The federal government is taking more steps to ensure rural parts of the country won’t be left behind urban centres that are getting high-speed Internet services.
Industry Minister James Moore issued a warning to fixed wireless carriers that own spectrum in the 2300 MHz and 3500 MHz bands their licences will not be renewed in the coming years if the haven’t met all licence conditions.
“Those that have not used the spectrum will lose it,” he said. Instead, the frequencies will be returned to the government and possibly auctioned off again.
On the other hand carriers that have fulfilled all conditions of the licence are eligible for them to be renewed.
The decision could affect BCE Inc.’s Bell Canada and Rogers Communications, who share some of that spectrum in a partnership called Inukshuk and told the government in December they have yet to deploy all they have. They asked for a three-year extension. Moore’s decision today rejects that.
In a statement this morning Bell said that “we’re confident Inukshuk will satisfy all of Industry Canada’s conditions.” Rogers issued a statement that it and Bell are in the process of deploying the spectrum for LTE service. Rogers will use the new network next year. “Rogers fully intends to meet the conditions” of the 2300 and 3500 MHz licences as set out in Moore’s statement, it said.
“The minister is showing surprising steel in policing the licence decisions,” said Iain Grant, managing director of the SeaBoard Group, a telecommunications consultancy. “As the Throne Speech indicated the government is serious about offering broadband to rural Canadians.”
Moore’s statement came as he released a policy decision on renewing the 2300 and 3500 MHz licences.
Ten year licences in those bands were aimed at fixed wireless service– meaning providers broadcast signals from antennas to businesses and homes. A number of buyers intended to use fixed wireless in rural areas where subscribers couldn’t get cable Internet service and/or the local phone company wasn’t delivering high speed broadband. This spectrum was auctioned off between 2004 and 2009. Some of those licences will expire starting next year and can be renewed.
But one of the conditions was that all of the spectrum carriers bought has to be used by the end of the 10 year period.
It’s not much of a problem for those who bought spectrum in the 2300 MHz band. But Industry Canada admits that deployment so far of spectrum in the 3500 MHz band has been limited despite the availability of antennas and subscriber modems. Most of these carriers are providing fixed wireless broadband to homes in rural areas, the government says.
Carriers that have fully met all licence conditions will be eligible for a one-year.
Industry Canada has also attached rural deployment conditions on the prized 700Mhz spectrum which will be auctioned off starting in January, 2014. Generally, carriers will have to deploy the spectrum to 20 to 50 per cent of the population covered by the geography they bought in, depending on the area.
But the licences will also specify carriers that win or get access to two or more paired blocks of spectrum bands must bring the next-generation services — meaning LTE — to at least 90 per cent of the population covered by their 2012 HSPA network within five years of receiving their licence, and 97 percent of the population covered within seven years.
LTE is a technology that promises wireless data speeds of up to 100 Mbps under ideal conditions. HSPA is a slower technology that promises wireless data speeds of up to 42 Mbps under ideal conditions. Users typically get less.
Bell, Rogers and Telus have LTE networks in urban areas of the country and HSPA networks in most other parts. SaskTel has LTE and HSPA coverage in Saskatchewan, Manitoba Telecom has a mix of LTE and HSPA coverage in its home province. Eastlink is expanding its new LTE network in the Maritimes. Wind Mobile and Mobilicity have HSPA networks in the Toronto area, Ottawa, Vancouver, Calgary and Edmonton. Videotron has an HSPA network in Quebec.
Three auctions were held to sell off the 2300/3500 frequencies to 34 companies for a total of $68.7 million.
The biggest winners were Bell Canada [TSX: BCE], which spent about $36 million, and Rogers Communications [TSX: RCI.B], which spent almost $11 million. They shared some of that spectrum in Inushuk consortium for bringing broadband to underserved part of the country using a high speed wireless technology called WiMAX.
That changed several years ago with the carriers instead deciding to use those frequencies to deploy HSPA or LTE.
One of the spectrum holders is Xplornet Communications Inc., which focuses on serving rural Canada with fixed wireless and satellite broadband. In an interview this morning executive vice-president C.J. Prudham said the carrier has deployed “virtually all” of the 3500 spectrum it has. “Every megahertz we can get we deploy pretty quickly,” she said.
It has no trouble getting antennas or customer modems, including models from Motorola and Alvarion Ltd. (which is in receivership and is in the process of being bought by Valley Telecom Ltd.