Telecoms generally against ISED proposal for restricted areas around airports
By Amanda OYE
OTTAWA – Comments submitted to Innovation, Science and Economic Development Canada’s (ISED) Consultation on a Policy and Licensing Framework for Spectrum in the 3800 MHz Band, show Canada’s telecoms are divided on which, if any, pro-competitive measures should be adopted for the 3800 MHz spectrum auction, expected to be held in 2023.
ISED proposed three options for competitive measures for the 3800 MHz auction – a 50 MHz set-aside, a 100 MHz cross-band cap (this would apply across the 3500 MHz and 3800 MHz bands), or both.
The set-aside option means a portion of the spectrum being auctioned would be unavailable to the national mobile service providers (NMSPs), defined as those “with 10% or more of the national wireless subscriber market share,” ISED’s consultation document says.
Telus, which “vehemently opposes the use of set-asides,” was on board with ISED’s second option – the 100 MHz cross-band cap – although recommends it be increased to 110 MHz, according to the comments it submitted to the consultation.
The company’s position is based on what it says is “a disparity in NMSPs holdings that drives the need for a cross-band cap to facilitate post auction competition and support investment.”
Telus argues if the same rules are applied in the 3800 MHz auction as in the 3500 MHz auction (which had set-aside spectrum but no cap), it “would undoubtedly once again face severe bidding pressure from the other NMSPs, who are incented to preserve their strategic advantage in this crucial 5G mid-band spectrum asset for which no substitute exists, either today or for the foreseeable future.”
“Canadian spectrum auctions, which have maximized proceeds, lead to higher costs to build networks and adversely affect wireless service prices thus conflicting with the Department’s goal to facilitate lower wireless prices” – Bell
According to Telus, the ultimate outcome of the auction without a spectrum cap would be “an unbalanced distribution of 5G mid-band spectrum while the auction would once again reach world record spectrum prices.”
Rogers, however, argues against the spectrum cap Telus wants, calling ISED’s proposal “wildly anti-competitive for facilities-based competition,” and indicating it believes the 100 MHz cross-band cap “should not be adopted under any circumstances, as it could destroy facilities-based competition between the two national networks.”
This argument is based on the existence of what Rogers calls in its comments “Belus” (Bell and Telus). Rogers says ISED must recognize the two telecoms “will pool any spectrum won in the 3800 MHz auction (together with their existing 3500 MHz spectrum holdings) into their joint radio access network.”
Because of this, Rogers says Bell and Telus would have an advantage if all three of the companies were to individually be capped at the same amount of spectrum.
“There is no justification why the Bell-Telus joint network (which combined only has about half again as many customers as Rogers) should effectively be gifted with the opportunity to assemble and benefit from 200 MHz of mid-band spectrum while the Rogers and other networks are limited to 100 MHz,” Rogers comments say.
Bell, for its part, is against all three of ISED’s proposed options and argues instead for a market-based approach.
The company says pro-competitive measures in Canada’s spectrum auctions have “proven that they distort the auction process to the significant benefit of set-aside spectrum recipients and the detriment of Canadian taxpayers.” Bell goes on to say pro-competitive measures should be discontinued because they have “resulted in Canada having the highest spectrum cost in the world.”
“History proves that pro-competitive measures within the auction are needed if the objective is to support regional carriers or a fourth national carrier – all to the benefit of the industry and consumers” – SaskTel
The company argues “Canadian spectrum auctions, which have maximized proceeds, lead to higher costs to build networks and adversely affect wireless service prices thus conflicting with the Department’s goal to facilitate lower wireless prices.”
Several telecoms that submitted comments to the consultation, including Cogeco, Eastlink, Iristel, Quebecor and SaskTel were supportive of ISED’s third option, which incorporates both set-aside spectrum and a spectrum cap, although some proposed modified versions of it.
Iristel for example, recommends the measures be applied differently in urban and rural areas, and Quebecor, which submitted its comments in French, recommends 100 MHz of set-aside rather than 50 MHz as in ISED’s proposal, along with the 100 MHz cross-band cap.
Arguments made for the combination of set-aside spectrum and a spectrum cap centre around their preventing the NMSPs from dominating the auction while smaller providers are shut out.
Sasktel, which recommends spectrum set-aside of 50 MHz and a spectrum cap of 50 MHz argues in its comments submitted to the consultation: “History proves that pro-competitive measures within the auction are needed if the objective is to support regional carriers or a fourth national carrier – all to the benefit of the industry and consumers.”
Restriction zones
Another proposal from ISED’s consultation document that received strong reactions involves extending the department’s decision to put restrictions in place for the 3500 MHz band to the 3800 MHz band. As Cartt.ca previously reported, restrictions are in place for the areas surrounding 26 major airports due to concerns about interference with radio altimeters.
SaskTel suggests a delay in holding the auction might be appropriate if a decision is not made on the issue, arguing “it is completely inappropriate to auction the proposed 3800 MHz band before the altimeter issue is resolved.” SaskTel says this is because the true value of the spectrum to be auctioned will be unknown until the issue is resolved.
Bell, which opposed the measures put in place for the 3500 MHz spectrum, unsurprisingly outright opposed their extension to the 3800 MHz band.
“These measures are unnecessary and make Canada an outlier globally with respect to 5G deployments,” Bell’s comments read.
The company says “5G deployments in 3400-3800 MHz in Europe and 3700-4100 MHz in Japan have been operation for a number of years without any reports of interference with radio altimeters.”
Bell further says there have been developments since ISED issued its decision on the 3500 MHz band, including several regulators allowing “5G to operate across the 3400-3800 MHz band.” These regulators have made public statements indicating “no interference has been observed from 5G signals to radio altimeters.”
Bell goes so far as to call on ISED to remove the measures already in place restricting the 3500 MHz spectrum band arguing the available evidence suggests there is no reason for them to continue.
Rogers’ comments to the consultation indicate it agrees with Bell that the approach currently being used by ISED does not seem to be supported by evidence on the public record or by work taking place in other jurisdictions.
When ISED made the decision restricting the 3500 MHz spectrum band it said it anticipates more evidence to become available into 2022 and notes should it “determine, based on a review of these developments and on ISED’s continuing work, that further changes could be proposed to the technical rules… it will launch a future consultation with stakeholders including the RABC (Radio Advisory Board of Canada).”
An ISED spokesperson told Cartt.ca via email the department still studying the issue, “including with the telecommunications and aviation industries via a working group under the Radio Advisory Board of Canada. As new information and studies become available and as new radio altimeter standards are developed internationally, these measures may be modified.”
