Spectrum Considerations for WISP Operators in BCBA

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1 Spectrum Considerations for WISP Operators in BCBA April 28, 2015 Delivered to BCBA Conference Prepared by Stuart Jack, Partner Nordicity 1

2 Table of Contents 1. Introduction to Spectrum Management in Canada 2. Factors Affecting Spectrum Demand and Availability 3. Spectrum Availability: Overview 4. IC Framework for Spectrum Transfers, Division and Subordinate Licensing (TDS) 5. Spectrum Availability and Access to Spectrum for ISPs 6. Availability of Spectrum in Upper Bands 7. Potential Solutions 8. Appendices 1. FCC Rules Regarding White Spaces 2. Auctions Questions 2

3 1. Introduction to Spectrum Management in Canada Industry Canada manages spectrum with the policy objective: To maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum resource Additionally, IC has policies regarding the: Placement of spectrum into the highest economic use and Prevention of spectrum warehousing Favour competition in the marketplace Spectrum Management program is guided broadly by the following Acts: The Radiocommunication Act The Telecommunications Act The Broadcasting Act 3

4 2. Factors Affecting Spectrum Demand and Availability Technology Evolution of technology (e.g. cognitive radios) Rival standards may result in incompatible equipment and inefficient use of spectrum (incl. interference) [e.g. TDD WiMax vs. FDD LTE; broadcasting digital TV ATSC vs. DVB2; In unlicensed 5.8GHz band, LTE-U vs. WiFi] Newer technology and prices for equipment are driven by manufacturers and operators in Asia, US, Europe. Canadian service providers typically align their technological plans and equipment strategies with those of US operators (i.e. CDN add-ons orders) [important to have developed and compatible ecosystems]. Cost of gear e.g. Whitespace gear in 3.5GHz band is still relatively costly 4

5 2. Factors Affecting Spectrum Demand and Availability Regulatory CDN frequency allocations correspond with ITU Region 2 (Americas) Economic realities require IC to harmonize with the FCC Spectrum allocation Coordination/interference Release of spectrum (Canada generally lags behind US ( US plus 3 years - see Appendix) Technology, combined with additional regulatory flexibility, can enable more efficient spectrum usage and increase access to spectrum for the ISPs, resulting in greater benefit to consumers to innovative services at a reasonable cost. In some cases technology lags behind the regulatory process e.g. no VoLTE technology yet available for FWA 2014 Consultation on Re-classification of 3.5GHz spectrum & service areas as urban for mobile services 5

6 2. Factors Affecting Spectrum Demand and Availability Policy Broadband Availability in Rural Areas Canada lags in broadband availability in rural areas and has difficulty in defining broadband: In Canada, 5 Mbps/1 Mbps. In the US, it is 25 Mbps/3 Mbps. Market Service evolution: need for spectrum to deliver broadband services Netflix & other OTT services are driving the demand for ISP bandwidth 6

7 3. Spectrum Availability and Access for ISPs - Overview ISPs use a combination of unlicensed, lightly-licenced and fully-licenced spectrum to deliver their services to Canadians Unlicensed bands: ISPs operate with a combination of three bands: 2.3, 3.5 and 5.8 GHz; WISPs use unlicensed spectrum in the bands: 900MHz (25 MHz), 2400 MHz (80 MHz) and 5800 MHz (125 MHz / 230 MHz) of spectrum. * In the West in particular, some ISPs are using white space spectrum, however, this has been subject to restrictions notable the 120 Km exclusion zone from the border Spectrum transfers (see TDS) Licensed bands: Due to congestion on and uncertainty with unlicensed bands, many WISPs are looking for access to licenced spectrum; however, Licenced spectrum is often too expensive or inappropriately configured (tiers) see Appendix Likely further licensing including auctions, of spectrum e.g. IC held back some of the unpaired lots in the current April, 2015 auction of 2.5GHz band 7

8 4. Spectrum Availability: IC TDS Licensing Framework In 2013, Industry Canada developed a Spectrum Licence Transfer framework policy for transfers, divisions and subordinate (TDS) licensing of spectrum licences Objectives: Address issues of spectrum aggregation and competition in Canada Ensure increased competition in the wireless sector; Subordinate licensing enables more efficient use of spectrum by: Allowing licensees contract with other service providers to operate within the licence area, using all/ portion of their licensed spectrum* 8

9 4. Spectrum Availability: IC TDS Licensing Framework Track record for TDS transfers Nordicity assessed TDS transfers in order to examine how much new spectrum is made available to new ISPs According to Industry Canada data from 2011 to March 5, 2015, there were a total of 570 TDS transfers during this period In order to provide fair assessment the following transfers were not included: Acquisition of one ISP by another ISP Company name change Transfers between divisions of the same company Total # of Licences Divided, Transferred and Subordinated 570 # of Licences (Net of acquisitions, same company transfers and name changes) 492 9

10 4. Spectrum Availability: IC TDS Licensing Framework Track Record for TDS transfers (cont d) The majority of licences were transferred between large incumbents There were 92 licence trades involving independent ISPs The top bands for ISPs acquiring spectrum were Cellular and FWA Category and number of licences PCS (98) AWS (22) Cellular (64) FWA(2300MH z) (112) FWA (3500MHz) (187) Total All Bands (483) Incumbents* to independent ISPs** Between Large Incumbents Independent ISPs to incumbents Between Independent ISP s 2% 5% 25% 0% 0% 4% 95% 77% 23% 91% 91% 88% 2% 9% 48% 2% 2% 7% 1% 9% 3% 7% 7% 1% * National and regional operators **ISPs (Excluding Xplornet) 10

11 4. Spectrum Availability: Track Record for TDS transfers Track Record for TDS transfers: Since 2013 (cont d) IC approved the transfer of two PCS spectrum licences from Canada to i-mobileca;* IC approved two subordinate spectrum licensing in the cellular band from Sogetel Mobilité Inc. (Sogetel) to Bell Mobility Inc. (Bell) in Nantes, QC and St-Liboire, QC To meet the policy objective, in 2014, Mr. Moore, Industry Minister, blocked the transfer of 83 spectrum licences from Nextwave to Inukshuk** Issues Short term sublicensing (year to year extensions) from operators create uncertainty for ISPs LTE grabbing spectrum from FWA re. 3GGP allocation of spectrum: bands 42 & 43 11

12 5. Availability of New Spectrum in Upper Bands Technology Historically, wireless services have been targeted at bands below 3 GHz due to technological and practical limitations. New technologies promise to facilitate next generation 5G wireless services - primarily mobile but also fixed wireless services with the objective to dramatically increase broadband speeds and the development of new features for clients Platforms - Drones, robots, high-altitude balloons and low-altitude satellites are all envisioned to provide fifth-generation (5G) wireless connections as early as 2020 (FCC) Small cells can be deployed in any frequency band, the lower power and coverage requirements of small cells mean higher frequencies can be used 12

13 5. Availability of New Spectrum in Upper Bands Regulatory Initiatives hot topic for next WRC Conf. FCC (USA) October FCC launched a public consultation on potential uses and technology requirements for high-frequency wireless spectrum above 24 GHz Manufacturers and developers researching feasibility of millimetre wave technologies (MVT) for both next-generation mobile services and novel Internet of Things applications. Ofcom (UK) Released a report on bands above 6GHz (April, 2015) New possibilities for spectrum sharing may be opened up as a result of beam widths being smaller at higher frequencies Ofcom auctioned spectrum in the 10, 28, 32 and 40 GHz bands in Current licensing structure of these bands might facilitate repurposing in the future as they are mostly held as blocks of spectrum by a small number of operators Sufficient spectrum below 6 GHz will be required to provide the coverage layer required to deliver a good user experience for 5G 13

14 5. Spectrum Availability in Upper Bands > 20 GHz Industry Canada Consultation on a new licensing framework and licence renewal process for the 24, 28 and 38 GHz Bands was conducted in June 2014 Microwave bands have typically been used by ISPs for backhaul MSI, Bell, Rogers, I-NetLink and Québecor noted that demand is expected to increase in the 24, 28 and 38 GHz bands as backhaul capacity is required for wireless networks For these bands (24, 28 and 38) the licence is transferable in whole or in part (divisibility), in both bandwidth and geographic dimensions, subject to Industry Canada's approval. TELUS stated that the 38 GHz band has significant spectrum that could be used for short urban backhaul Also suggested that the fragmentation between FCFS and auctioned spectrum makes it difficult to use this band as a fibre alternative in urban areas since that would require paired blocks larger than 50 MHz. 14

15 6. Potential Solutions 1. Spectrum Transfer 2. New Technologies and Devolution 3. Additional Spectrum 4. Mandatory Spectrum Sharing 15

16 6.1 Spectrum Transfer, Division & Subordinate Licensing (TDS) Significant amount of licensed but unused spectrum among incumbents; IC could adopt more aggressive policies that would enable smaller ISPs to gain access to that spectrum: Place restrictions on incumbents current warehoused spectrum i.e. use it or lose it * Re-farm spectrum from lower to higher economic uses Require incumbents to give priority in subordinate licensing to smaller users that have the least spectrum Subordinate Licensing of Spectrum enables efficient utilization of spectrum Possibility of subordinate licensing of 3.5 GHz Tier 4 licences 16

17 6.2 Application of New Technologies and Devolution White space spectrum IC is in the process of establishing procedures and technical rules to permit the introduction of Television White Space (TVWS) devices in the TV bands*. Spectrum will be managed via a dynamic database; however devices will be exempt from licensing and will operate on a no-interference, no-protection basis Responsibility for spectrum sharing is devolved from regulator to operators 3.5 GHz spectrum Renewal of 3.5 GHz spectrum provides an additional 50MHz of lightly licensed spectrum**. Tiered spectrum sharing offers the opportunity for multiple users to share spectrum users through database-driven prioritized access and offer reliable broadband service. 17

18 6.3 Making Available Additional Spectrum Upcoming Auctions of re-purposed or under or unused spectrum; Recently completed AWS-3 Auction provides opportunities due to limits imposed on larger players. Digital switchover will make available additional TV spectrum in 600MHz band Likely further licensing including auctions, of spectrum e.g. IC held back some of the unpaired lots in the current April, 2015 auction of 2.5GHz band; Under what conditions would ISPs be provided with a set aside by IC as spectrum poor service providers? Unlicensed Spectrum Offered to smaller, spectrum-poor players on a priority basis Can be used to deliver broadband access over large areas; It is an opportunity for small/medium sized ISPs to gain affordable access to spectrum; 18

19 6.4 Mandatory Sharing of Operators Facilities IC has implemented Mandatory Roaming agreements and Antenna Tower/Site Sharing in the interest of consumers. Mandatory Spectrum sharing may hold promise as a means to increase the efficient use of spectrum FCC Title II regulation of firms e.g. Google Fiber under Telecoms Act and facilities sharing (poles, conduits)* April 17, 2015 FCC approves plan to let broadband providers and military share spectrum (3550MHz to 3700MHz) 19

20 Appendices

21 Appendix 1. FCC Rules Regarding White Spaces In 2011, FCC approved the first device that could operate in white space frequencies There are currently 10 authorized TV bands, four of which are approved by OET* to provide service to TV White Space devices Mitigation of Interference Issues** Fixed devices must register their location in the database; Devices cannot transmit without checking database and must check periodically; Fixed devices may not operate adjacent to an occupied TV channel. 21

22 Appendix 2. Auctions: Formats and Features Simultaneous Multiple Rounds Auction (SMRA) Licences are auctioned simultaneously over many rounds of bidding Results are posted each round Percentage increase on lowest bid in order to remain in the running Winner announced after no new bids Combinatorial Clock Auction (CCA) Participants place bids on packages rather than individual items Auction consists of three phases: clock rounds, supplementary round and assignment round This format eliminates the risk that bidders may win some but not all of the licences that they desire this is particularly important given the regional nature of the licences to be auctioned High level of complexity due to activity rules and rules that allow generation of large number of bids 22

23 App 2: Canada s 2500 MHz Auction (April 2015) Change from SMRA to CCA format for 2.5 GHz auction Minimizes risk exposure (getting some spectrum needed for the business case but not all of it, or getting spectrum that is not needed) CCA allows bidders to create packages of licenses that, when combined, make a good business case at the price that reflects their valuation. Encourages truthful bidding, diminishes potential for gaming and collusion CCA format is very complex and doesn t allow the bidders to know how much exactly they will be paying for the spectrum they want Greater efficiency in allocation of spectrum Closer to market value First time mobile and fixed spectra are auctioned together Caps on mobile and fixed incumbents (Bell and Rogers for FDD; Xplornet, SSI for TDD) provides opportunity for new players and encourages competition 23

24 App 2: Comparison of FCC and IC Auction Dates Band CANADA FCC AWS-3 Mar 2015 Jan 2015 AM Broadcast May MHz Jan PCS Jan 2001 Dec Jan 2001 AWS -1 May 2008 Sep 2006 Broadband Wireless Access (24 GHz and 38 GHz) GHz and 3.5 GHz 2004 and Air-Ground Services ( MHz, MHz) GHz and 2.69 GHz Sources: 1) Industry Canada, Spectrum Auctions (2015). Available at: 2) FCC, Auction Summary (2014). Available at: 24

25 App 2: How much did the winners pay for 700 MHz spectrum 25

26 App 2: Comparison of CDN 700MHz to Other Auctions Source: Nordicity s presentation to CTCA delegates. Prices adjusted for

27 App 2: AWS-3 Results ($/Licence/MHz/Pop) $0.33 $0.29 $0.03 $0.03 $0.03 Bell Mobility Inc. Bragg Communications Incorporated TELUS Communications Company Vidéotron s.e.n.c. WIND Mobile Corp. Source: Nordicity s calculations 27

28 App 2: IC Auctions to Date Band Plan Licensing Information Auction Date 24 and 38 GHz Total 354 licences Licences Won: 260 PCS-2GHz Total 64 licences. Licenses won and 3500 MHz Total 849 Spectrum Licences in 172 service areas. License Won: and 3500 MHz (Residual) AWS-1 Air Ground ( MHz; MHz) Total 457 spectrum licences in 172 service areas Licences Won: 306 Total 292 Spectrum Licences in Tier 2 and 3 service areas Licences Won: 282 Total 2 national spectrum licences Licences Won: MHz Total 98 Tier 2 licences Licences Won: 97 AWS ( MHz and MHz) MHz Current Holdings: Inukshuk, Rogers, Bell, Xplornet, SaskTel, SSI Micro, IC Source: Industry Canada, Spectrum Auctions (2015). Available at: October 18, November 19, (In progress) 28

29 Thank You Questions?

Re: Gazette Notice SLPB : Consultation on Releasing Millimetre Wave Spectrum to Support 5G

Re: Gazette Notice SLPB : Consultation on Releasing Millimetre Wave Spectrum to Support 5G September 15, 2017 Senior Director, Spectrum Licensing and Auction Operations Innovation, Science and Economic Development Canada ic.spectrumauctions-encheresduspectre.ic@canada.ca Re: Gazette Notice SLPB-001-17: