terminology and a mechanism to have fees adjusted during the transition from a radio licence to a spectrum licence regime.

Industry Canada notes that Canadian service providers find themselves in an environment that is characterized by a small, fully liberalized Canadian MSS market with a growing number of MSS players. Furthermore, these MSS services are complementary to, rather than competitive with, well developed cellular and personal communication services. Finally, the MSS subscriber base has been very slow to develop despite optimistic marketing projections. Given such an environment, the originally proposed fee, which may be more suited for a mature industry, is not appropriate at the moment.

In view of the comments received and the general support for this initiative, and given the environment that MSS service providers now face, the department will establish a fee framework for the mobile satellite service above 1 GHz by: 

1. fixing the annual fee at $540 per 100 kHz of assigned spectrum;
   
   
2. fixing prorated fees for new licences at 1/12 the annual fee for each month remaining until April 1;
   
   
3. reducing the applicable fee where spectrum is shared by mobile satellite network operators or mobile satellite service providers;
   
   
4. implementing the spectrum licence fee regime over two fiscal years; and
   
   
5. including MSS service providers that use fixed satellite service (FSS) spectrum under this regime on an interim basis while the Department considers a spectrum licensing regime for the fixed satellite service.

Complete details of the fees fixed for the mobile satellite services using radio spectrum above 1 GHz are set out in the following fee schedule.

Fee Schedule

The Minister of Industry, pursuant to section 19 of the Department of Industry Act, hereby fixes the following fees, effective the date of publication of this notice in the Canada Gazette. The fees are applicable to radio authorizations issued by the Minister pursuant to paragraph 5(1)(a) of the Radiocommunication Act to establish mobile satellite services using radio spectrum above 1 GHz in accordance with the terms of the authorization.

Interpretation

1. For the purpose of this fee schedule,

“assigned spectrum”

means the specific portion of a radio frequency band or bands above 1 GHz that a mobile satellite service provider or a mobile satellite network operator is authorized to use in Canada;

"mobile satellite service” (MSS)

means a radiocommunication service that uses the radio frequency bands above 1 GHz for communications between mobile earth stations and one or more space stations;

“mobile satellite network operator”

means the person responsible for the operation of the space and ground segments of a mobile satellite network that provides a mobile satellite service in Canada;

“mobile satellite service provider”

means any person authorized by a mobile satellite network operator to provide mobile satellite services in Canada in accordance with a radio authorization issued by the Minister;

“new fee”

means the applicable annual, prorated or renewal fee fixed under sections 2 to 5 or section 6;

“old fee”

means, pursuant to the Radiocommunication Regulations, the applicable radio licence fees, paid by the holder of radio licences as of April 1, 1999, for the operation of mobile earth stations and for those frequencies at a space station that are authorized for communications with mobile earth stations.

"renewal fee"

means the annual fee payable for the renewal of a radio authorization before the radio authorization expires on March 31 of each year.

Annual Radio Authorization Fee

Annual Fee

2. The annual radio authorization fee is $540 per 100 kHz, or portion thereof, for assigned spectrum to provide mobile satellite services in Canada. Prorated Fees

Prorated Fees

3. The month that the Minister issues the annual radio authorization determines the applicable prorated fee.

4. The prorated fee is $45 per 100 kHz, or portion thereof, for assigned spectrum that provides mobile satellite services in Canada for each month until the licence expires on March 31.

Renewal Fee

5. The renewal fee is the applicable annual radio authorization fee.

Fee Reduction for Sharing Assigned Spectrum

6. The reduced annual, prorated or renewal fee is

(a) 1/3 of the applicable fee set out in sections 2 to 5, where a mobile satellite network operator is required to share assigned spectrum in Canada with another mobile satellite network operator;

(b) 1/3 of the applicable fee set out in sections 2 to 5, where a mobile satellite service provider is required to share assigned spectrum in Canada with another mobile satellite service provider of the same mobile satellite network operator; or

(c) 1/9 of the applicable fee set out in sections 2 to 5, where both of the conditions set out in paragraphs (a) and (b) apply.

Fee Adjustments for Phased Implementation

7. The applicable annual, prorated or renewal fee set out in sections 2 to 5 or the reduced annual, prorated or renewal fee set out section 6 is adjusted so that the aggregate of the fee is

(a) A + 0.2(B-A) during the fiscal year 1999/2000; and

(b) A + 0.5(B-A) during the fiscal year 2000/2001;

where A is the old fee, if any, and B is the new fee.

General Notes

1. Under the Radiocommunication Regulations, as of April 1, 1999, the annual fee for a mobile station that communicates with a space station is $41 and the annual fee for a space station that communicates with a mobile station is $473 for each assigned transmit or receive frequency.
   
   
2. The aggregate fee is rounded to the nearest dollar.
   
   
3. This fee order applies to radio authorizations for the use of radio spectrum above 1 GHz that is allocated in Canada to the mobile satellite service for the purpose of providing mobile satellite services in Canada. Notwithstanding this, on an interim basis until such time as a separate fee order is established that is applicable to the fixed satellite service (FSS), this fee order also applies to radio authorizations for the use of spectrum above 1 GHz that is allocated to the fixed satellite service for the provision of mobile satellite services in Canada.
   
   
4. The fees fixed in this order do not apply in respect of frequencies assigned for telemetry, telecommand, control and feeder link operations.
   
   
5. This is an interim fee regime for mobile satellite services using radio spectrum above 1 GHz that may be adjusted as circumstances so warrant.

John Manley
Minister of Industry

July 16, 1999