May 6, Mr. Michael Helm Director General Telecommunications Policy Branch, Industry Canada 300 Slater Street, Ottawa, Ontario, K1A 0C8

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1 May 6, 1999 Mr. Michael Helm Director General Telecommunications Policy Branch, Industry Canada 300 Slater Street, Ottawa, Ontario, K1A 0C8 Reference: Canada Gazette Consultation on Whether to Permit License-Exempt Family Radio Devices in the Land Mobile Frequency Sub-bands 462/467 MHz DGTP March 1999 Dear Mr. Helm: The purpose of the Consultation is to determine the public interest and feasibility of accommodating license-exempt family radio devices in spectrum allocated to the land mobile radio user. We appreciate the opportunity to present our findings and position on this issue. AVS Technologies Inc is a privately owned, 100% Canadian company. It is in the business of importing and exclusively distributing consumer electronics. AVS product lines include TDK audio & video tape and data storage products, Cobra CBs, radar detectors, cordless telephones and power inverters, Uniden cordless telephones, Emerson consumer electronic products, One For All multi-brand remote controls, and CD Projects and Glacier Gear media and insulated storage cases. Cobra, one of our major suppliers, is a primary supplier of FRS in the US. We have used their input as a resource in responding to the questions posed in your paper. We are pleased that it is the intent of Industry Canada to understand the issues and problems in order to determine a solution. We respectfully file our submission and welcome the opportunity to answer any questions you may have. Sincerely, Mary Sullivan Marketing Manager ph: x2260 fax: marysull@total.net

2 Comments Invited on Whether Family Radio Devices Should Be Accommodated (a) What are the consumer benefits and level of public interest in permitting FRS devices to operate in Canada? Consumers in the United States have demonstrated an extremely high level of interest in the benefits FRS devices provide. Having just been introduced to the market in mid-1997, FRS category sales in 1998 are estimated to have exceeded sales for two long-standing categories: mobile CB radios and radar detectors. The US estimate of 1998 unit sales was 2,000,000 with an industry forecast of 4,000,000 units in 1999 and 6,000,000 in FRS radios are being sold by a wide variety of retail channels, including electronics/appliance retailers, mass merchandisers, department stores, club stores, sporting goods chains, office supply chains, building supply chains, TV home shopping channels, and hundreds of catalogs. The reason for this broad acceptance stems from the large number of situations in which FRS radios can be used for important two-way communications. It should be noted that in most of these situations, two-way communications are not practical or affordable other than with FRS radios. These situations include: Neighborhood communications. FRS radios allow parents to maintain contact with their children as they walk or ride their bicycles to nearby parks and friends houses. This provides the very important benefits of convenience (e.g., making it easy to call children home for dinner) and safety/security (e.g., allowing children to contact their parents in the event of any trouble they might encounter). Leisure time communications. Families and friends can use FRS radios to keep in contact at shopping malls and amusement parks when they head off in different directions. One party can easily contact the other for everything from making arrangements to meet for lunch to making them aware of an emergency situation. Outdoor sports. Fishermen, hunters, downhill and cross country skiers, hikers, campers, bicyclists, and boaters are just a few of the outdoor-oriented consumers who can now easily and economically maintain two-way communications thanks to FRS radios. Vehicle-to-vehicle communications. Friends or families traveling together in separate vehicles can use FRS radios to keep in touch regarding lunch plans, travel directions, and more. Small business communications. FRS radios provide economical two-way communications for such businesses as warehouses, construction firms, car dealerships, retail stores, restaurants, lumberyards, nurseries, and so on. Law enforcement. One surprising application for FRS radios is the law enforcement community. Several law enforcement organizations are using or testing FRS radios as a relatively low-cost means of two-way communications. 2

3 Interestingly, consumer feedback indicates that most FRS owners use their radios in several of the above situations. Unlike many other new technologies, many consumers report that they find themselves using their FRS radios much more frequently than they had expected. What makes these FRS radios so well suited for these applications is the combination of these primary benefits: FM sound clarity UHF ability to penetrate structures and other obstacles Range of up to 2 miles/3.3 km Small size / lightweight - Safety - Affordable cost (b) Could the manufacturers and distributors facilitate the move of the most seriously affected base stations of land mobile users to other frequency bands to permit the introduction of family radio devices? AVS Technologies Inc recognizes that the density of signal usage varies from region to region. In some regions the impact of a FRS introduction would be minimal to none. In other regions the Land Mobile Radio (LMR) users might experience some interference from FRS. This interference would be minimized however by the fact that LMR radios are transmitting at a much higher power level than the half watt of FRS. AVS Technologies would entertain the idea of assisting the move of the most seriously affected base stations of LMR only after FRS was approved for introduction and sale in Canada under the standards/specifications established by the FCC. We would suggest that such funding would represent a payment per FRS unit sold be a maximized at a negotiated level expire within an agreed upon period subsequent to FRS approval be conditional on all manufacturers and suppliers of FRS contributing (d) What measures, if any, could be introduced to enable existing land mobile users of these frequencies to share the spectrum with family radio users either in the short or the long term? Short term LMR radio users may have some minimal interference problems created by FRS users. As volume of the FRS increases, the frequency of interference might increase as the probability of both LMR and FRS users being in the same area increases. To date, however, this has not appeared to be a meaningful problem in the U.S., where there are already approximately 3

4 2,750,000 FRS units in operation, and there are 7 FRS channels/frequencies shared with GMRS. A future solution to this potential problem for LMR users (if they must remain on the same frequency spectrum) may be the introduction of a digital code at the beginning of each LMR transmission which opens the squelch of the receive radio. This would mean that if the receive radio doesn t receive the digital code at the beginning of the transmission, the squelch will not open. This means the LMR user will not hear the FRS transmission because it doesn t have the required digital code. Some of the concerns with this system will be that the FRS user will hear all LMR transmissions as long as both are on the same channel. (LMR would not hear FRS.) Under this scheme the only time the FRS user will interfere with LMR users is if a FRS radio is very close -a few metersto one of the LMR radios and the two LMR radios are far enough apart that the signal from the other LMR radio is weaker than the FRS radio transmission. This is minimized by the fact that LMR s are allowed to transmit at much higher power levels than the 500 mw of a FRS radio. (e) What would the impact be on existing land mobile users if family radio devices were permitted without limitation? In theory the problem might be that the LMR user might start hearing transmissions from the nearby FRS radios in the area. This may be annoying since most LMR radio users are not used to hearing users other than the LMR radios licensed by the same company. Since the LMR radio is a higher power device than the FRS radio, in most instances the LMR user will be able to talk over the FRS user. This means that when a person using a LMR talks on a specific channel the FRS user will not be able to communicate with the other FRS user unless the LMR users stop transmitting. As a result it would seem likely that the FRS user would change channels so that they can communicate uninterrupted. In specific instances a FRS may overcome the base station due to proximity but the likelihood of extended, or frequent, interference is very small due to the nomadic nature of FRS and LMR users. (f) Can manufacturers and distributors modify the operational design of family radio devices to prevent or limit harmful interference to existing land mobile licensees from family radio users? For example, could family radio devices be modified to operate on seven channels as opposed to the current fourteen channels? As long as these two systems use the same frequencies there will always be potential interference between the two systems. It should be noted, however, that to date this has not appeared to be a problem in the United States. What interference there is could be minimized by using some of the ideas described earlier.. If Canada were to separate into two bands by giving some channels to LMR users and the others to FRS this interference could be eliminated entirely. Some of the problems might, however, be as follows: 4

5 By creating a unique standard Canada will not be able to enjoy the economies of scale by joining the fast growing US FRS market. Prices would reflect the premium charged on small runs. Special Canadian FRS models would not be competitive with the grey market product coming in from the USA thereby encouraging dealers and consumers to buy the non legitimate product. The effort of modifying FRS channels for Canada would be defeated by market forces. Special models will have to be made for Canada which have a limited number of channels which would delay the availability of products and reduce the numbers of vendors willing to participate. This would increase the overall product cost to the consumer until the market grows enough to create competition between vendors and suppliers of parts to lower the overall cost of the product. The next problem with this strategy is the illegal smuggling or grey marketing of US FRS radios into the Canadian market. Since they will have more channels and will operate with other Canadian approved models, and, as a result of being a part of the large world-wide production, likely be cheaper to the importer, a counter-productive black market will develop. This gray/black market will develop if Canada approves specifications that are not at least as desirable as the US version. We are all aware that FRS is already being sold in Canada, in significant quantities, although not through regular law-abiding importers, distributors, or retailers. It would be harmful to cross border hikers, outdoorsmen, travelers and tourists who will rely on their FRS but find it fails to be compatible with other FRS units.. (g) If the decision were to open these frequencies to family radio, what steps should Industry Canada take, and in what time frame, to ensure a smooth transition? How should the existing land mobile users be accommodated? Industry Canada should quickly make the decision to allow FRS to be sold in Canada. Immediately organize a meeting with potential FRS suppliers to establish a basis for helping LMR users convert to other frequencies, if they so desire. Advise all LMR users of the program and that there will be an approval of FRS for sale by September 1, Also inform them of the potential problems and suggested solutions, and the cooperation of the FRS vendors in minimizing the problems. Allow FRS to be sold in Canada by early Fall, Declare the 14 FRS frequencies open for usage under the same standards/specifications as established by the FCC. Publish the IC standard for FRS radios within a couple of days of the IC declaration in favour of FRS. (h) Are other any other issues that need to be considered? Canadian authorities will want to consider that the potential market for FRS radios is a large one. 5

6 It would appear that the benefits to the government and potential FRS users are sizeable and may outweigh the inconvenience of moving the seriously affected LMR incumbents. FRS radios are a reality in Canada. They can be found on virtually every ski hill, at popular tourist sites, in our national parks, even in our urban malls. Industry Canada s policy of withholding approval of FRS has penalized legitimate distributors and retailers while tacitly approving the activity of grey marketers. It forces Canadian consumers, either knowingly or unknowingly, to purchase gray market product. This product is then difficult for the consumer to service or to receive technical support. It is time that Industry Canada legitimizes the trade. To the consumer and dealer who have been hearing about FRS since 1996, and anticipating its availability it is difficult to understand why it is not being sold in Canada. The delay in approval, to date, has deprived Canadian consumers of the use of an excellent communication product that would add both convenience and safety to their lives. It has encouraged a gray market in U.S. product, and therefore has permitted illegitimate businessmen to take advantage of legitimate importers, distributors, and retailers. And, it is gradually resulting in tens of thousands of illegal units being sold to primarily unsuspecting Canadian consumers, who are using unapproved product. Since the usage of FRS will be gradual there will be a natural phasing in of the product, as well as any potential conflicts with LMR users. This will permit LMR users the time to determine whether a problem exists for them, and, if so, how they will be able to minimize their conversion costs as a result of the program being offered by the FRS suppliers. We genuinely believe that time is of the essence and that the approval of FRS should be fasttracked so that Canadian consumers will be able to purchase the product this year. 6