OTTAWA – Innovation, Science and Economic Development Canada (ISED) announced today its decision on the rules for the upcoming 3800 MHz spectrum auction.
“These rules ensure that it will be possible to support higher quality and more affordable wireless services,” according to a press release.
Spectrum in this band is important for the deployment of 5G.
“Today’s announcement of the new rules for the 3800 MHz spectrum auction is an important step in our ongoing efforts to ensure Canadians have access to affordable and high-quality services from coast to coast to coast,” said François-Philippe Champagne, minister of Innovation, Science and Industry, in the press release.
“Making more spectrum available will equate to lower wireless prices for Canadians as competition ramps up,” added Gudie Hutchings, minister of Rural Economic Development. “Today’s announcement includes the strongest spectrum deployment requirements to date, ensuring providers will act quickly to provide higher quality services from Prince Rupert to Yellowknife and all the way to Fogo Island.”
Included in the auction rules, which ISED launched a consultation into last December, are pro-competitive measures designed to help foster competition in Canada’s wireless market as well as support competitive pricing.
ISED indicates in the document outlining the auction rules released today that without pro-competitive measures, national mobile service providers (NMSPs) will be able to acquire all the available spectrum, which will hinder competition from regional mobile service providers (RMSPs) and wireless Internet service providers (WISPs).
RMSPs and WISPs, however, “should have the opportunity to acquire sufficient mid-band spectrum to deploy 5G services,” the document says.
ISED previously proposed three possibilities for pro-competitive measures. This included 50 MHz of set-aside spectrum, a 100 MHz cross-band cap, or both.
The department ultimately decided to implement a 100 MHz cap across the 3500 MHz and 3800 MHz bands, without set-aside spectrum. (This means that while the NMSPs can only acquire so much spectrum, there is no spectrum specifically allocated for only RMSPs and WISPs to bid on, which could impact the price at which the spectrum licences can be acquired.)
While the 3500 MHz spectrum auction last year included 50 MHz of spectrum set aside for eligible bidders, ISED decided having spectrum set-aside for the 3800 MHz auction on its own would not be an effective way to achieve its policy goals.
The document explains ISED views set-aside spectrum for this band as being unnecessary “for RMSPs and WISPs to acquire sufficient mid-band spectrum to compete with NMSPs given the 450 MHz of total spectrum available across the 3500 MHz and 3800 MHz bands.”
A cross-band cap, however, was determined to provide a balanced approach by limiting the NMSPs to a maximum of 300 MHz (combined) of 3500 and 3800 MHz spectrum, while thereby reserving a minimum of 150 MHz of spectrum for RMSPs and WISPs.
In a statement emailed to Cartt.ca, Iristel CEO Samer Bishay said “it’s unfortunate there are no set asides this time around and a distinguished status between a billion dollar regional player and truly a mid size regional player.
“Not great for us but effectively we’ll be in the same situation as before. Unless we pony up serious cash we get nothing,” he said, adding it will lead to more of the same in Canada “with no true competition other than the usual suspects.”
Cartt.ca reached out to several other service providers for their comments on the new rules, but most indicated they are still reviewing them and therefore will not comment at this point in time.
While Rogers was among those that declined to comment, we imagine the company is not particularly happy with new rules since the spectrum cap will allow Bell and Telus to each acquire 100 MHz of spectrum across bands, which Rogers previously suggested would not be appropriate due to their spectrum sharing agreement.
In a submission to ISED’s consultation on the spectrum auction, Rogers called the spectrum cap proposal “wildly anti-competitive for facilities-based competition,” arguing the department must recognize Bell and Telus would pool any spectrum they win in the 3800 MHz auction.
“There is no justification why the Bell-Telus joint network… should effectively be gifted with the opportunity to assemble and benefit from 200 MHz of mid-band spectrum while Rogers and other networks are limited to 100 MHz,” the company’s submission reads.
Beyond pro-competitive measures, ISED made several other determinations regarding the 3800 MHz auction, including that all 3800 MHz licences issued through the auction will be based on Tier 4 service areas, which is in line with what ISED initially proposed.
ISED also determined that the licences would be issued for a 20-year term, at the end of which “the licensee will have a high expectation that a new licence will be issued for a subsequent term through a renewal process unless a breach of licence condition has occurred, a fundamental reallocation of spectrum to a new service is required, or an overriding policy need arises,” the document published today explains.
The document further outlines specific conditions under which licences may be transferred, including specifying that the cross-band spectrum cap is to be “applicable to a licensee’s total 3500 MHz and 3800 MHz spectrum holdings immediately following the issuance of 3800 MHz licences and extends for a period of five years.”
For the full rules and auction format, please click here.
