Telecoms object to Telesat’s proposal to auction 3800 MHz spectrum

A number of Canadian wireless providers have objected to a proposal that could allow satellite operator Telesat Holdings Inc. to sell off part of the 3800 MHz spectrum, instead of Innovation, Science, and Economic Development Canada, which typically conducts auctions for spectrum allocation. The objections came in response to ISED’s two-month consultation period on the future of the 3800 MHz band, which ranges from 3650 to 4200 MHz, and is crucial for the deployment of 5G wireless networks. (A 30-day follow-up reply period is ongoing, and will conclude in late November.) At least five companies raised concerns with the August proposal, wherein Telesat would sell off 200 MHz within that band, with the satellite operator calling its proposal “the only actionable path to rapidly deploy true 5G service in Canada.” Companies including Rogers Communications Inc., Bragg Communications Inc.‘s Eastlink, Saskatchewan Telecommunications Holding Corp., Quebecor Inc., and Shaw Communications Inc. objected, mostly raising concerns about the idea of a private entity managing spectrum allocation, rather than the government. A clear majority of that band (500 MHz) is currently held by Telesat and used for Fixed Satellite Services (FSS). ISED has proposed making the 3650 to 3900 MHz range available for wireless use by the end of 2023 (except for in satellite-dependent areas), and shifting FSS up to the 4000 to 4200 MHz range. The remaining spectrum between 3900 and 4000 MHz would then be split between flexible use and a guard band. Meanwhile, Telesat is proposing that the 3700 to 3900 MHz range be cleared and auctioned alongside the 3500 MHz band in June 2021 — over two years faster than ISED’s plan to clear that section by late 2023. Telesat would skip any ISED licensing process for spectrum allocation, and would invest profits from the sale into new satellites and facilities, particularly its low-orbit earth constellation, Telesat LEO. In a statement, Telesat manager of government affairs Stephen Hampton said that freeing up the 3800 MHz band sooner rather than later would help alleviate the shortage of mid-band spectrum for 5G — if the 3500 MHz band goes to auction in 2021 but the 3800 band does not, Hampton said this will likely result in extra-high prices because of reduced spectrum supply at auction. “The carriers will have to pass on the high costs of this spectrum to Canadian consumers, undermining the vital policy objective of affordable wireless service.” Although ISED typically manages the sale process for spectrum licenses, and not external companies, Telesat proposed this plan as a way to fast-track wireless providers’ access to the spectrum they need to roll out 5G networks. ISED has not committed to any particular approach for licensing the 3800 MHZ band yet. In responses to the ISED consultation on the band, multiple wireless companies indicated that they were not enthusiastic about Telesat’s plan. Providers such as Eastlink responded, noting that if Telesat acts as auctioneer, it and other smaller, regional providers could be locked out of the spectrum “Eastlink is concerned that implementing their proposal will grant Telesat the ability to dictate the terms, conditions and opening prices for this spectrum, compromising the ability of smaller, regional providers to gain access to this spectrum,” Eastlink wrote in its submission. Eastlink also expressed concern over the “financial incentives” for Telesat in the auction process, suggesting that this might result in inflated prices. Other smaller providers expressed similar worries, with both SaskTel and Shaw writing that it “would not be in the best interest of Canadians.” “It would give Telesat responsibilities that are at the core of mandate, position Telesat as the arbiter of Canada’s digital future, and run counter to the Department’s objectives for this important spectrum band,” Shaw wrote in its response. They were joined in opposition to the Telesat plan by Rogers, arguing that Telesat would seek to capitalize on the process. “Telesat’s incentives are to extract as much capital as possible from mobile carriers, reducing capital for network investment in urban and rural, but hurting rural more owing to already challenging economics,” Rogers wrote. In a statement to The Wire Report, Hampton rejected arguments that the company was hoping to capitalize on the process, writing that the company was “fully committed to running a fair, open and transparent process.” “To promote competition and affordability in the wireless services market, Telesat is receptive to pro-competitive measures that the ISED Minister may consider imposing, including set asides for the regional providers. In short, this isn’t about maximizing profits at Telesat,” Hampton wrote in the email. Rogers was the only major player to push back on Telesat’s plan — in their responses, both BCE Inc. and Telus Corp. gave support to it on the basis that it would speed up the development of 5G networks. “This will result in the faster and more efficient deployment of 5G services, which in turn will benefit rural connectivity and competition in Canada's wireless market,” Bell’s submission to ISED argued. One regional provider, Cogeco Inc., also tentatively endorsed Telesat’s plan, but also noted a strong preference for ISED to impose “conditions and pro-competitive measures” on the auction. The 3800 MHz band is not the only spectrum segment likely to be used for 5G networks: wireless companies are also planning to use the 3500 MHz band as a key part of their initial 5G expansions. ISED will auction that band in June 2021, although it was initially scheduled for December 2020 and pushed back due to the COVID-19 pandemic. The biggest providers — Bell, Telus, and Rogers — currently offer limited 5G access, restricted to a few major Canadian cities; once they access the 3500 MHz spectrum, those networks will start to be expanded. — Reporting by Tim Forster at tforster@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

Telecoms object to Telesat’s proposal to auction 3800 MHz spectrum

News | November 10, 2020

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