Frequently Asked Questions

Publication Date: February 2002

1. What is the Department proposing to do to address disparities between the various licensing processes for cellular and PCS?
2. Why is the Department proceeding with this initiative?
3. What are the advantages of proceeding with the initiative?
4. How are the new fees calculated?
5. Were the PCS Auction results used to calculate this fee per MHz?
6. Why did the Department use 1996 population data to determine fees?

(1) What is the Department proposing to do to address disparities between the various licensing processes for cellular and PCS?

With the Consultation underway, the Department's goal is to replace the current differing licensing regimes and fee structures and create a situation whereby licences awarded through different processes will be treated under a common set of principles and policies.

(2) Why is the Department proceeding with this initiative?

The Department is seeking to redress a number of long standing disparities in the current regulatory structure. The disparities relate to both the licensing and application processes as well as the fee structures.

Currently, differing licensing regimes apply to cellular licences, PCS licences authorized through a comparative review process and the PCS licences authorized by auction. With respect to fees, three different regimes apply as well. The proposal the Department is putting forward in this consultation, seeks to redress the disparities by harmonizing the licensing and fee structures. The proposal also seeks to accord to the licensees affected, privileges that are very similar to those that apply to the auctioned PCS licenses. Finally, it is the goal of the Department to have in place a fee regime that will continue to earn a fair return for the Canadian public for the use of a publicly-owned and controlled resource -- the radiofrequency spectrum.

(3) What are the advantages of proceeding with the initiative?

Specifically, service providers who use very similar spectrum and offer similar services will: 

(a) be subject to the same simplified licensing regime;
(b) pay the same rate, corresponding to the amount of spectrum assigned and the total population included in the service area, once the phase in period is complete;
(c) benefit from the same privileges as those of the auctioned PCS licensees;
(d) benefit from the advantages of long term licences; and
(e) see reductions in administrative costs associated currently with site-by-site licensing.

In addition, efficient spectrum use will be encouraged in that the deployment of additional sites will not be compromised by fees. Also, fees will not be part of the equation when it comes to deployment in areas of marginal economic viability thus helping to promote the deployment of services in currently unserved or underserved areas.

(4) How are the new fees calculated?

To determine fees corresponding to the amount of spectrum assigned and the total population included in the service area, the Department chose to use the 1996 census data (Footnote 1) where the population of Canada was 28,846,761. A formula was then developed that distributes fees based on the amount of spectrum bandwidth and the population of the geographic area licensed to each licensee. The application of the formula results in a licence fee of $0.052 per 1 MHz of assigned spectrum per person in a defined geographic area.

(5) Were the PCS Auction results used to calculate this fee per MHz?

The PCS auction results were not considered in calculating this fee. The fee is based on a rate corresponding to the amount of spectrum assigned and the total population served, using the service area of existing national wireless carriers as a model.

(6) Why did the Department use 1996 population data to determine fees?

At the time of the preparation of this consultation the 2001 population figures for all areas were not available. Furthermore, the Department feels it is not necessary to adjust the population value for the duration of the implementation period since the relative impact of population changes would result in only a marginal impact on the distribution of the total fee.

Footnotes:

(1) The Department feels it should not be necessary to adjust the population value for the duration of the implementation period as that value is used only to distribute the $1.5M. The relative impact of population changes should result in only a marginal impact on the total fee.