Backgrounder Information - Industry Canada's Auction of Spectrum Licences in the 2300 MHz and 3500 MHz Bands

On September 20, 2003 the Minister of Industry announced the release of the paper entitled Policy and Licensing Procedures for the Auction of Spectrum Licences in the 2300 MHz and 3500 MHz Bands. The purpose of this licensing process is to facilitate the growth of Wireless Communication Services (WCS) in the 2300 MHz band and Fixed Wireless Access (FWA) in the 3500 MHz band in both rural and urban areas, and to facilitate the implementation of new and innovative services. The above-noted paper initiates the licensing process for this additional spectrum by calling for completed application forms and financial deposits.

In proceeding with an auction of these bands at this time, Industry Canada (the Department) reflected on the commitments the Government of Canada made in the Speech from the Throne 2001, to work with the private sector to achieve the goal of making broadband access widely available to citizens, businesses, public institutions and to all communities by 2005. With the release of this spectrum, the Department is taking an important step towards fulfilling the Government of Canada's goal. This spectrum provides an opportunity to complement and improve local network distribution facilities for the delivery of a range of telecommunication services.

Selection and Licensing Process

Industry Canada will be assigning spectrum licences for WCS and FWA through an auction process. The auction will be held via the Internet, using the latest software encryption technology to guarantee the authenticity of the bids. At the close of the auction, the high bidder on each licence will be declared the provisional winner of the licence. The document entitled Framework for Spectrum Auctions in Canada(http://strategis.gc.ca/epic/internet/insmt-gst.nsf/vwGeneratedInterE/sf01626e.html) outlines the approach that Industry Canada will take whenever spectrum is assigned by auction.

A Webcast will be made available in the weeks following the publication of the policy, to provide a general overview of the licensing process. Interested parties are invited to visit the Spectrum Auctions page of Industry Canada's Spectrum Management and Telecommunications Web site at http://strategis.gc.ca/spectrumauctions to obtain further information on these sessions.

WCS and FWA Consultation Process

On August 3, 2001, the Department released DGRB-006-01 entitled Consultation on the Auction of Spectrum Licences for Wireless Communication Services in the 2300 MHz Band and Fixed Wireless Access in the 3500 MHz Band - Proposed Policy, Licensing Procedures and Technical Considerations. Comments and reply comments were received by November, 2001.

Spectrum to be Auctioned

There are five spectrum licences available in 172 service areas across the country (with the exception of the 3500 MHz licences on Vancouver Island): one 15+15 MHz licence in the 2300 MHz band; three 25+25 MHz licences and one 25 MHz licence in the 3500 MHz band, as indicated in diagrams.

Figure 1. WCS

Figure 2. FWA

For detailed descriptions of the spectrum blocks see Policy and Licensing Procedures for the Auction of Spectrum Licences in the 2300 MHz and 3500 MHz Bands.

Exceptions

FWA tiers in the 3500 MHz band may be subject to occasional interference due to radiolocation services (radars) operating in the band 3400-3650 MHz in Canada, along the Canada-U.S. border and in Canadian coastal waters. Due to these radiolocation services FWA tiers on Vancouver Island (Tiers 4-153, 4-154 and 4-155) will not be available for licensing through the spectrum auction. In addition, FWA tiers in Halifax, Dartmouth, Vancouver and nearby coastal areas including those communities that are along the Strait of Georgia (Tiers 4-010, 4-151, 4-156 and 4-157), may be susceptible to an increased potential of interference.

For detailed descriptions of the exceptions see Policy and Licensing Procedures for the Auction of Spectrum Licences in the 2300 MHz and 3500 MHz Bands.

Overview of Attributes of 2300 MHz and 3500 MHz Licences

• 5 licences will be auctioned within 172 areas of the country (with the exception of FWA systems on Vancouver Island);
• Ten year licence terms;
• Transferability and divisibility;
• Spectrum aggregation limit - 100 MHz to all participating companies, their Affiliates and Associated Entities
• Implementation requirement - licensee must demonstrate to the Department that the spectrum has been put to use at a level acceptable to the Department, within 5 years of receipt of licence;
• R&D requirement - 2% of adjusted gross revenue with the exception of small businesses with less than $5 million in annual gross operating revenues;
• Open eligibility - successful bidders must be eligible to become radiocommunication carriers; and
• Other standard conditions of licence will apply (e.g. interference management, ownership and control, international and domestic coordination).

Critical Deadlines

To participate in the auction, a potential bidder must submit completed application forms along with a financial deposit to the Department by November 17, 2003. The auction is expected to begin in January, 2004. Information regarding the auction schedule is available on Industry Canada's Spectrum Management and Telecommunications Web site at http://strategis.gc.ca/spectrum.

Copies of the document entitled Policy and Licensing Procedures for the Auction of Spectrum Licences in the 2300 MHz and 3500 MHz Bands, the associated Canada Gazette notice (DGRB-003-03) and other reference documents are also available on the above mentioned Web site.