The federal government is cracking down on telecom carriers that hoard valuable spectrum licences as an industry battle heats up over the future of those publicly-owned assets.
Industry Minister James Moore announced Thursday that Ottawa will reclaim spectrum in the 2300 and 3500 megahertz bands from carriers that have held those licences for years but failed to use them.
Spectrum refers to the invisible radio waves that telecoms use to provide a variety of services, including cellphone and Internet access for consumers. Those finite resources are owned by the Canadian public and controlled by the government on their behalf.
Mr. Moore’s announcement signals the Conservative government will no longer turn a blind eye to carriers that sit on fallow spectrum to the detriment of rural consumers – a move that is bound to resonate with a huge swath of the party’s voter base.
Spectrum licences in the 2300 and 3500 MHz bands were originally designated for “fixed wireless access”, which basically means high-speed Internet. Unlike cities where Internet is provided through wires (such as copper telephone lines, fibre or cable), rural communities generally get Internet through satellite-based services or fixed wireless access that uses a combination of spectrum and towers.
Some countries, however, are now reconsidering whether the 3500 MHz band in particular should be repurposed for mobile use because of the growing popularity of smartphones. Mr. Moore’s announcement does not make it clear whether Canada has taken a position on that broader debate.
What the government’s announcement does say is that only carriers that have met all of their licence conditions would qualify for renewals. It also notes that Ottawa plans to hold a consultation on how to reassign any returned spectrum.
"Today, our government took the next step in delivering on our commitment in the Speech from the Throne to defend Canadian consumers by ensuring Canadians living in rural areas benefit from greater access to high-speed Internet services,” said Mr. Moore in a statement.
"Beginning in March 2014, 2300 MHz and 3500 MHz spectrum licences will be subject to renewal. These spectrum licences contained conditions requiring that the spectrum be used for fixed wireless access, which represents the most affordable high-speed Internet access for many rural Canadians. Our government will only renew spectrum licences for those holders that have met all conditions of licence. Those that have not used the spectrum will lose it.
“As we indicated in the Speech from the Throne, our government will continue to defend the interests of Canadian consumers by providing more choice, lower prices and better service in Canada's wireless sector.”
The 2300 and 3500 MHz spectrum licences were auctioned between 2004 and 2009, and Ottawa has already cut carriers some slack on deployment – much to the chagrin of rural Internet service providers.
Companies like Xplornet Communications Inc. have previously accused Rogers Communications Inc. and BCE Inc. of “hoarding” licences especially for 3500 MHz spectrum – an outcome they say hurts competition for Internet services in rural areas.
“This Minster is listening to the needs of rural Canadians by ensuring that Industry Canada applies the rules fairly to all telecom services in Canada,” said Xplornet president Allison Lenehan in a release. “Hundreds of thousands of rural Canadians access the Internet through fixed wireless networks that operate on spectrum. Today’s announcement is a clear signal that spectrum designated for broadband use should be used for that purpose so that rural Canadians can experience the full benefits of broadband technology.”
Rogers and BCE’s Bell Canada division collectively hold about 75 per cent of the 3500 MHz spectrum through a joint venture called Inukshuk Wireless, but have not widely used it despite being given licence extensions by Ottawa.
They have flatly denied allegations of hoarding and have previously said it would be more efficient to use that spectrum to add capacity to their wireless networks rather than deploying outmoded technology for fixed Internet access.
“Canadians will be more effectively served by the implementation of the most innovative and advanced technologies such as LTE, even if this means that the deployment requirements must be extended again,” stated Inukshuk’s submission to Industry Canada.
"Inukshuk, a partnership between Bell and Rogers, holds this spectrum. We're confident Inukshuk will satisfy all of Industry Canada’s conditions," said BCE spokesman Mark Langton in an e-mail.
Bell’s parent company, BCE, owns a 15-per-cent stake in The Globe and Mail.
"Today's decision means Canadians will benefit from additional quality spectrum being deployed across the country, which will lead to dependable high-speed Internet services on the latest technologies at the best prices. Our government will continue to enhance rural access to high-speed broadband networks and will continue to put consumer interests at the core of our decisions," added Mr. Moore.
“Rogers, which holds a 50-per-cent interest in the licences held by the Inukshuk Wireless Partnership (a 50:50 joint network build partnership between Rogers and Bell), is already in the process of deploying its half of a new 4G LTE broadband wireless network with Bell using our 2.3GHz and 3.5GHz spectrum,” said Rogers spokeswoman Terrie Tweddle.
“Rogers will be providing broadband wireless services to Canadians using the new network beginning in 2014. Rogers fully intends to meet the conditions of the 2.3GHz and 3.5GHz licences as set out in Minister Moore’s statement of November 14th 2013, such that our licences will be renewed as per Industry Canada policy.”