Wireless operators oppose government’s licence fee proposal for backhaul spectrum

Wireless operators are taking issue with Industry Canada’s proposal to charge licence fees on a per-MHz-per person basis for fixed services operating in the 25.25 to 28.35 MHz spectrum band. “It means you pay more money to do the same job just because goes near a larger group of people. But you aren’t serving a larger group of people,” Telus Communications Company spokesman Jim Johannsson told The Wire Report. In May 2010, Industry Canada launched a consultation on the use of the 25.25 to 28.35 MHz band, a large portion of which was previously unassigned. The department’s suggested plan would reallocate and open up a total of 2,100 MHz for fixed services. A portion of the band, from 26.5 to 27.5 GHz, would be reserved for tracking and data relay satellite services. The spectrum will largely be used for backhaul purposes, which wireless operators use to link network towers in direct, point-to-point lines of communication. The Industry Department is considering two licensing options for the spectrum: issuing spectrum licences tied to geographic areas or radiocommunication station licences tied to the location of the cell tower. Each model comes with its own licence fee arrangement. Geographic spectrum licences would incur annual fees of 0.003205 cents per MHz per person. Radiocommunication licence fees would be based on the number of radio links, or channels, and influenced by telephone channel equivalencies—Industry Canada’s traditional approach to licence fees. In its submission, Telus said the proposed fee structure for geophraphic spectrum licences is ill-suited for backhaul purposes. Johanssonn said in an interview the fees would be based on the number of people living close to the antenna location, so that an antenna near a city would cost more than an antenna in a remote location. But backhaul is about linking towers, he said, not people. To determine the price of backhaul licences, the department should not be drawing a connection between the tower’s location and the number of people it serves, he said. In its submission, the Radio Advisory Board of Canada (RABC) also said the proposed model would be difficult to apply for point-to-point backhaul systems. “Tying fixed point-to-point fees to population is unworkable and would not be appropriate,” it said. The RABC suggested the department instead apply the fees on a “spectrum grid-cell basis,” so that the fees are determined by number of areas the carrier is operating in. Rogers Communications Inc. agreed, noting in its submission that it shares the view of the RABC. TeraGo Networks Inc., which provides broadband, data and voice services to businesses, said in its submission that the radiocommunication model would penalize efficient radio systems operating several channels. TeraGo—and the RABC—agreed that the pricing model should be based on the bandwidth used per frequency as opposed to the number of channels. But Adrian Foster, a spectrum expert and partner with McLean Foster and Co., said in an interview that it’s important the government assign a price high enough to ensure spectrum is used efficiently. "One of the things that is very important in pricing spectrum is you want to price it so that the people who value it most end up using it, and efficiently. If I gave you a chunk of spectrum for free, what's the likelihood that you are going to be motivated over time to invest to get the maximum value out of that spectrum?" he said. Industry Canada suggested in its consultation document that the spectrum be assigned on a first-come, first-served (FCFS) basis, a process typically used for backhaul spectrum when “demand is not anticipated to exceed supply.” But the department said it “reserves the right to review the use of the process and consider a competitive process at any time.” Telus argued that assigning the spectrum on a first-come, first-served basis could hinder the development of HSPA and LTE networks. Johannsson said that because regional offices assign spectrum, a wireless provider trying to build a national network might find that the frequency they need in an area has already been assigned to another company. “The first-come, first served thing is an irritation when you’re trying to build a national network,” he said. Ian Munro, a spectrum expert and independent consultant, said in an interview the first-come, first-served approach is a bad idea. “History has shown that when they have first-come, first-served processes for things like this, the government tends to have this belief or assumption that they can all very easily manage everything and there will be plenty of supply to meet demand,” he said. “Then lo and behold, they say, ‘OK, the doors are open now, come and line up,’ and suddenly they find themselves with way more people at the door than they have seats for.” Munro said it would make more sense to auction the spectrum licences to evaluate demand. The department also suggested in its consultation document that conditions be respected to maintain efficient use of the spectrum if a first-come, first-served approach is taken, including deadlines to use the spectrum. TeraGo wrote it supports the conditions. “These principles should help ensure that the Spectrum ends up in the hands of operators such as TeraGo that are ready to deploy in such band immediately,” the company wrote. “This Spectrum will be utilized by TeraGo to provide carrier-grade wireless broadband and data services to Canadian businesses and public sector organizations, as well as Ethernet-based backhaul services to Canadian wireless carriers, and for our own network needs.” But Mobilexchange Spectrum Inc., a company that leases spectrum in the 24 GHz range in cities, said it takes issue with a condition that would deny requests to use the spectrum in large regions of a province, instead limiting operations to small geographic areas. In its submission, the company wrote that Industry Canada’s plan for the band is at odds with previous policies established for the 24, 28 and 38 GHz bands, which allow “wide-area” licences. “A carrier would not be able to integrate the use of 28 GHz spectrum into its network in order to serve demand throughout its operating territory or engage in the kind of long-term network planning that is facilitated by licensing based on geographic tiers,” Mobilexchange wrote. “uch a condition would substantially increase the costs and complexity of microwave backhaul and fixed wireless deployments.” But Eamon Hoey, a wireless industry consultant and senior partner with Hoey Associates, said in an interview that by assigning the spectrum to specific geographic areas the government is trying to ensure its efficient use. He said the government “is trying to provide some flexibility to avoid people having to buy spectrum for a whole province, when all they intend to use is between two points.” The department will be granting interim radiocommunication licences for the band until the consultation process is complete. kfournier@thewirereport.ca

Wireless operators oppose government’s licence fee proposal for backhaul spectrum

News | August 24, 2010

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us