By Konrad von Finckenstein and Philip Palmer
THE 2017 BUDGET CALLED FOR A REVIEW of the Telecommunications and Broadcasting Acts. The review is both timely and necessary, but it ignores that there is a third pillar of Canadian communications law: the Radiocommunication Act.
The late 1980s and early 1990s proved a fertile time in the history of Canadian communications law. In the years from 1989 to 1993, Parliament adopted a new Radiocommunication Act (1989), a new Broadcasting Act (1991), and a Telecommunications Act (1993).
Both the Telecommunications and Broadcasting acts emerged from policy considerations of the late 1980s. The Broadcasting Act attempted to address the heated debate surrounding the cultural impacts of the Canada-US Free Trade Agreement. The Telecommunications Act was likewise spurred by the desire to ensure that the regulation of basic communications would not be subject to free trade principles, and that telecommunications carriers remain under Canadian ownership.
The Internet is now at the heart of Canadian communications. The primary issues broadcasting policymakers must address are the financing of distinctively Canadian programming, and making that programming discoverable to Canadian and foreign audiences. Canadian telecommunications policy must find ways to ensure that Canadian telecommunications carriers provide the necessary bandwidth to permit all Canadians to have affordable and equal access to high-speed Internet services.
The Radiocommunication Act is focused on governing devices that can only be used with a licence (transmitting and receiving devices for broadcasting, local non-cellular mobile communications, microwave networks, ship and aeronautical radios and a wide variety of commercial and public uses). In this sense, the Act created a strong framework for the governance of radio devices. It covers matter such as radio interference, conditions of licence, renewals, and device-specific licence fees. However, the Act, while permitting exemption for classes of devices by way of regulation, could go further to provide flexibility to more easily exempt from licensing intelligent devices that pose no risk of harmful interference.
Principally, however, the Radiocommunication Act does not adequately address spectrum management, spectrum planning and the powers of the government respecting their governance. While a number of cursory amendments were made to the Act to permit the auctioning of spectrum (as opposed to devices), those amendments were minimal. The Act does not actually provide a regulatory framework for spectrum licences. For instance, ISED, as a matter of policy, treats spectrum licences as if they were governed by the Radio Regulations- which do not in fact apply to spectrum. This is a serious limitation.
“The major failings of the Radiocommunication Act can be attributed to the fact that, as enacted, it did not provide an adequate framework for spectrum management.”
The Radiocommunication Act governs a wireless industry that has grown to $50 billion a year, and approximately 30 million handsets are in use in Canada – in a population of 36 million. The major failings of the Radiocommunication Act can be attributed to the fact that, as enacted, it did not provide an adequate framework for spectrum management, and the Act has had to be stretched and, in part, interpretations invented to accommodate spectrum management within a radio device management regime.
A forward looking legislative response is essential to the long term stability and effectiveness of spectrum management in Canada. Radio usage has become a key to the ability of Canadians to reach the Internet and use data. Accordingly, it is only logical to create a coherent framework for the use of both licensed and unlicensed (e.g. Wi-Fi) spectrum.
The current Act permits the Minister to take into account the objectives of the telecommunications policy set out in s. 7 of the Telecommunications Act. This is not enough. The Radiocommunication Act must be subject to telecommunications policy: it is impossible to think of a situation respecting radiocommunication that should not be governed by the telecommunications policy.
The current Act discourages the free play of market forces. For example, the Minister must individually approve all changes in licence ownership. A forward-looking and market-oriented Act would include such features as:
1. Permitting the automatic effectiveness of the sale or transfer of spectrum;
2. Permitting the subdivision of spectrum by apportionment of frequency bands, or by geography or by time;
3. Acknowledging the mortgaging and foreclosure of spectrum assets;
4. Forbearing from regulating spectrum where, for instance, there is sufficient competition; and,
5. Delicensing where the application of intelligent technologies minimize the risk of harmful interference.
With these measures in places, secondary markets in spectrum can be created and managed within the confines of ordinary legal and commercial processes. The current discretion that remains in the hands of the Minister – even if largely unexercised – adds time, cost and uncertainty to what are otherwise purely market transactions.
The creation of effective secondary markets will require the establishment of a registry of spectrum interests – and this too should be embedded in a revised Act, as should private rights of action to both enforce those rights and seek redress for harmful interference by third parties.
“The present Act is also deficient in governing the behaviour of wireless carriers.”
The present Act is also deficient in governing the behaviour of wireless carriers. Matters such as tower sharing, access to poles and rights of way, spectrum hoarding, and anti-competitive behaviour are not addressed in the Radiocommunication Act – yet these subjects are key to effective competition in telecommunications services.
The Telecommunications Policy Review of 2005 identified the need for a proper legislative framework for spectrum management. Thirteen years later, Canada has failed to act on those recommendations.
ISED and its predecessor departments have for many years adopted market friendly policies. A legislative framework putting those policies into practice has never been enacted. The current review of the Telecommunications Act presents the perfect opportunity to plant the roots for a true market oriented approach to spectrum management and spectrum markets.
It is not imperative that the Radiocommunication Act governs spectrum management. Spectrum management is concerned with the issuance of licences to carriers, the governance of their behaviour, and the restraint of their abuse of market power. These issues are largely severable from issues of compliance with frequency allocations, harmful interference, radio operator training and the like that forms the core provisions of the Radiocommunication Act.
There continues to be a need for a Radiocommunication Act for matters such as the oversight of everyday radio-based communication and the continued oversight of the use of radio devices, their technical compliance with standards, and the monitoring of compliance with the conditions of operation of radio transmitting and receiving apparatus.
Spectrum management is the process of determining the use to which particular frequencies or frequency bands are put, the quantity of spectrum allocated for particular uses, the process for determining how the use of the spectrum will be allocated, the conditions of spectrum licences, their duration, and the behaviour of the carriers holding those licences toward both customers and competitors. Those processes are conceptually and practically severable from the Radiocommunication Act, and would logically comprise the subject of spectrum management legislation. Legislation dealing specifically with spectrum management could either be stand-alone legislation or be incorporated into a revised Telecommunications Act.
There remains an elephant in the room: does the administration of a revised Radiocommunication Act remain with the Minister of ISED, or should it be administered by the CRTC?
The Telecommunications Policy Review Panel did not comment on many of the traditional Radio Act provisions, and who would administer them. It recommended that the responsibility for the management and regulation of spectrum be administered by the CRTC while responsibility for spectrum policy should remain with what was then Industry Canada. We believe this to be a reasonable approach.
The economic significance of spectrum as a driver of economic growth, the economic power of the spectrum licensees, and the close nexus between wireline telecommunications carriage and radio based carriage dictates that the regulation of spectrum properly belongs with the telecommunications regulator. Additionally, the ability to levy substantial administrative and monetary penalties (AMPs) for breaches of spectrum licenses or regulations demands a transparent and procedurally sound foundation and be subject to quasi-judicial processes. ISED is ill equipped to meet those standards.
An appropriate division of labour between the CRTC and ISED would suggest the following:
1. The Radiocommunication Act should continue to administered by ISED;
2. The Act should permit delicensing where intelligent devices obviate the concerns, such as harmful interference, that formerly necessitated device regulation;
3. The spectrum management and auctioning provisions should be stripped out of the Radiocommunication Act;
4. Spectrum management legislation should be introduced that deals with long-term spectrum planning and with the management and regulation of spectrum, including forbearance from regulation;
5. Spectrum planning and the determination of which frequencies and what quantity of spectrum is available for spectrum licensing should remain a function of the Minister of ISED in consultation with the CRTC;
6. The allocation of spectrum to particular carriers should be conducted by the CRTC through an auction process (with proceeds going into the Consolidated Revenue Fund); and,
7. The CRTC should be responsible for setting the duration and conditions of licence, making regulations to permit the creation of secure secondary markets, and ensuring that spectrum licence holders abide by the regulations and adhere to the conditions of their licences.
To carry out a mandate on spectrum management the CRTC would also need to have authority to impose AMPs. The current opacity of the CRTC’s AMP imposition regime must be improved through increased transparency. All notices of violation should be published in full. All decisions to impose or decline to impose an AMP must provide written reasons, and those reasons must be published to inform and educate the public. The communications policy challenges facing Canada are enormous and their correct resolution is critical to the ability of Canadians to contribute to and benefit from the knowledge economy.
“The current opacity of the CRTC’s AMP imposition regime must be improved through increased transparency.”
It is likewise critical that all legislation that is necessary to ensure open and affordable access to the Internet must be examined together in order to ensure that each act contributes effectively to the attainment of the broader policy goals of the Canadian government.
The Radiocommunication Act is a necessary pillar of Canadian communications law, and to neglect it in the context of the current review imperils the attainment of Canada’s communications policies.
Only by ensuring that the legislation governing spectrum management is harmonious with the legislation governing telecommunications carriage can Canadians fully benefit from the riches offered by the Internet.
Konrad von Finckenstein is a former chairperson of the CRTC. Philip Palmer is a former director, legal services to the Department of Communications.