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Ottawa has announced plans for upcoming auctions of wireless airwaves, detailing how it will take back some spectrum from companies currently using it to provide rural internet so it can be deployed in 5G networks.

The federal government held an auction for low-band spectrum earlier this year, and on Wednesday after markets closed, it revealed new plans for the mid- and high-frequency airwaves it will sell over the next three years.

The next generation of wireless technology is expected to offer faster speeds with less lag time and support many more connected devices. To build networks that offer broad coverage and also the high-speed transfers of large amounts of data, telecom providers will need to use a mix of different types of airwaves, known as spectrum. Lower-frequency airwaves can travel farther while high-band spectrum carries more data.

The department of Innovation Science and Economic Development (ISED) said existing holders of spectrum in the 3,500-megahertz frequency, which some companies currently use to provide rural internet, will have to return some of the licences they own. This “clawback” policy generated controversy last year when it was first proposed, and rural internet provider Xplornet Communications Inc. said it could affect its ability to keep serving broadband customers. The company has more than 370,000 internet subscribers.

Meanwhile, Telus Corp., which owns little to no 3,500 MHz licences, lobbied hard for a large clawback to ensure that more spectrum would be available at auction next year. BCE Inc. and Rogers Communications Inc., two other national providers, together control 76 per cent of the spectrum in the band through a joint venture called Inukshuk.

Senior officials at ISED said in a briefing for reporters that the government decided to take back less spectrum than it initially proposed and companies that have to return licences will be permitted to bid on the airwaves in next year’s public auction. The government is consulting on whether to reserve some spectrum in the auction for smaller bidders or to cap the amount of spectrum any one company can own; ISED said both measures could help promote more competition.

Innovation Minister Navdeep Bains said in an interview that his department considered the views of rural internet providers in its consultation.

“This was all designed with a rural lens to make sure rural communities benefit,” he said, adding that “Xplornet retains 80 per cent of its current holdings.”

Xplornet was not immediately available to comment on the news on Wednesday evening. At a telecom industry conference in Toronto on Tuesday, CJ Prudham, the company’s chief legal officer, said the company spent years buying the spectrum licences and the proposed clawback was like “having the rug pulled out from under you.”

Spectrum in the 3,500-MHz band is designated only for “fixed-wireless” use, which means telecom operators use the airwaves to deliver internet service using communications towers and wireless signals. It is most often used in rural and remote areas that are difficult to serve with traditional wired internet service.

However, once the airwaves are auctioned off next year, they will be redesignated for “flexible” use, allowing licence holders to use them for either fixed wireless or mobile service, which makes them much more valuable to the large national carriers who want to serve their large number of urban-dwelling cellular customers. Current licence holders will be able to keep using the airwaves until the new owners are ready to deploy.

The 3,500 band is expected to be crucial for 5G services, offering a blend of both coverage and the capacity to carry significant data. Anoop Kulkarni, global head of sales for 5G network planning at Nokia, one of the main telecom network equipment makers, said on Tuesday it will be the “mainstream band” that supports most consumer applications.

ISED also said on Wednesday that it is beginning a consultation on the sale of airwaves in the 3,800-MHz frequency band, which are also currently being used for other purposes. It is proposing to auction that spectrum in 2022. It will hold an auction for higher-frequency spectrum in 2021.

BCE and Telus said they were still studying the decisions Wednesday evening while Rogers did not immediately have a comment.