Von Finckenstein outlines how Industry Department can transfer spectrum management to CRTC

OTTAWA—CRTC chairman Konrad von Finckenstein has outlined three ways that Industry Canada can transfer its spectrum management responsibilities to the commission. Von Finckenstein has been pushing for a transfer of spectrum management powers to the CRTC, and at a spectrum roundtable on April 22 organized by Industry Canada, the chairman suggested how the department could go about it. Industry Canada currently allocates spectrum usage by band and administers spectrum licences, and the CRTC issues radio and television broadcasting licences and conducts foreign ownership reviews. According to his speaking notes, von Finckenstein told the roundtable that shared responsibilities can result in contradictory decisions and has led Canada to roll out spectrum slower than other jurisdictions. “The lack of regulatory coherence is an obstacle to innovation and competition, and makes it difficult to maximize economic and social benefits for Canadians,” he said. To transfer spectrum management from one agency to another, von Finckenstein said the government could use the Public Service Rearrangement and Transfer of Duties Act. “ Act permits horizontal transfers from one portion of the federal public administration to another. It is an open question whether it can be used for transfers from a department to an agency,” he said. A short-term option would be to use section 3(4) of the Radiocommunication Act, which allows the industry minister to delegate his powers to “a person,” he said. A longer-term solution would be to amend the Radiocommunication Act. “Section 5 of the Act grants a number of statutory powers to the Minister related to spectrum, including the power to issue licences, amend the terms and conditions of licences, and plan the allocation and use of spectrum. Essentially, the references to ‘the Minister’ in this section would be replaced with ‘the CRTC,’” von Finckenstein said. But he acknowledged that reorganizing the spectrum management structure would be a time-consuming process and that the idea “is unlikely to have the necessary political support at this time.” Industry Canada held the invitation-only spectrum roundtable in collaboration with the Radio Advisory Board of Canada. Department spokesman Michael Hammond said “Canadian telecommunications leaders” and “internationally recognized experts” attended the roundtable to speak on a not-for-attribution basis, facilitating “frank and open discussion." Hammond said Industry Canada anticipates that the roundtables will be a regular event. A summary of the roundtable posted on Industry Canada’s website says participants were concerned by possible setbacks brought on by the proposed transfer of spectrum management powers. “Participants indicated that any transfer of some responsibilities to the CRTC or institutional restructuring should not delay the advancement of wireless in Canada, create uncertainty or result in inefficiencies,” says the summary. Von Finckenstein said the CRTC should gain sole responsibility of assigning spectrum and conducting auctions, but added that the government should retain the power to “issue directions to the CRTC on broad spectrum policy matters” and to “set aside decisions related to the telecommunications spectrum or refer them back to the CRTC for reconsideration.” Von Finckenstein’s suggestion is consistent with recommendations of the 2006 Telecommunications Policy Review Panel, which said spectrum regulation should be transferred to the CRTC. Hank Intven, a partner at the McCarthy Tétrault law firm in Toronto and a member of the 2006 Policy Review Panel, said transferring responsibility to the CRTC would help avoid inconsistencies and delays, increase transparency and due process, and depoliticize spectrum regulation, according to Industry Canada’s notes on the roundtable. But the reorganization could cause disruptions and lead to a “perceived loss of government control,” Intven said at the roundtable. Ian Munro, an independent consultant, who was scheduled to speak at the roundtable but could not attend, told The Wire Report that the CRTC should assume spectrum assignment powers and review its licensing process. In an October 2009 report, published by the Atlantic Institute for Market Studies, Munro wrote that the division of responsibilities creates economic inefficiency. “The split … limits opportunities for bidders/applicants to arbitrage across the two processes to acquire substitutable spectrum at the lowest cost, and makes it difficult for them to aggregate complementary spectrum efficiently across the two processes,” the report said. Munro said in an interview that the CRTC would benefit from adopting Industry Canada’s power to use auctions to assign licenses. Von Finckenstein maintained that transferring responsibility would benefit both government and industry because it would create a more stable regulatory environment. He added that asking the commission to manage spectrum would free up government departments to focus on broad policy issues. “The government can focus on broad policy issues while the regulator looks after the day-to-day management of spectrum,” von Finckenstein said. “This structure also removes any possible perception of political influence from spectrum licensing.” Munro agreed that Industry Canada could benefit from the transfer. “There is a whole lot of time and energy that gets eaten up worrying about all these political and appearance issues. It’s not really very productive work,” he said. “Without these kinds of things on their desks, being able to depend on a more expert regulatory body, ministers could breathe a sigh of relief and focus on the policy issues.” Eamon Hoey, a senior partner with Hoey Associates in Toronto, said in an interview that he does not think the CRTC should be tasked with spectrum management. He said a new regulatory body should be created to deal with telecom, broadcasting and spectrum issues. “Do we need to have a new regulator for all of this? We certainly do, but the CRTC in my view is just not the place to put it,” he said. “If we’re just going to have the merging of two departments, that’s not effective ... We need new thinking from a regulatory perspective that suits the times.” Administrative incentive pricing (AIP) was also discussed at the roundtable. AIP sets prices according to “spectrum opportunity cost,” at an annual price not under auction. The purpose of AIP is to set prices high enough that they encourage incumbents to return spectrum that is not used efficiently, freeing up bandwidth. According to the roundtable summary, public and private sector representatives did not endorse the adoption of AIP for Canadian spectrum over the department’s existing administrative cost recovery policy. Roundtable participants also discussed spectrum trading and spectrum usage rights, agreeing that “clearly defined usage rights” should be a prerequisite to spectrum licence trading. kfournier@thewirereport.ca

Von Finckenstein outlines how Industry Department can transfer spectrum management to CRTC

News | May 17, 2010

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