Unfettered access to 700 MHz necessary to meet spectrum crunch, Telus tells court

Telus Corp. continues to challenge the federal industry minister's power to impose caps in January's 700 MHz spectrum auction, arguing in court documents that there is no “viable alternative” to using the coveted wireless frequencies to ease wireless network congestion. In an affidavit filed in August as part of the company's Federal Court challenge of the minister's authority over some auction rules, Telus' vice-president of corporate strategy, Stephen Lewis, said the carrier has a “pressing need” for more spectrum since it has “almost fully utilized” its current spectrum “in many significant markets.” “Without access to new spectrum, TELUS' clients will be impacted by network congestion, which leads to dropped calls, the inability to make calls and degraded data speeds,” Lewis said in a Sept. 5 affidavit, which The Wire Report obtained from the court this week. “My colleagues and I have considered whether there is a viable alternative to the prime blocks that will allow TELUS to avoid the impending network congestion problems,” he said, referring to wireless spectrum shortages related to growing smartphone usage. “It is not possible for TELUS to simply choose an alternate frequency to provide its services if it is denied full access to 700 MHz spectrum in the forthcoming auction.” In its August application, Telus asked the court to prohibit the industry minister from using “eligibility criteria” outlined in the government’s 700 MHz auction rules to limit how much spectrum the company can obtain in the upcoming auction. Those rules, which were released in March 2012, limit Telus and fellow incumbent wireless carriers BCE Inc. and Rogers Communications Inc. to acquiring a single block of “prime” spectrum in the upcoming 700 MHz spectrum auction, while allowing other players to acquire two out of four prime blocks in each region of the country. Each region, or licence area, will have four available prime blocks available for licensing through the auction. Over the summer, BCE, Rogers and Telus campaigned for changes to the government's auction policy, arguing that the rules limiting the amount of spectrum they can purchase in the auction create an unfair playing field against foreign-owned potential market entrants. The Industry Department has said it wants to encourage more competition in the wireless sector to compete against the three incumbents, and would like to see four competing wireless providers in each region of the country. In June, it denied a first attempt by Telus to acquire the spectrum licences of smaller provider Mobilicity (operated by Dave Wireless Inc.) and indicated in October that it would block such a deal again. In the affidavit, Lewis said Telus wants to bid for two prime blocks of 700 MHz spectrum because the other, non-prime blocks available don't support “the most advanced and most popular customer devices.” Spectrum in other bands may not be available in time, he said, citing the 2.5 GHz spectrum, also known as the 2500 MHz band, which Industry Canada has said it will auction off a year after January's 700 MHz auction. “TELUS will probably participate in that auction, but the timetable has not been confirmed and 2.5 GHz spectrum is not a complete substitute for 700 MHz,” Lewis wrote, adding that the low-frequency 700 MHz frequencies carry wireless signals over longer distances and deeper into buildings. In an Oct. 4 cross-examination of his testimony, Lewis said Telus can address “some degree of congestion for sure” with a single block of 700 MHz spectrum. The company could address those issues “much more efficiently with two blocks than with one block,” he said in the cross-examination by government lawyer Sandersen Graham, according to a transcript filed with the court. Other options, such as putting up more cell towers, would be “inordinately expensive” and could face opposition from communities where they are installed, Lewis added. Peter Hill, acting director general of spectrum management operations at Industry Canada's spectrum management operations branch, said in a Sept. 27 affidavit that Section 5 of the Radiocommunication Act gives the industry minister “broad powers” to “plan the allocation and use of spectrum.” The minister also has the authority to use a “competitive bidding process” to select spectrum licensees, he said. Hill said the Industry Department's decision to restrict the incumbents to a single block of prime spectrum was based on two policy framework documents, including the department's 2007 Spectrum Policy Framework for Canada and its 2011 Framework for Spectrum Auctions in Canada. The 2007 policy said the department should try to “maximize the economic and social benefits that Canadians derive” from spectrum, Hill said, while the 2011 document said the department can limit how much spectrum “any single bidder” can acquire in an auction. The department also held “extensive public consultations which included significant industry input over many years” before releasing its auction rules, Hill said. In his affidavit, Hill pointed to comments Telus submitted in February 2011, as part of the department's consultations, in which the company said it preferred a “reasonably designed cap” to rules that would set aside specific spectrum blocks for smaller players. “A cap can be individually determined for each bidder per region on any suitable basis and still result in a regular functioning auction,” the company said, according to Hill. According to a transcript filed with the court, Hill said during an Oct. 8 cross-examination that the federal Telecommunications Act gives the minister the power to determine telecom policy objectives, and is “moot on how the Minister may do some of these things.” “t the end of the day, you know, the Minister exercises his powers under the Act,” Hill said during a cross-examination by Christopher Rootham, a partner with Nelligan O'Brien Payne LLP in Ottawa representing Telus. “It's a very broad Act in my view,” Hill said. BCE has a filed a similar challenge of the minister's power to impose auction caps, and Federal Court Justice Paul Crampton said in a September order that the court will hear both the Telus and BCE cases at a hearing in Ottawa on Dec. 3. The Telus case number is T-1405-13 and the BCE challenge is filed under T-1428-13. —With reporting by Nicholas Kyonka at nkyonka@thewirereport.ca and editing by Anja Karadeglija at akarad@thewirereport.ca

Unfettered access to 700 MHz necessary to meet spectrum crunch, Telus tells court

News | 11/01/2013 2:15 pm EDT

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