Microcell Telecommunications Inc. is battling its national brethren on two key spectrum policy fronts. The Montreal-based wireless operator wants Industry Canada to mandate digital roaming for all carriers, an issue the carrier has raised before and one that still doesn’t sit well with its competitors, and it is also asking the department to maintain a hard spectrum cap to prevent anti-competitive behaviour from its larger rivals. Microcell’s latest attempt at shaping spectrum policy comes as part of a public policy consultation on advanced wireless services, commonly referred to as 3G (DGTP-007-03; RoW Update, March 15/04). Industry Canada announced in an October 2003 Gazette Notice that it is looking for mechanisms to expand digital cellular services to rural and remote regions of the country without upsetting the current competitive landscape in urban markets (RoW, Oct. 21/03). The department suggested that small rural operators should be allowed to enter into preferential roaming agreements with the national operators only when the rural operator doesn’t compete against the national operator. The country’s smallest operator disagrees with the department’s proposal and wants the current analog cellular roaming provision extended into the digital space. Microcell recommends that 800 MHz cellular licensees should be required to offer resale and roaming through commercial arrangements to PCS licensees that are not cellular licensees. The company says the issue boils down to requiring operators that hold 800 MHz spectrum to make it available regardless of the technology being used over the spectrum. "A technology independent roaming and resale obligation applied to the holders of the cellular spectrum would focus more directly and more fully on the issue of coverage potential, which is the true and lasting competitive advantage that cellular licensees hold over ‘pure play’ PCS licensees," Microcell writes in its March 1 comments. Rogers Wireless Inc. notes in its own comments that analog roaming was initially established to help new entrant PCS operators during their rollout phase and that mandatory digital roaming was not established in either the 1995 process or the auction of 2001. "It would be prejudicial to amend these ground rules at this late stage when carriers have made and implemented capital expansion plans and purchased additional auctioned spectrum in order to respond to the department’s competitive model for the industry." Changing the rules at this point would also deliver a severe blow to the competitive landscape and provide advantages to one operator over the others, Rogers Wireless writes. "In requesting mandatory digital resale and roaming in recent Industry Canada consultations, Microcell is seeking to avoid the capital expenditures required to expand its digital PCS network. By gaining mandated access to a digital network that has been financed and built by a competitor, Microcell would be able to avoid hundreds of millions of dollars worth of capital expenditures and ongoing interest costs." The Bell Wireless Alliance (BWA) and TELUS Mobility agree with Rogers Wireless that extending preferential roaming should only be afforded to rural carriers operating in unserved or under-served regions of the country. Both also note that roaming agreements should be based on commercially accepted practices and shouldn’t be mandated by Industry Canada. "Indeed, the BWA’s concurrence with the department’s proposal is based in its understanding that the policy will only apply to those small, rural carriers operating solely in unserved and underserved areas who do not directly compete with the incumbent carriers and is not intended to impose mandatory digital roaming arrangements, either by design or accident, between competing licensees operating in the same serving territories," writes the BWA. Asked whether it was hypocritical of Microcell to demand mandated digital roaming while only having built out its network to 60% of the Canadian population, Dean Proctor, VP regulatory affairs at Microcell, says the issue isn’t about buildout, it’s about spectrum. "First of all in certain markets, there is only so much infrastructure that can be rationally put in place. We fundamentally believe in the business model for wholesale where we allow any number of service providers to offer choice to consumers. Tied into that is mandatory co-location as well. In many cases, the first guy puts up a tower and causes such a stink you can forget about a second, third and in our case a fourth carrier ever having any hope of getting in there because there is so much animosity that’s created over whatever site that might have been put up. "This isn’t a situation of whether or not we’ve deployed further or are unwilling to deploy further. 800 MHz cellular technology quite simply beams further than 1900 MHz. There’s an exponential increase in cost for us to build the Toronto-Montreal corridor and if we’re going way beyond, it’s worse again because of spectrum. So it isn’t a situation of having access to analog … what we want is access to the 800 MHz band. We have a permanent barrier there. If they were willing to give back a chunk of 800 MHz spectrum, we’d be happy to take it and build out accordingly," Proctor tells Report on Wireless. Applicability of spectrum cap up for debateJust as Microcell stands on the other side of the fence in digital roaming, its views on the applicability of the spectrum cap are contrary to the other national players. In arguing for the continued use of the spectrum cap, Microcell says in its comments that removing the spectrum cap would lead to industry consolidation and that would be the greatest threat to "pro-consumer innovation." Nor does the company try to hide the fact that retention of the spectrum cap would save it from being acquired from one of the other carriers, or as it refers to, "anti-competitive consolidation." The company notes that Bell Mobility and Rogers Wireless have already indicated a preference to operate in a three-player market. Microcell cites statements in the July 31, 2003 issue of RoW made by Bell Mobility’s president and COO Michael Neuman, and Nadir Mohamed, Rogers Wireless’ president and CEO. Nor does TELUS Mobility shy away from the possibility of industry consolidation, saying that removing the spectrum cap would enable such transactions to take place. "TELUS believes that industry consolidation from four to three players is a distinct possibility and that it is not in the public interest to prevent such an occurrence. Therefore, TELUS believes that the spectrum cap should also be removed so as to permit such an event to occur." Despite jousting over the applicability of the spectrum limit, the national players aren’t that far apart on the amount of spectrum to be governed under a cap system should the department decide to keep one in place. Microcell suggests that the department continue to enforce the existing spectrum cap of 55 MHz and also implement a second cap of 25 MHz for 3G spectrum. "Under the Microcell proposals … no carrier could reasonably argue that it would be impeded from acquiring whatever spectrum resources are necessary to satisfy the projected needs of its customers. The public interest would doubly benefit: new advanced wireless service would be made available, with no anti-competitive industry consolidation." Rogers Wireless recognizes that there could be anti-competitive practices if the department doesn’t retain a limit on the amount of spectrum any carrier could acquire in the auction of 3G spectrum. The company doesn’t recommend a spectrum cap for 3G, but an auction cap of 40 MHz. "However, if the department sees fit to retain , RWI believes that the cap should be increased from its current level of 55 MHz to 95 MHz. This would enable those carriers which are at or near the limit to acquire sufficient new spectrum to participate fully in the new advanced services market," the company writes. Bell Mobility and TELUS Mobility agree with Rogers Wireless that if the department opts to maintain a spectrum cap, then the level should be increased accordingly. Bell sides with Rogers that it should be raised to95 MHz, while TELUS says it should be increased by an additional 45 MHz or at least 30 MHz.