Bell, SaskTel, not buying ISED proposal to reintroduce deployment requirements for cellular bands

BCE Inc. and Saskatchewan Telecommunications Holding Corp. are not in favour of a proposal from Innovation, Science and Economic Development (ISED) to adopt its 20-year 3500 MHz general deployment requirements to the cellular and personal communications services (PCS) bands -- primarily used to provide commercial mobile wireless services -- claiming spectrum is being used despite the lack of requirements. Last week ISED released comments on its consultation to re-introduce deployment requirements for cellular and PCS licences that have been or will be renewed through the Renewal Process for Cellular and Personal Communications Services (PCS) Spectrum Licences (the 2011 Renewal Process). “Cellular and PCS spectrum licences are currently used and will continue to be used (including for 5G services) even in the absence of a deployment requirement,” Bell wrote in its consultation document. “Canada has world class wireless networks that cover more than 99 per cent of the Canadian population and there is no evidence of a persistent market failure in the delivery of wireless services.” Bell argued that Canada has some of the highest spectrum auction prices in the world -- having just spent an industry-wide $8.9 billion on the 3500 MHz band -- and some of the highest production costs in the world. It estimated that over the next six years the industry will invest $26 billion to build 5G infrastructure. “ISED's proposal to change the deployment requirement for cellular and PCS spectrum licences ignores the significant costs of meeting the new targets at a time when the demands on wireless network builders' capital have never been higher. The next five years will require massive capital expenditures by all of Canada's facilities-based wireless providers in order to participate in upcoming spectrum auctions and deploy new 5G services,” Bell said, adding that the additional costs makes it difficult to meet CRTC’s requirements for incumbents to lower their plans by 25 per cent. Bell said it would rather see the government introduce subsidies and incentives, like it does with its wireline services, to facilitate deployment in rural areas where it is not economical for telecom businesses to develop. ISED is proposing to reintroduce deployment requirements to cellular and PCS licensees, which would be “at least as ambitious” as the 20-year requirements it established in its policy for the 3500 MHz band. The general deployment requirements for Tier 4 service areas with large population centres have a minimum population coverage requirement -- ranging from 25 to 30 per cent within five years; 40 to 50 per cent within ten years; and 60 to 70 per cent within 20 years depending on the area. Tier 4 service areas without large population centres have a minimum population coverage requirement ranging from five to 30 per cent within seven years; 10 to 50 per cent within 10 years; and 20 to 70 per cent within 20 years depending on the coverage area. ISED said existing licensees would have five years from the date of the final consultation decision to meet the requirements. New licensees would have five years from the date their licence is issued. “Given the substantial time remaining in all 20-year licences, ISED is confident that the reintroduction of these requirements will not create investment uncertainty. Licensees unable or unwilling to meet these requirements would be expected to return licences to ISED,” the department wrote in its consultation document. SaskTel argued that as a regional service provider it utilizes spectrum at all its sites, including in rural areas, and has “gone further” than ISED’s deployment requirements “in most cases.” SaskTel said that if ISED insists on imposing deployment requirements it should not be “strict” in rural areas where “excessive costs are unnecessarily imposed” to deploy mid-band spectrum in very small communities. Furthermore, more government subsidies would be required if ISED were to impose requirements more ambitious than those set out in its 3500 MHz policy, according to SaskTel. The company added that the five-year timeline to implement the 20-year 3500 MHz requirements were reasonable. “For these very small communities, it does not make sense to impose additional costs by mandating the deployment of additional spectrum where it might not be needed as this will only increase the costs and the amount of government funding required," SaskTel, which holds licences through the 2011 Renewal Process, told the CRTC. “With limited subsidy funding available, the increased costs resulting from having to meet excessive deployment requirements would reduce the number of rural cell sites that could be deployed with these subsidies.” SSi Micro Ltd. made similar comments, raising concerns that deployment requirements for smaller providers in the three territories would not lead to improved services but rather “to the balkanization and relinquishment of licences” and “more consolidation of spectrum resources in the hands of the players that have failed to resolve the digital divide to date.” Meanwhile Rogers Communications Inc. is for the proposal but is opposed to the proposed timeline. “Simply reintroducing deployment requirements to existing Cellular and PCS licences will result in a suboptimal spectrum policy that may produce some minor increases in network coverage without providing a material benefit for Canadians. Further, it could ultimately reduce overall network capacity for Canadians by mandating uneconomic and inefficient network expansion,” Rogers wrote in its response. In its consultation document Rogers argued that the 3500 MHz 20-year Tier 4 requirements should apply within ten years, “aligning with the approximate licence term for most cellular and PCS licences.” Rogers also said that the 10-year Tier 4 requirements should have to be met within five years, claiming its approach “strikes the right balance between aggressive and achievable rollout requirements.” “Moving from formerly Tier 2 coverage requirements to Tier 4 requirements with a five-year deadline ensures there are immediate gains for rural and remote Canadians, while the final ten-year deadline will allow operators the time needed to complete the extensive network planning and deployments required. This is particularly the case due to the inherent challenges of new site acquisition and builds in rural and remote areas, which often involve additional challenges (e.g., site access, power, new backhaul facilities, etc.) that are not present in urban and suburban areas,” Rogers said. Cellular licences, first issued by ISED in 1983, and PCS licences issued in 1995, were initially subject to a spectrum usage requirement that obligated the licensee to provide coverage to 50 per cent of the population in the licenced areas. In 2009, the department launched a consultation on the renewal proposal and the licence conditions that would apply, establishing the 2011 Renewal Process two years later. The process stipulated that licensees would have 20-year licence terms without any further spectrum usage requirements if they could demonstrate they met the 50 per cent coverage requirement. “Because ISED expected that if licensees met their deployment requirements at renewal, they would continue to provide the same coverage into the future,” the department wrote in its consultation document. Approximately 290 licences would have no deployment requirements if no changes are made, according to ISED. The department also wants cellular and PCS bands to be subject to the same conditions of licence “to deter licensees from acquiring spectrum for speculation, warehousing or anti-competitive purposes.” Xplornet Communications Inc., Cogeco Inc., Iristel Inc., Telus Corp., the Federation of Canadian Municipalities (FCM) and Canadian Communications System Alliance (CCSA) all generally agreed with the proposal. “However, ISED should not impose any deployment conditions related to the existing LTE coverage of the licensee, as was done in the 3500 MHz band framework. This requirement creates an unfair condition whereby two licensees may have widely differing coverage requirements for licences that cover the same area based on their existing coverage in another band. This would certain not provide for uniform conditions on all cellular or PCS licence holders,” Iristel wrote. Telus also proposed a few modifications by recommending that ISED adopt the percentage coverage requirements in its 2018 Advanced Wireless Services (AWS) renewal decision, applying the Tier 3 requirement milestones in five years and Tier 4 deployment requirements in nine years. The Independent Telecommunications Providers Association (ITPA) -- representing independent local exchange carriers in Ontario, British Columbia, and Quebec -- said that the consultation would exclude local telephone (TEL-area) licensees which puts its members at risk of being excluded from CRTC’s new MVNO tariff regime, which proposes reliance on spectrum ownership at a Tier 4 level or higher as one of the eligibility criteria. “Some incumbent national wireless carriers – as expressed in their tariff proposals… have proposed that subordinated licences not be eligible to the MVNO access regime. The CRTC was silent on the concept of subordination. Nor did the CRTC address the issue of which party – either the primary or subordinate spectrum holder, should be considered in terms of eligibility to the MVNO regime,” ITPA said. -- Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca.

Bell, SaskTel, not buying ISED proposal to reintroduce deployment requirements for cellular bands

News | October 20, 2021

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Bell, SaskTel, not buying ISED proposal to reintroduce deployment requirements for cellular bands

News | October 20, 2021

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