Gov’t proposal to withhold spectrum for rule breakers raises industry’s ire

The wireless industry is cautioning Industry Canada to avoid tough enforcement measures when it comes to ensuring that companies comply with the conditions of their spectrum licences. In particular, licensees are objecting to the introduction of what they describe as a powerful new enforcement tool – one that would prohibit non-compliant carriers from participating in a spectrum auction. Earlier this year, the department issued a call for comments on the idea (RoW, March 5/01). The Canadian Wireless Telecommunications Association (CWTA) says the government should use the sanctions it already has in place instead of introducing new ones. "Revocation or suspension of licence and prosecution under the Radiocommunication Act are both extreme measures, which the Department has been properly reluctant to deploy in the past, except in the face of flagrant and serious non-compliance," David Farnes CWTA’s VP industry and regulatory affairs writes in a May 18 intervention to Industry Canada. "However, the consequences for a wireless telecommunications company of being foreclosed from even bidding for spectrum at auction are also extremely serious." The CWTA also suggests that some licence conditions are more important than others, and that, in essence, the punishment for non-compliance should be commensurate with the infraction. Any sanctions, it notes, should be "proportional to the degree to which a licensee is non-compliant." In its call for comments, Industry Canada is specifically reviewing what are referred to as Category 3 conditions. They include public interest conditions, including lawful interception capabilities, research and development investment, implementation of service and network deployment. Enforcing Category 1 (i.e. technical requirements) and Category 2 (i.e. foreign ownership limits) aren’t a concern for the government. The department acknowledges however that keeping tabs on the third group of conditions has been a problem. But as the CWTA points out, Category 3 conditions are often tied to the ups and downs of the market and the government should allow for some flexibility in this area. For example, the association points out that building out a national network is subject to many variables, including the availability of equipment, access to antenna sites, access to affordable financing, and the ability of the market in each location to support the number of licensees required to offer service in that location. Microcell Telecommunications Inc also worries that taking away a company’s ability to bid for more spectrum is too severe a punishment. "In Microcell’s submission, the Category 3 public interest licence conditions are the least appropriate grounds on which to base a decision to bar a licensee from applying to participate in an auction," Microcell’s director of regulatory affairs Dennis Béland writes in a May 18 submission. Microcell was one of seven groups to respond to Industry Canada’s call for comments. While the majority of intervenors supported the department’s efforts to deal with the non-compliance issue, they questioned the fairness and effectiveness of withholding spectrum. According to Rogers Wireless Inc, the key to effective regulation and continued growth of the industry is flexibility on the part of government. "It’s critical that licensees be afforded the flexibility to address market changes, especially when they lead to results that go beyond requirements of the original licence commitments," writes Dawn Hunt, VP regulatory affairs at the wireless telco. "The department should take a purposive approach to compliance rather than an assessment of technical compliance." The CWTA says if a company hasn’t lived up to its licence conditions then the department should adopt a four-pronged approach. The company should be given timely notice of the situation. If an allegation of non-compliance is made by a third party, the alleged company should receive a full disclosure of the allegation. Information that is confidential should remain that way and the company should be afforded an adequate amount of time to respond to the case and get it resolved before the competitive process. Compliance should not be extended to affiliated companiesIndustry Canada is also asking if the sanctions on one company should apply to its affiliated companies. For example, should Bell Canada be prevented from bidding in a spectrum auction if one of its affiliates in the Maritimes is found to be non-compliant? Not surprisingly, considering the level of consolidation in the Canadian telecom market, most intervenors say the proposed sanction shouldn’t be extended. Their rationale? Affiliated companies are traditionally controlled by their management team and operate their networks. Telesat Canada’s VP corporate development, Paul Bush, writes that "rather than a blanket requirement on all licences, the company would suggest that the department extend this requirement on a case by case basis to cover only those licensees and their affiliates where a concern has been identified with that affiliated group of companies and/or a record of non-compliance where category 3 conditions exists." Bell Mobility’s Don Woodford agrees, but adds that not all of the companies in an affiliated group will have the same spectrum requirements at the same time. For example, companies in the Bell Wireless Alliance will have different needs if their network covers a highly populated urban region than a carrier whose network covers a vast rural area. "The Bell Wireless Alliance submits that only those affiliates which are applicants in such a future licensing process should be required to provide compliance attestations," Woodford writes.

Gov’t proposal to withhold spectrum for rule breakers raises industry’s ire

News | June 11, 2001

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