<https://www.thewirereport.ca/2017/11/21/size-of-600-mhz-set-aside-licence-areas-points-of-contention/#newsarticle>
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"While much of the debate around the upcoming 600 MHz spectrum auction has centered on implementing spectrum set-asides, issues like imposing a spectrum cap and the size of any set-aside, the ability of small providers to participate, and compensation for TV stations are also being hammered out in the lead-up to the action.    The consultation wrapped up earlier this month and reply comments were posted on Innovation Canada’s website last week. In recent months, large providers Rogers Communications Inc., BCE Inc. and Telus Corp. have been vocal in their opposition to setting aside spectrum for regional wireless players to bid on. Such set-asides, analysts said, would benefit companies like Quebecor Inc.’s Videotron and Shaw Communications Inc.’s Freedom Mobile, who said “substantial” set-asides were needed.    Canada’s Big Three wireless providers said in their comments that if Innovation Canada decides to set aside spectrum for smaller players to bid on, those blocks should be limited to 20 MHz — 10 megahertz less than the 30 proposed by ISED in the consultation.    However, both Bell and Telus said that a cap on the amount of spectrum a company can buy would be a better alternative, though they disagreed on the format that should take. Bell is recommending a cap of 20 MHz of 600 MHz spectrum, while Telus is suggesting a 50 MHz cap on all low-band, or sub-gigahertz spectrum, a company can hold.    In its reply comments, Bell said that having a cap on the total amount of sub-gigahertz spectrum would be unnecessarily complex, because companies would be allowed to bid on different amounts of spectrum in different licence areas.    Rogers said that ISED’s proposed set-aside of 30 MHz “all but insures a poor outcome of the auction. It only leaves 40 MHz for the three national carriers, scarcely more than half of the available spectrum for carriers serving in total 90% of customers.”    It also said that restricting the amount available outside the set-aside could put Rogers at a disadvantage given Bell and Telus’ spectrum-sharing agreement. “If there is only 40 MHz of spectrum open to all bidders, a likely outcome is that Bell and Telus together obtain 30 MHz, if not all 40 MHz, for their single network. That would leave Rogers with 10 MHz or nothing, providing the Bell-Telus network with an unacceptable advantage in terms of holdings of sub-1 GHz spectrum relative to other national and regional networks,” Rogers argued.    Bell also brought up the issue of compensating TV stations for their move out of the 600 MHz band, arguing that since the “auction is expected to generate more than $1.5 billion in revenue for Government, and as such, represents an ideal vehicle for  TV compensation.”    It also proposed using 10 per cent of that revenue for local programming, in a fund similar to the now-defunct Local Programming Improvement Fund (LPIF). “A fraction of the proceeds from the 600 MHz auction alone could provide much needed support for many years, especially given the glaring absence of any mention of the critical importance of local television to local communities in the recently released Creative Canada: Policy Framework,” Bell said.    That call was backed by the Canadian Association of Broadcasters (CAB). It pointed to the costs incurred by stations when they moved off the 700 MHz spectrum auctioned off four years ago, which it said it’s “still grappling with.” Rogers — which, like Bell, owns over-the-air (OTA) stations — said it supported the CAB submission.    “Taking on significant incremental expenses related to the 600 MHz conversion will place local television across Canada in jeopardy,” the CAB said, estimating that the total cost of that transition will be more than $106 million. It recommended that the stations be fully compensated for that move, and called for new funding for stations to be established from the auction proceeds.    However, Bragg Communications Inc.’s Eastlink said in its intervention that the set-aside could be 40 MHz, and no lower than 30 MHz, since “any smaller set-aside would serve to entrench the current imbalance in low-band spectrum holdings making it difficult for regional service providers to compete sustainably.” Quebecor and Shaw called for the set-aside to be 40 MHz.    Eastlink pointed out that the auction will be key for rural areas. It “is the most important for rural Canada since the Department first enabled regional service providers to enter the mobile wireless market in 2008.” Low-band spectrum under 1 GHz is “ideal for efficiently deploying networks to rural areas,” as it allows providers to cover larger areas with fewer sites, it noted.    “For example, to build the same rural area with AWS-1 spectrum would require two to three times the towers required to cover the area with 600 MHz spectrum; each additional tower adds considerable upfront capital cost as well as long-term operational costs, particularly when considering the unreasonably high wholesale cost of sharing national incumbent providers’ towers,” Eastlink said.    Smaller providers, many of which serve rural areas, pointed to the licence areas as a barrier.    In its reply comments, the British Columbia Broadband Association (BCBA) noted that groups representing small independent providers, including itself, the Canadian Cable Systems Alliance (CCSA), the Independent Telecommunications Providers Association (ITPA) and the Canadian Association of Wireless Internet Service Providers (CanWISP) were united in telling ISED that “rural Canadians will continue to be under-served unless ISED enables rural focused providers to access spectrum. In communities with no terrestrial cable or fibre, this spectrum does double-duty – providing fixed high-speed connections to homes, and mobile services to handsets. In the hands of incumbents and new mobile wireless competitors … this spectrum sits idle.”    In its intervention, the ITPA said the size of the licence areas proposed by ISED means that they’re far too large to allow small providers to compete. In its consultation document, ISED proposed using Tier 2 areas, which splits the country into 14 licence areas. However, in the three territories, spectrum would be auctioned off using the smaller Tier 4 areas, which divide Canada in 172 sections.    “They are out of the financial reach of these companies. Based on the two previous spectrum auctions in Canada, it is simply not possible that any ITPA member company would be able to successfully bid for the auction fees for a Tier 2 service area,\" the association said.    The small and independent carriers it represents serve remote and rural areas with very low population densities, it noted.    “The population density of  operating territories necessitates the availability of spectrum allocations in smaller service areas than even Tier 4 areas. These smaller service areas could extend the reach of services through this spectrum to Canadians that are currently unserved or underserved by leveraging their local presence and focus and their existing on-the-ground network footprint,” it said.    Unless ISED makes the licence areas smaller, ITPA added, “it will effectively foreclose on the participation of small carriers in the 600 MHz auction.”    CanWISP also pointed to the value of 600 MHz spectrum, saying that its propagation characteristics would be helpful to rural operators. It said far more spectrum is needed in rural areas, and that its members “need to have access to spectrum that covers large distances and where higher power can be used.”    Telecom Ecotel Inc. said in its reply comments that having Tier 4 licence areas “would encourage smaller and potential niche carriers to obtain the spectrum they need in specific remote areas while letting the densest markets to bigger carriers where their business plans better suits the type of requirements for such bigger markets.”    — With reporting by Anja Karadeglija at akarad@thewirereport.ca and editing by Ahmad Hathout at ahathout@thewirereport.ca"
<https://www.thewirereport.ca/2017/11/21/size-of-600-mhz-set-aside-licence-areas-points-of-contention/>