Industry Canada Releases Its Licensing Framework For Mobile Broadband Services (MBS)

more+
less-

Industry Canada has issued its licensing framework for the Mobile Broadband Services (MBS) 700 MHz Band. The release of the framework follows the consultation process undertaken by the Department in April of 2012. The  objective of the framework is to promote increased wireless competition in each region of the country, “to ensure that Canadian consumers continue to benefit from more choice in the wireless sector and faster wireless speeds at better prices”.

A useful Backgrounder to each of the relevant framework documents can be found here.

The framework envisages that at least four competitive providers in every region will acquire spectrum in the 700 MHz spectrum auction (see below). In order to achieve this outcome, the Government has adopted a series of ex ante structural rules or "competitive measures" in four key areas:

1.      The current requirement for wireless companies to provide roaming on their networks to competitors will be expanded and strengthened, to help ensure comprehensive network coverage regardless of a consumer’s chosen service provider.

2.      The Government will tighten the rules to ensure more cellphone tower sharing, thereby limiting the construction of new cell towers (mitigating the major concern of cell tower proliferation). Both roaming and tower sharing will be subject to a strengthened arbitration process to address disputes. However Industry Canada stopped short of setting rates for these key bottleneck services (effectively leaving it to the CRTC to set rates under the Telecommunications Act).

3.      The Government will conduct wireless spectrum auctions to “promote four competitors in each region of the country”. The first of these auctions (the 700 MHz auction) will commence on November 19, 2013 (note: complex auction rules have been adopted to avoid strategic "gaming" of the auction process, I will leave that topic for a separate post).

4.   Spectrum aggregation rules will be implemented to facilitate access to wireless spectrum for smaller providers. A limit of two paired spectrum blocks in the 700 MHz band will be applicable to all licensees. However a limit of a single paired spectrum block will be imposed on "large wireless service providers" (i.e., companies with 10% or more share of the national wireless subscriber market or 20% or more in the province of the relevant licensed area).  The Government will also review the policy on spectrum licence transfers with the objective of promoting competition in the wireless sector. .

It remains to be seen however whether these ex ante measures will be sufficient to achieve a more competitive landscape, given the current high barriers to entry and capital investment needed for new players to launch new wireless services.  Some parties have urged the Government to go further and adopt more direct “market engineering” measures including setting aside spectrum specifically reserved for new entrants. 

The proposed framework underscores the challenge facing governments and regulators in the wireless sector in striking the appropriate balance between intervention/regulation on the one hand and reliance on market forces, on the other hand.

Reporters on Deadline

CONNECT