Proposed fees for earth stations would hinder remote connectivity: Telecom stakeholders

Rural broadband provider Xplornet Communications Inc. and BCE Inc. are opposing a proposal to implement licence fees for fixed earth stations, to which there are currently no fees in place -- and to modify existing radio licence fees for earth stations in motion (ESIMs), claiming it will make satellite broadband less affordable for Canadians. ESIMs provide broadband communications on platforms in motion (airplanes, boats and moving vehicles) and communicate with satellites in geostationary orbit. Telecom stakeholders and public safety entities were generally supportive of ISED’s proposal to use spectrum licences to authorize fixed and transportable earth stations and ESIMs with multiple earth stations authorized under a single spectrum licence, claiming that it is efficient. However, there was mixed debate put before ISED on the licensing fee structure. In its consultation document, ISED proposed to implement a consumption-based model -- calculated by how much spectrum is authorized multiplied by a base rate set in $/MHz -- which is already in place for fixed-, broadcast- and mobile-satellite service (FSS, BSS and MSS) spectrum licences and for MSS earth station licences. ISED said the model is predictable and easy to administer. “It encourages spectral efficiency in comparison to the existing traffic-based fee currently in place for satellite-related radio licences. In particular, the existing traffic-based fee acts as a disincentive for licensees to apply the latest modulation and coding techniques and maximize frequency reuse because these are penalized with higher fees,” ISED wrote in the consultation documents. The spectrum licence fees would be applied per licence not per earth station and the base rates range from $2000 per MHz for frequencies at or below 1 GHz: for frequencies above 1 GHz to $1 per MHz for frequencies above 51.4 GHz. ISED also proposed a base rate of $5 per MHz, applied per licence that does not require site approval (whether for fixed earth stations or ESIMs) in any frequency band allocated to satellite services in which generic licensing is permitted. “These licensees would therefore see a fee increase over the current interim rules for which there is no, or a disproportionately low, fee.” ISED wrote in its consultation document. Xplornet opposed ISED’s proposal to impose fees on consumer broadband terminal equipment, noting that the current interim authorization in place allows for systems of earth stations to be placed without obtaining separate site-based licences for each earth station. No fees are applied to earth stations placed under the interim process which has been in place since 2015. Xplornet argued the fees will make satellite broadband less affordable for the Canadians who rely on the service, and argued that the fees counteract government goals outlined in Canada’s Connectivity Strategy and the Spectrum Policy Framework for Canada. “The costs associated with providing affordable broadband services to customers who rely on satellite technologies for connectivity are already extremely high. It is already very challenging for service providers, like Xplornet, to develop a business case that allows for affordable plans to be offered to consumers. Adding additional regulatory costs to these services will increase these challenges,” the company wrote in its consultation. Xplornet proposed that ISED remove fees on new spectrum licences for generic earth stations supporting rural broadband services. Xplornet further recommended that ISED reduce its proposed base rates for spectrum licences for earth stations requiring site-approval by 50 per cent when used to provide broadband connectivity in remote areas, noting that the department made the same concessions in its 2019 Point-to-Point Process. Bell also opposed the proposed base rate of $20 per MHz for the C-band (frequencies between 3.4 GHz and 7.075 GHz that are primarily used for remote communications), arguing that the new model would result in “significantly higher” fees than what the company is currently paying for the C-band earth stations it operates in remote areas. Instead, Bell recommended that the fees range from $10 to $15 in that specific band. Bell agreed with ISED’s proposal to charge $5 per MHz for generic licences, however, it recommended that the interim authorizations issued for identical receive-only earth stations in the C-Band as a result of the 3800 MHz decision should not be subject to these fees. Telesat Corp. and Shaw Communications Inc., on the other hand approved of the fee proposals, with the latter calling the generic licencing fee model “a natural, intuitive evolution of the licensing framework." Shaw also approved of the consumption-based fee model but proposed a periodical review to ensure that rates appropriately reflect the changing market and technological advancements. “While Canadian satellite operators will still be paying for use of licensed frequencies twice and the consumption-based space station fees are higher than in other jurisdictions, the fees proposed in the consultation document are a very important step in removing significant anomalies in the current licence fees and promoting the competitive deployment of affordable satellite broadband services in Canada and efficient spectrum utilization,” Telesat wrote in its consultation document. Telesat has received substantial government money for its low-earth orbit satellite (LEOs) program, known as Lightspeed. Telestat’s competitors, OneWeb Ltd. and Space Exploration Technologies Corp. sided with Bell and Xplornet by also arguing that the $5 per MHz for generic licences would “discourage deployment of broadband services and run counter to the goal of expanding access” while also stifling competition. OneWeb argued a rate of no more than $1 per MHz “would better reflect the use and value of the spectrum for that purpose, particularly when taking into account the coordination requirements that could limit the actual value of the spectrum to operators.” SpaceX wrote to ISED in its consultation that it should impose no fees for the generic licences and argued that the consumption-based model, for earth stations requiring site-approval, would “ossify inefficiencies in the licensing system that will result in market distortions that would inhibit innovation, raise barriers for new entrants, and require continual assessment and readjustment.” The company instead proposed a cost-recovery method based on well-designed spectrum policies. “For example, ISED could reward operators that exceed certain efficiency thresholds and can provide the most throughput to the most consumers,” it wrote in its consultation. It did add, however, that if ISED insists on proceeding with its consumption-based model it should lower the generic licence rates to $1 MHz and reduce its base rates for earth stations requiring site-approval to $500 per MHz for frequencies at or below 1 GHz and $5 per MHz fee for stations between 3.4 GHz and 51.4 GHz. -- Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca.

Proposed fees for earth stations would hinder remote connectivity: Telecom stakeholders

News | October 14, 2021

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Proposed fees for earth stations would hinder remote connectivity: Telecom stakeholders

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