OTTAWA – Telus is telling Industry Canada that it stands to lose as much as $200 million in an auction of the 2500 MHz bandwidth if the current spectrum swap proposal remains unchanged.
The company’s comments come as verbal sparring over the specific rules for transitioning wireless broadband spectrum in the band continued this month with interested parties arguing over transition deadlines and the amount of spectrum to be given back to Industry Canada for auction.
Telus says that adopting the department’s plan would result in incumbents retaining 21% more spectrum than they currently have. This “would be both unfair and in direct conflict with the department’s clearly stated policy that precisely half the paired spectrum in this band was to be clawed back and auctioned off to support further entry into the band.”
Maintaining this policy could result in the loss of as much as $200 million because less bandwidth would be available in the auction, says Telus. The company bases its prediction on the recent auction of the same band in Germany.
The department is conducting a multi-stage consultation (DGSO-001-10) to clarify the rules around the band and transition licences to more flexible broadband radio service (BRS) licences. The government needs to complete the process so it can auction the unassigned and returned 2500 MHz bandwidth, expected sometime in the near future.
The amount of spectrum that should be repatriated by Industry Canada and included in the auction is a major point of contention. Ottawa has proposed to boost the amount of spectrum incumbents can retain from 33 MHz to 40 MHz. Telus suggests the department decrease the amount to 30 MHz.
Inukshuk Internet Inc. (and its owners Bell Canada and Rogers Communications Inc.) says that it shouldn’t be required to return any spectrum to the department. The company says its self-serving for Telus to argue for a greater spectrum claw back.
“Telus ignores the fact that it has passed on every opportunity that it had to acquire spectrum in the band, and that incumbents such as Inukshuk have made substantial investments and taken significant risks to develop the band, despite ongoing uncertainty surrounding the band,” Inukshuk tells Industry Canada in reply comments.
The incumbent 2500 MHz licence holder has proposed its own spectrum swap plan that it says would be make more spectrum available in an auction and would be better for the industry. “It would also recognize the substantial investments made by incumbent licensees and would reflect the importance of licensing adequate paired spectrum blocks with which to satisfy the surging demand for mobile broadband services,” says Inukshuk.
Others say that it would only be fair to potential new entrants to give them an opportunity to purchase as much spectrum as possible. In addition to Telus, Bragg Communications Inc. (EastLink), Quebecor Media Inc. and MTS Allstream are among the companies that want Industry Canada to repatriate more spectrum from the incumbents.
The department should strive to develop a policy that is fair to both incumbents and new entrants alike, according to EastLink (which is expected to launch wireless service in Nova Scotia and PEI in 2011).
“This will ensure that, to the extent incumbents operate on existing technologies, their customers will continue to benefit and new entrants will be afforded opportunities to bring new technologies to the market, enhancing competition. Without fair spectrum allocation there is less motivation to bring new technologies and products to the market,” the company tells Industry Canada.
Firm deadlines for transition, or not?
Inukshuk opposes any firm transition deadline. The company tells Industry Canada it should continue with the conventional practice of allowing migration when and where needed. It notes that it would go against previous policy to force existing users to vacate portions of a band prior to an auction.
“Simply put, it would be unreasonable to require incumbents to incur the cost, financial or otherwise, of migrating their systems before the spectrum has been licensed to another operator and absent the department’s approval of a bona fide displacement request,” Inukshuk says in reply comments filed last week.
Quebecor wants Industry Canada to set a firm transition deadline of 12 months prior to the auction of this spectrum. EastLink agrees that a firm transition deadline is the way to go and is fair to all parties. This, the company says, will give new licensees the opportunity to the use spectrum immediately and give incumbent licence holders the certainty needed to develop transition plans.
“Wireless operators should have the ability to use the spectrum that they have paid a large amount of money for, and the spectrum should be free from interference,” says EastLink, adding that “the department must set a hard deadline for the transition period and that deadline should be the date of the auction.”
