Wireless operators spar over proposed changes to spectrum licensing fee regime

Divisions among Canada’s mobile wireless operators are becoming clear over proposed changes to the country’s spectrum licensing and fee regime. Mandatory resale and roaming, antenna tower site sharing, and the different rates for analog and PCS spectrum are each emerging as contentious issues, though overall support for a common position against higher fees has been reinforced. As a starting point, each of the carriers agrees that proposed new fee levels are excessively high, that the government should conduct a comprehensive assessment of the impact of all fees on the industry, and that the system access fee description is unwarranted. Last December, Industry Canada launched a broad consultation on the harmonization of the country’s spectrum licensing regime for cellular and PCS operators (DGRB-004-02), which seeks to treat cellular, non-auctioned PCS and auctioned PCS licences in the same manner. The consultation also sought comment on a variety of matters including a proposed fee formula that the carriers deemed to be out of step with reality in initial comments (RoW, March 31/03). PCS spectrum licence fees excessive In reply comments published last week, the national mobile wireless carriers unanimously call for a significant reduction in the fees proposed in the consultation, as they did in initial comments. Some suggest spectrum licence fee rates should be 60% lower than those proposed by the department. Others argue that even deeper cuts to the fees need to be made. Despite presenting a common front on the level of fees proposed, the carriers began to joust over specific aspects contained in the original consultation document. A key point of contention is whether PCS spectrum licence fees should be less than those for analog spectrum. The issue has divided the national operators, with Microcell Telecommunications Inc. and Telus Mobility on the side of lower PCS fees, and Rogers Wireless Inc. and Bell Mobility (on behalf of the Bell Wireless Alliance – BWA) opposed to such a plan. (Report on Wireless erroneously reported in the March 31 issue that Rogers Wireless was the only carrier opposed to lower PCS spectrum fees. Bell Mobility should have been aligned alongside Rogers Wireless in opposing this issue.) As Rogers noted in its comments, it is against any policy direction to decrease the level of PCS spectrum licence fees compared to analog spectrum. Rogers targets Microcell’s technical assessment of the different propagation characteristics of the 850 MHz and the 1900 MHz bands, arguing that it is flawed. More specifically, Rogers says, the propagation analysis, prepared by Yves R. Hamel et Associés Inc., omits certain important factors such as the comparison of all digital technologies, urban and suburban analysis, as well as other technical aspects. Rogers concedes that it could accept discounted PCS spectrum, but only on one condition. "In the alternative, if the department elects to provide a discount for 1900 MHz spectrum licence fees, any such discount should not apply to spectrum used to serve urban and suburban areas," it writes on page 14 of its April 4 reply comments. Rather than focus on technical issues, Bell Mobility highlights its support of the proposed policy change to harmonize both the fee levels and the licensing regime. "The BWA notes, however, that the $0.02 per MHz per person fee proposed in its comments would be fair to incumbent cellular and PCS carriers as well as to those carriers operating in smaller markets," it writes. Microcell has received harsh criticism for its suggestion that the department maintain mandatory analog cellular resale and roaming agreements as well as institute digital resale and roaming arrangements. In its reply comments, the Montreal-based wireless operator reiterates that market incentives will not suffice in creating reasonable digital roaming agreements and suggests the department should look past that argument. "Does a free market truly exist when a spectrum band with advantageous propagation characteristics has been fully allocated on a duopoly basis?" the struggling wireless operator asks. As might be expected, the incumbent wireless operators are against any such government intervention. Two opponents, the BWA and Rogers Wireless, point out that the CRTC has already dealt with competition in the wireless industry with its decision to forebear from regulating certain parts of the industry. "Telus submits that mandated roaming and resale would effectively preclude competitive market forces from establishing rates for such access. This would create the need for even further regulatory intervention that is unacceptable to Telus and we believe, to the rest of the mobile wireless industry," Telus Mobility writes on page 12 of its reply comments. The BWA writes, "Such action would be completely counter to the objective contained in the Telecommunications Act to let market forces govern where appropriate. The BWA notes that the commission, on two separate occasions and subsequent public consultation, has found that market forces in the wireless sector are sufficiently present to protect the interests of users." Rogers Wireless is particularly harsh in its call for rejecting mandated resale and roaming. "Perhaps the most important reason for rejecting Microcell’s request for an expansion of the current resale and roaming requirements is that it is a transparent attempt by Microcell to obtain remedial relief for its own failed business strategy at the expense of its competitors." Microcell also wanted the government to intervene and mandate transmission tower co-location due to the lack of advancement in this area in a competitive market. "Does a free market truly exist when incumbent providers have locked up advantageous antenna site locations (including rooftops) in exclusive deals, and can then relax and watch as new entrants confront heightened resistance from local land use authorities? Microcell submits that the answer to both of these questions is no, and we call upon the Department to exercise its authority and actively ensure that fair access is ensured in both cases," the wireless operator writes. Microcell’s three national rivals aren’t convinced that the government should intervene on mandated tower and site sharing for radio communications antenna. Telus Mobility writes, "his issue would be more properly addressed under the recently announced Tower Site consultation and should not be dealt with in the present consultation."

Wireless operators spar over proposed changes to spectrum licensing fee regime

News | April 15, 2003

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