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Federal industry officials have unveiled a proposal designed to enhance cellphone service in large cities and mid-sized urban centres, but some say it could actually reduce high-speed Internet access for people living in rural areas.

KEVIN VAN PAASSEN/THE GLOBE AND MAIL

Federal industry officials have unveiled a proposal designed to enhance cellphone service in large cities and mid-sized urban centres, but some say it could actually reduce high-speed Internet access for people living in rural areas.

On Tuesday, Industry Canada said it will hold a consultation on the future of a band of airwaves used for rural Internet access and reiterated a commitment it made last year to force telecommunications providers to "use it or lose it" when it comes to spectrum licences.

The department added that it hopes to re-purpose some of that band of spectrum for cellular use in urban areas. That has left one major provider of rural Internet service worried about the impact on its customers. New Brunswick-based Xplornet Communications Inc. said that if the proposal goes forward, it will lose its ability to deliver high-speed service to thousands of rural households.

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Spectrum refers to the radio waves that carry telecommunications signals and it is commonly used to deliver cellular service. In areas outside of highly-populated urban centres, the Internet is not usually delivered through wires (whether through cable, telephone lines or fibre). Instead, operators use towers and spectrum to deliver broadband service to people's homes. This is known as "fixed wireless access" and the 3,500-megahertz band was originally designated for this purpose.

That is now the subject of Industry Canada's consultation.

The government said Tuesday that due to the high demand for wireless services generally – driven in part by increasing use of streaming video on smartphones – it wants to reclassify some of the 3,500-MHz band for cellular use in large cities and "medium urban" areas.

The consultation document proposes classifying areas with a population centre of 30,000 or more as urban and therefore designating them for mobile coverage rather than fixed wireless Internet services under the 3,500-MHz band.

"Xplornet is deeply concerned about this consultation and the proposal that will have a detrimental impact on high-speed Internet access for rural Canadians," president Allison Lenehan said in a statement Tuesday. "At this point we are reaching out to Industry Canada officials to make them aware of the implications of this proposed change."

The company said people in some areas who already have cellphone coverage could lose their home Internet connection. For example, people living in rural areas around larger centres, such as Belleville, Ont., Cornwall, Ont., and Grande Prairie, Alta., could be affected. Those in the urban centre would likely still have Internet access through wired services, but those in the outlying areas could be cut off.

Industry Canada appears to acknowledge that concern in part in the consultation document, saying it recognizes that some rural communities will fall into urban classifications. It said the areas were designed to minimize potential interference problems that could arise from the spectrum being used for different purposes.

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Other spectrum is also available for fixed wireless Internet service including the 2,300-MHz band, which was auctioned off along with the 3,500 band in 2004 and 2009. Apart from Xplornet and several other rural broadband providers, Canada's largest telecommunications providers also own licences in those bands.

"Spectrum is a valuable public resource and it's the government's responsibility to allocate it in a way that benefits all Canadians," Jake Enwright, press secretary for Industry Minister James Moore, said Tuesday.

The proposed reallocation of spectrum comes as the federal government is pushing to expand rural Internet access with a plan to spend $305-million over five years to extend high-speed services to 98 per cent of Canadians. The government is mapping current Internet coverage this summer and plans to start taking applications for eligible projects starting in the fall.

According to the Canadian Radio-television and Telecommunications Commission, 85 per cent of rural households had access to residential broadband Internet in 2012, not including services provided by satellite.

The government is accepting comments on its proposals for the 3,500-MHz band up until Oct. 8 with reply submissions due Nov. 5.

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