Consumers will pay price for higher licence fees, Rogers warns government

Rogers Communications Inc. is warning Industry Canada that consumers will see a jump in their monthly bills if it decides to increase wireless carrier licence fees. Speaking with Report on Wireless this week, Ken Engelhart, senior VP of regulatory affairs at Rogers, says the last time the department addressed licence fees, it was more about harmonizing the old site licence arrangement with new spectrum licences. “This time it sounds to me like it’s more about raising them,” he says of the licence fees. “All those charges will get passed onto consumers and wireless is an enabler for the economy so I don’t think you want to do that.” Last month, Industry Canada launched a consultation on the renewal of cellular and PCS licences, but included in the document was mention that the department would first seek an opinion on the market value of the spectrum in question. The goal of this assessment is to set the new licence renewal fees. “The challenge is to set fees that reflect the underlying market value while taking into account the wide variations in different markets and comparing prices paid for the spectrum in different auctions, which is further complicated by varying economic conditions, different auction bidding strategies and the overall demand for the spectrum at the time,” reads the consultation. Engelhart says it’s a mistake for the department to consider hiking the fees. He points to the US where renewal fees are low because the US is only aims to recoup the administrative costs of managing the spectrum. “If people want to have the same kind of competitive market as the US and they want to have the same sort of rates as the US they should have the same licence fees as the US,” he says. Currently Canada’s mobile wireless companies pay the lion’s share of spectrum licence fees, yet the spectrum they use amounts to a small slice of the entire electromagnetic frequencies. Statistics from the Canadian Wireless Telecommunications Association show that mobile carriers pay 50% of all spectrum licence fees, or about $140 million, for use of 0.22% of allocated spectrum. Industry Canada recently completed its first licence renewal consultation for auctioned spectrum – the 24/38 GHz band. While the department had set a minimal fee of $0.003205 per 100 MHz per population, it chose to waive it because lack of readily available equipment led to very little deployments. Asked whether this proceeding could have an impact on how the department prices cellular and PCS spectrum licence renewals, Engelhart was to the point. “I guess the morale of the story is if you don’t do anything with your spectrum then you get to keep it and you don’t have to pay any licence fees. If you make valuable use of your spectrum then going to soak you for it.” Industry Canada’s decision to seek a market valuation for cellular and PCS spectrum may in part be driven by the 2007 Spectrum Policy Framework. It has as an overriding policy objective “to maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum resource.” Engelhart isn’t so sure that the department is bound by the spectrum policy framework, but notes views differ on this matter. “Like most lawyers, I believe that the minister is bound by his previous statements and policies. The lawyers at the Justice department and the federal government really are of the view that the minister can do anything and everything that the Radiocommunication Act permits him to do and the statements and policies don’t really constrain or bind him. So, I guess it’s an open legal question how much they have to obey those policies,” Engelhart explains. “It’s only a matter of good public policy that they do obey them and they’re certainly receptive to those arguments. But as to whether you could go to court to challenge something that was inconsistent with the policies, I guess different people have different views.” The market evaluation of the spectrum will be closely watched by all cellular and PCS companies, including those with AWS licences that will expire in about 10 years. While the department will have to consult with industry on AWS licence renewals, a licence fee for cellular and PCS spectrum will almost certainly have an impact on what rate Industry Canada sets for AWS licensees.

Consumers will pay price for higher licence fees, Rogers warns government

News | 04/02/2009 7:32 pm EDT

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