Branchons nos Communautés • Connecting Communities 0 CANWISP’S PROPOSED CHANGES TO BILL S-242 Strengthening Broadband Deployment in Rural Canada CanWISP jblack@canwisp.ca Rural communities need the support of the Federal Government to ensure that spectrum, a public resource, is used for the benefit of all Canadians.

Branchons nos Communautés • Connecting Communities 1 Contents PROMOTING RURAL BROADBAND IN CANADA .......................................................................................... 2 About the Canadian Association of Wireless Internet Service Providers (CanWISP) ................................ 2 Bill S-242 ....................................................................................................................................................... 2 CanWISP Recommendations for Bill S-242 .................................................................................................. 3 Bill S-242 Urgency ......................................................................................................................................... 4 Remedying Impediments to Rural Connectivity ......................................................................................... 4 The Time for Legislative Action is Now........................................................................................................ 5 Detailed Background ..................................................................................................................................... 6 Bill S-242 and the Upcoming 3800MHz Auction ........................................................................................... 7 Loss of WBS Spectrum and its impact on Small ISPs..................................................................................... 8 A brief history of WBS spectrum ............................................................................................................... 9 Condition of spectrum licences issued ....................................................................................................... 11 Revocation of spectrum licence .................................................................................................................. 14 Civil liability ................................................................................................................................................. 15 Reissuance of spectrum licence .................................................................................................................. 16 Sub Licensing and Subordination ................................................................................................................ 16 Service areas for competitive licencing ...................................................................................................... 18

Branchons nos Communautés • Connecting Communities 2 PROMOTING RURAL BROADBAND IN CANADA About the Canadian Association of Wireless Internet Service Providers (CanWISP) • CanWISP represents Wireless Internet Service Providers (“WISPs”) across Canada. These operators provide broadband Internet access to hundreds of thousands of households and businesses in rural communities. They use a combination of wireless and fibre optic technologies. • CanWISP members are based in the communities they serve. These small, nimble businesses operate local broadband networks with low overhead costs.

They have the capacity to build networks more quickly than, and at a lower cost than, large national carriers. • WISPs depend on spectrum to deliver service to users. Bill S-242 • Bill S-242 recognizes that spectrum has not been effectively deployed in rural Canada while layers of spectrum and competing services have been deployed in urban areas. This imbalance in spectrum utilization is a significant impediment to rural connectivity. In rural areas, there are both unused and underutilized spectrum licences held by large national and regional carriers.

As a result of this spectrum squatting rural ISPs are not able to access enough spectrum to expand and enhance their rural broadband networks. • CanWISP welcomes the Senate’s desire to rectify this spectrum imbalance. • However, the Bill proposes a one -size-fits-all requirement for all types of spectrum, terrain, and populations.

The proposed requirement to serve 50% of the population of a large licence area within 3 years will not support a broad overall goal to increase rural connectivity. • In addition, the proposed provision regarding civil liability creates an undefined and potentially unlimited financial risk to companies investing in new business ven tures in rural communities. This clause will discourage, not promote, investment into rural broadband infrastructure. • Bill S-242 imposes a requirement for a quick spectrum auction if deployment requirements are not met.

There are other means of spectrum re-distribution which should not be ignored. • Moreover, the Bill does not address other critical obstacles to rural broadband rollouts faced by rural ISPs. • As a result, we recommend that in addition to passing an amended Bill S -242, the Senate initiate an additional Bill that would address other important impediments to rural broadband rollouts in a more flexible manner.

Branchons nos Communautés • Connecting Communities 3 CanWISP Recommendations for Bill S-242 Condition of spectrum licences issued • CanWISP recommends that the Bill be changed to require a milestone at year 3 to provide service availability to 50% of the population within each of the Tier 5 areas contained within the auctioned area regardless of the Tier size of the licence . Service provided either directly by the licence holder or by sub -licensees (i.e. via subordination) will count towards the deployment requirements.

Revocation of spectrum licence • CanWISP recommends, if the Population Coverage requirement is not met at 3 years, t hen the licence holder would need to provide a reasonable plan of action to meet the requirement by year 5. If the Population Coverage requirement is not met at year 3 and the licence holder does not provide a commercially reasonable remedy that could include sublicensing to a third party, then the licence will be revoked. Civil liability • CanWISP submits that Civil Liability should be removed from the Bill.

The provision creates an undefined and potentially unlimited financial risk to companies investing in new business ventures in rural communities. Reissuance of spectrum licence • CanWISP recommends that the Bill be modified to reflect issues such as geography, population density and even the physics of radio frequencies which means that a one-size fits all approach to spectrum re-allocation won’t achieve the goal of ensuring the spectrum is reissued in a very timely manner to the benefit of rural Canadians.

ISED should be empowered to determine the means of spectrum re-allocation, but that regardless of the method used, the spectrum be made available for re-use within 180 days of licence revocation. Enhanced reporting requirements • CanWISP recommends that the Bill be modified to establish a framework to streamline, monitor and track spectrum subordination requests for any spectrum acquired at auction.

In order to effectively promote subordination, ISED should require licence holders to undertake the following: o Annual reporting of su bordinate licence requests , with details of the service provider, whether a subordination was successfully negotiated, and if not, reasons for refusal, etc. o Designate a specific individual within the organization with authority for subord ination decisions and provide contact information within the spectrum database. o Respond to subordination requests within a reasonable timeframe.

Branchons nos Communautés • Connecting Communities 4 Bill S-242 Urgency Rural operators have been utilizing 3650MHz spectrum to deliver internet to rural Canadians for years. Countless thousands of rural Canadians rely on this spectrum for access to the internet. The spectrum licences of these rural operators are being revoked/ clawed back so that the spectrum can be auctioned to the major telecommunications compani es later this year in the 3800MHz Auction.

Without stricter deployment requirements for this upcoming auction, there is a real chance that the major telecommunications companies will not utilize the spectrum in rural Canada or sub-licence it to providers who will use it rurally. This public resource will be lost and no lo nger used to serve rural Canadians. It is critical that legislation, or policy, be enacted to ensure that rural Canadians are not deprived of their internet access. Remedying Impediments to Rural Connectivity Bill S- 242 deals with one barrier to better internet for rural Canadians.

There are several other obstructions that could be removed and would have significant benefit in permanently abolishing the urban-rural digital divide. Many of our concerns were also noted by the Auditor General of Canada1, the Broadcast and Telecom Legislative Review panel report 2. To date we have seen scant progress towards the following recommendations that CanWISP endorses and submits for the Senate’s consideration. • Spectrum auction rules that favour large national and regional carriers contribute to the spectrum imbalance.

Auction rules that support mobile competition in major cities impede fixed wireless deployment in rural areas. The use of smaller auction areas 3 , targeted set-asides and spectrum caps, as CanWISP has advocated in the past4, will put spectrum in the hands of local broadband providers that will use it in their communities. • When there is a claw-back or reallocation of spectrum that is being used to provide rural connectivity, investment in rural broadband networks is wiped out by policy. This is happening today in the 3650 MHz spectrum.

Equivalent spectrum must be made available to the same operators in a reasonable time frame and at a reasonable cost to accelerate investment in rural networks. • A portion of the proceeds from the 3800MHz auction should be reinvested with rural operators to fund deployment of WBS replacement equipment to serve their rural customers.

CanWISP posits that 50MHz of the 2 50MHz auction corresponds to 2 0% of the proceeds of the auction and would be appropriate as a re-investment fund. • Funding programs that favour large telecommunications companies with little or no rural infrastructure can hinder, rather than support, rural connectivity. Funding programs should be accessible to small local companies so that Canada’s rural communities can be served more quickly by companies that will continue to invest in the network long after the program’s conclusion.

Improving the transparency of the selection process, as recommended by the Auditor General 5, will broaden the accessibility of funding programs. 1 2018 Fall Reports of the Auditor General of Canada to the Parliament of Canada, Report 1— Connectivity in Rural and Remote Areas, Tabled November 20, 2018 (“Auditor General Connectivity Report”), at paras. 1.61 to 1.81 2 Canada's communications future: Time to act 3 Auditor General Connectivity Report, at paras. 1.61, 1.76 and 1.77 4 See CanWISP Comments to SLPB -006-21 — Consultation on a Policy and Licensing Framework for Spectrum in the 3800 MHz Band, dated February 15, 2022, at paras. 8-16, available for download here. 5 Auditor General Connectivity Report, at paras. 1.55-1.57

Branchons nos Communautés • Connecting Communities 5 • Rural connectivity is also impeded by small companies’ lack of wholesale access to telecommunications infrastructure such as backbone fibre transport. This was noted by the Standing Committee of Industry, Science and Technology in 2018. 6 The existing regime of regulated access does not always result in widespread and timely access.

The clear specification of rates, terms, and conditions for, and enforcement of, such access is necessary to ensure that the open access obligations are met for all infrastructure, including infrastructure that was funded with public money. The Time for Legislative Action is Now CanWISP appreciates the opportunity to participate in this process.

We trust that our comments have highlighted some of the challenges faced by small rural operators who have been battling the digital rural divide for a decade or more. 6 Report of the Standing Committee on Industry, Science and Technology, Broadband Connectivity in Rural Canada: Overcoming the Digital Divide, Presented April 17, 2018, at Recommendation 4.

Branchons nos Communautés • Connecting Communities 6 Detailed Background DETAILED BACKGROUND AND SUPPORTING INFORMATION

Branchons nos Communautés • Connecting Communities 7 Bill S-242 and the Upcoming 3800MHz Auction Bill S-242 does not address all of the spectrum issues rural providers face in the next few years. The Bill does address some important issues but will not help our small rural internet service providers gain access to the large amount of unused spectrum in the rural and remote regions of the country we feel the upcoming 3800MHz auction will produce.

In the following pages CanWISP provides some background to the suggested modifications to the Bill and to the proposed next steps in assisting with the availability of rural internet. CanWISP submits that rural subscribers would be better served by ISED’s policy objectives if future auctions used the 654 smaller service areas (called Tier 5). The use of smaller auction areas would allow WISPs to acquire the affordable spectrum they need for their ongoing rural operations.

As Minister Bains indicated in a July 23rd, 2019, announcement, ‘’the introduction of smaller spectrum service areas, which will make it more economical for service providers, particularly smaller providers in rural areas, to access the spectrum they need to deliver telecommunications services’’. 7 To date no spectrum has been auctioned at the Tier 5 level. This document uses examples based on a Tier 4 area located in Kingston Ontario that CanWISP referenced in our presentation to the committee on February 8, 2023.

We believe that this example is typical in representing the issues rural operators face across the country. In the 3800 MHz auction, ISED has not introduced any pro-competitive measures that are specific to rural areas. The 100 MHz cross-band cap8 is the same in all service areas, with no measures to promote wider access to spectrum in rural service areas. Deployment requirements in the 3800 MHz band are less stringent in rural service areas than urban service areas, further undermining the pursuit of rural connectivity.

The procompetitive 100MHz spectrum cap in the 3800MHz auction may have the unintended consequences of allowing large mobile operators to top up their spectrum holdings at bargain basement prices.

COMPANY WON AT 3500 MHZ AUCTION (MHZ) TRANSITIONED (MHZ) CURRENT 3 GHZ SPECTRUM HOLDING (MHZ) MHZ AVAILABLE IN 3800 MHZ AUCTION 100 MHZ CROSSBAND CAP BELL 20 30 50 50 XPLORE 20* 50 70 30 ROGERS 10 30 40 60 COGECO 20* 0 20 80 VIDEOTRON 20* 0 20 80 TOTALS 90 110 200 300** * Set Aside ** 250 available at auction Table 1 3GHz Spectrum Holders in Kingston Ontario Tier 4-070 Auction rules as they are currently written and enforced by ISED, continue to support urban competition, not rural connectivity. Repeatedly large telcos gain more and more spectrum at auction.

If they decide to deploy the spectrum purchased, they tend to deploy that new spectrum across already 7 Government of Canada works to improve rural connectivity - Canada.ca 8 100MHz cross-band cap limits a single operator to no more than 100MHz of licenses in both the 3500MHz band and 3800MHz band (collectively 3450MHz – 3900MHz) This whole band is suitable for 5G deployment.

Branchons nos Communautés • Connecting Communities 8 serviced densely populated areas. CanWISP is very concerned that if this behavior is not corrected especially in the upcoming 3800MHz auction this conduct will continue. With the re-assignment of 50MHz of WBS spectrum (3650-3700MHz also called 3.65GHz), that is currently used by smaller companies to service rural Canada, to the upcoming 3800MHz auction, we believe that most of this spectrum will be used to augment the existing spectrum holding of the large providers already holding 3500MHz licenses.

Sometimes this has the effect of increasing capacity and lowering pricing which can be a desirable outcome. Often the spectrum obtained at auction is used to provide cellular mobile services. Mobile service providers’ networks are not designed to provide a primary internet service. Commonly mobile internet data fees are very expensive and limited in their available capacity when compared to rural ISPs providing fixed wireless access. Ultimately it will impede small rural operators.

This raises the very real threat of a well-intentioned government policy resulting in internet service being withdrawn to those Canadians most in need. Loss of WBS Spectrum and its impact on Small ISPs The largest claw back of spectrum licences in history is currently in process. Spectrum used by many rural ISPs to provide service to rural Canadians, is being taken back by ISED so that the major players can bid for it in the upcoming 3800MHz auction.

In May 2021, ISED declared they would be replacing the 50MHz of WBS spectrum with 80MHz of new spectrum in order to improve small companies access to spectrum to service rural Canadians. “Existing WBS licencees in the 3650-3700 MHz band will be displaced. … ISED will designate 80 MHz of spectrum for shared use in the 3900-3980 MHz band. 9 15 months later, WBS users were stunned to learn in ISED’s release of proposed Non Competitive Licencing rules (SPB-003-22 released in August 2022) the department had made a major change in strategy “While the 3900 MHz band may provide an alternative option for spectrum to support the services currently offered by WBS licencees, a number of key differences may impact the network structure of current WBS licencees when considering a transition into the proposed NCL licencing framework.

Operators should consider that: • Applications will be limited to the local licencing area structure (i.e. not the entire Tier 4 area for which they are currently licenced). • The technical requirements for the band may ultimately establish lower power limits than those currently permitted in the WBS band. Consequently, licencees may be required to deploy a greater number of base stations to support the provision of service”. 10 It would be a tragedy if the very spectrum used to serve rural Canadians today is purchased by major players and then not deployed in rural Canada.

Rural ISPs across the country are trying to figure out how they’ll serve their customers in just a few years’ time. 9 Decision on the Technical and Policy Framework for the 3650-4200 MHz Band and Changes to the Frequency Allocation of the 3500-3650 MHz Band (canada.ca) D1 5 and D16 10 Consultation on a Non-Competitive Local Licensing Framework, Including Spectrum in the 3900-3980 MHz Band and Portions of the 26, 28 and 38 GHz Bands (canada.ca) para 155

Branchons nos Communautés • Connecting Communities 9 A brief history of WBS spectrum Wireless Broadband Services (WBS) in the Frequency Band 3650-3700 MHz was made available to all service operators in 2010. Spectrum licences for WBS were issued on a Tier 4 service area basis. Each Tier 4 area being served, required a spectrum licence. Spectrum licences were issued for use of the band on a shared basis and all licences had equal access to the spectrum. There was no limitation on the number of licences issued for the same spectrum and geographic area (Tier 4) and no priority access was given to any operations.

This is known as “All come, All served” licencing. Licencees were expected to cooperate in order to identify and resolve possible interference issues among themselves. Licencees establishing new stations were required to coordinate with existing licencees in order to resolve any technical issues. To assist in facilitating cooperation and coordination, ISED developed a publicly accessible database showing both licence and site data for all WBS operators. ISED was to implement a yearly licence fee based on population. Licencees were required to pay annual fees once the fee order was in place.

The Department did accept applications and issue licences pending the establishment of the fee, but that fee was never imposed by ISED. Fees for Tier 4 “low population areas” were expected to be as low as $250.00 per year. The Kingston Tier 4-070 was expected to be $674.41 per year based on 1996 population census data. In 2019, the ISED database listed 8,245 Access Points operating in WBS. Of these access points only 6 access points were registered to Bell (Mobility) and 7 access points registered to Telus. Rogers had no access points registered in the ISED database.

Assuming each access point serves 20 households the WBS band serviced almost 165,000 rural Canadian families. As CanWISP wrote in its submission to a “CONSULTATION ON THE SPECTRUM OUTLOOK 2022 TO 2026” 11 ISED has chosen to displace WISPs from the 3650-3700 MHz WBS band, leaving investments stranded and businesses facing uncertainty. Rural internet service providers have invested heavily in networks using this band, bringing broadband connectivity to rural communities across Canada.

The decision to displace users from the WBS band has left fixed wireless access (“FWA”) network operators with no ability to invest in network improvements since May 2021. By halting FWA network investment, ISED has harmed consumers in the rural communities served by WISPs. 11 CanWISP SPB-005-22 Spectrum Outlook Comments Final.pdf Figure 2 Example of rural WBS coverage Figure 1 Location of WBS services across the country

Branchons nos Communautés • Connecting Communities 10 In the Consultation on the Technical and Policy Framework for the 3650-4200 MHz Band and Changes to the Frequency Allocation of the 3500-3650 MHz Band ISED recognizes “that existing WBS licencees would likely have to invest in new equipment to use this new band, as existing equipment would not be able to tune to the 3900-3980 MHz band”12.

In recognizing this issue ISED asked for comments about “Certain costs of transitioning to a new frequency band and upgrading equipment in order to achieve speeds of at least 50/10 Mbps could be considered eligible costs for successful applicants under the UBF.13 In the resulting decision14 ISED made no mention as to transition cost support to rural operators. In fact, in August 2020, ISED introduced a moratorium on new WBS deployments in all urban Tier 4 service areas. These service areas included both rural and urban territory.

This allowed almost one full year for licencees in 3500MHz to overbuild small WISP’s rural networks. In May 2021, the ISED 3800MHz decision eased the moratorium to include only the Urban Tier 5 area, however the decision had already seriously eroded some rural operators market penetration. ISED’s decision has not only thwarted rural WISPs’ abilities to invest in their core businesses of providing rural broadband connectivity. ISED has also treated these small businesses in a manner that is at odds with ISED’s treatment of large spectrum-holders.

In the 2019 Decision on Revisions to the 3500 MHz Band to Accommodate Flexible Use and Preliminary Decisions on Changes to the 3800 MHz Band (“2019 Decision”), ISED chose to reallocate and reclaim part of the 3475-3650 MHz band. However, ISED did not displace any spectrum holders from this band; ISED permitted spectrum holders to retain 60 MHz, 50 MHz, or 20 MHz of their spectrum holdings (for companies holding > 75 MHz, 50 MHz, and < 50 MHz, respectively).

While some spectrum licences were subject to changed frequency assignments following the 3500 MHz auction, these frequency assignment changes were within the same frequency band, and generally would not require new equipment to support the new frequency assignment. From the date of the 2019 Decision, these spectrum holders were allotted between 2.5 years and 5 years to transition to their new frequency assignments (until 6 months following the 3500 MHz auction for urban licences and 3 years following the 3500 MHz auction for the most rural licences, respectively).

By contrast, small WISPs using the WBS band today have two years and five years to transition to their new assignment (until March 2025 for urban licences and March 2027 for rural licences, respectively). This transition will require the replacement of existing radio equipment (at both the tower sites and the customer sites) with new equipment that is not available today, meaning that operators cannot yet begin their transition planning, much less the actual transition. In ISEDs proposed rules to access the promised 80MHz of replacement spectrum, the proposed rules will hamstring rural operators.

The new frequency assignment may be as small as 20 MHz, which would constitute less than half of the 50 MHz available to these providers today 15.

Additional constraints in the ISED proposal could restrict a rural operator to an area-based limit, based on a percentage (e.g. 5%-20%) of the geographic area (in square 12 Consultation on the Technical and Policy Framework for the 3650-4200 MHz Band and Changes to the Frequency Allocation of the 3500-3650 MHz Band (canada.ca) p ara 89 13 Consultation on the Technical and Policy Framework for the 3650-4200 MHz Band and Changes to the Frequency Allocation of the 3500-3650 MHz Band (canada.ca) p ara 92 14 Consultation on the Technical and Policy Framework for the 3650-4200 MHz Band and Changes to the Frequency Allocation of the 3500-3650 MHz Band (canada.ca) 15 Consultation on a Non-Competitive Local Licensing Framework, Including Spectrum in the 3900-3980 MHz Band and Portions of the 26, 28 and 38 GHz Bands (canada.ca) p ara 140

Branchons nos Communautés • Connecting Communities 11 km) of the Tier 5 service area.16 In a presentation to ISED17 in September 2022, CanWISP analysed the financial model of the proposed fees on 3 separate rural networks.

In all three cases the fees ISED proposed for Non Competitive Licencing precluded the new spectrum from being utilized in a rural internet service provider’s network and in fact the proposed yearly fee was many times more than each provider’s total revenue. 5-492 Hanna Alberta Area (km2) Population ISEDs Proposed NCL Fee per km2 Yearly Fee for 20MHz of Spectrum $4,011,904 22,338 9,863 $8.98 Total fees for a 20 Year licence $80,238,096 Table 2 ISED Proposed Yearly fees for Hanna, Alberta for 20Mhz of NCL Spectrum to provide 50x10Mbps Internet service.

Comparable: Using the 3500MHz auction results for pricing comparison, Videotron paid $934K for 20MHz for 20 years covering a population of 51,240 (The entire Tier 4-133 that contains Tier 5-492). CanWISP notes that deployments in the WBS band are extensive and provide crucial broadband connectivity services in rural communities across Canada. The transition that is imposed on WBS licence holders is significantly more onerous than the transition that was imposed on 3500 MHz licence holders.

Small service providers using WBS licences have been subjected to a strikingly worse transition policy than the predominantly large holders of 3500 MHz licences. The rural communities served by small service providers will suffer the consequences of this policy decision in the form of service disruptions, degradations, and discontinuations following the WBS displacement.

While Bill S-242 will not address the spectrum issues rural providers face in the next few years, we do feel the Bill does address some issues that will help our members access the unused spectrum we feel the upcoming 3800MHz auction will produce. In the following pages CanWISP suggests some modifications to the Bill and our underlying rational for the changes. Condition of spectrum licences issued

(1.11) It is a condition of every licence issued under subparagraph (1)(a)(i.1) — other than a licence in respect of the utilization of radio frequencies within a Tier 5 service area as described in Canada Gazette notice DGSO-006-19, Decision on a New Set of Service Areas for Spectrum Licensing, published on July 23, 2019 — that the holder must deploy the spectrum to provide service to at least 50% of the population within the geographic area covered by the spectrum licence within three years of the licence’s issuance. 16 Consultation on a Non-Competitive Local Licensing Framework, Including Spectrum in the 3900-3980 MHz Band and Portions of the 26, 28 and 38 GHz Bands (canada.ca) p ara 139 17 PowerPoint Presentation (canwisp.ca)

Branchons nos Communautés • Connecting Communities 12 CanWISP recommends that the Bill be changed to require a milestone at year 3 to provide service availability to 50% of the population of the licence area to be measured within each of the Tier 5 areas regardless of the Tier size. The basis for this analysis is to demonstrate the potential unintended consequences of excluding Tier 5 areas from Bill S-242. This analysis is based on a Tier 4 area located in Kingston Ontario that CanWISP referenced in our presentation to the committee on February 8, 2023.

The Tier 4 area in compassing Kingston Ontario is outlined in red in Figure 3. The Tier is approximately 7,400 square kilometres in size. The Kingston Tier contains both the City of Kingston and the surrounding rural area to the north of the city. Areas to the south of the Tier are Lake Ontario and on its far shore New York state. ISED lists the Kingston auction lot as Tier 4 service area 4-070. The conditions of licence in the 3500MHz auctions used deployment conditions of a Tier 4 zone with a large population area.

ISED currently uses 5 different service classifications, known as tiers, for competitive licencing processes. Tier 1 is the largest service classification, encompassing the entire country. Smaller Tiers are nested within the associated upper tier and encompassed between 16 (Tier 2) and 654 (Tier 5) unique sub-service areas, service maps are included on page 18. The 654 Tier 5 service areas are already sub- classified based on population and geography, and further designated as one of four specific area categories, metropolitan, urban (medium and large population centres), rural and remote.

Population data for each Tier being auctioned was compiled based on Statistics Canada’s 2016 census divisions and subdivisions. Companies developed business plans, secured financing and developed a bidding strategy based on this and other important information published by ISED prior to auction. The Auction Framework outlines the general attributes of auctioned spectrum licences and form the Conditions of Licence (CoL). Those deployment conditions among other things, require a winner of spectrum at auction to deploy spectrum to a minimum percent of the population contained within the boundaries of each Tier.

In the case of Kingston ISED listed the population to be 177,314 and the number of dwellings to be 89,590. Successful bidders in the 3500MHz auction are required to meet the following deployment conditions in the Kingston 4-070 Tier as a minimum. MILESTONE MINIMUM POPULATION COVERAGE MINIMUM POPULATION COVERED AT MILESTONE 5 YEAR 30% 53,194 10 YEAR 50% 88,657 20 YEAR 70% 124,120 Table 1 3 Milestones for the 3500MHz Auction for the Kingston Ontario Tier Bill S-242 in its current form with change the first milestone to be Figure 3 Kingston Tier 4 Service area (4-070)

Branchons nos Communautés • Connecting Communities 13 MILESTONE MINIMUM POPULATION COVERAGE MINIMUM POPULATION COVERED AT MILESTONE 3 YEAR 50% 88,657 At first glance this seems to be a worthy goal that would force a licence holder to achieve significant coverage within the Tier and therefore the underserved areas earlier, at year 3 and advance the provision of highspeed internet into the rural areas of the Tier.

CanWISP believes that as long as the Tier 4, or larger areas are used as a CoL, the government will see no improvement to the underserved areas while licence holders will continue to fully adhere to the CoL. CanWISP believes that because this Tier contains both a large population centre and a major highway corridor (Highway 401) mobile operators will be very anxious to deploy as quickly as possible in this area and by doing so could more than meet and could easily exceed the 3-year deployment requirement.

By deploying only in this high value area, the CoL would be satisfied even with the shorter timeline Bill S-242 imposes, without the licence holder deploying any services north of highway 401 and into the underserved rural areas that the Bill is trying to address. To correct this unwanted behavior CanWISP submits that if the holder of the Tier 4 was required to deploy the spectrum to 50% of the population in each of the four Tier 5 areas nested in the auction area.

The overall service area would include both the lucrative urban area including the highway corridor as well as the rural areas to the north of the 401. SERVICE AREA SERVICE AREA NAME POPULATION

(2016) SUB-TIERS AND TIER 5 CATEGORIES DWELLING (2016) 4-070 Kingston 177,314 5-257, 5-258, 5-259, 5-260 89,590 TIER 5 INFO FOR AREAS NESTED WITHIN 4-070 KINGSTON 5-257 Kingston 138,566 Urban 66,478 5-258 Sydenham 18,774 Rural 9,227 5-259 Flinton 8,744 Rural 9,115 5-260 Odessa 11,230 Rural 4,771 Table 4 Information for Tier 5s nested inside Kingston Tier 4-070 Table 4 confirms that the 3-year requirement of 88,658 in the larger Tier 4 auction area proposed in the current Bill could easily be met by only providing service to the Urban Tier 5 of Kingston and its population of 138,566.

In fact, a mobile provider could service only the urban Kingston population and never service a single household in the rural market. Multiple providers could easily meet their 20-year Tier 5 Flinton Tier 5 Kingston Tier 5 Sydenham Tier 5 Odessa Figure 4 Tier 5s nested inside Kingston Tier 4-070

Branchons nos Communautés • Connecting Communities 14 obligation of 70% (or 124,120 people) by servicing the same 89% of the urban population (124,120 of the 138,566 people) in the Tier 5-257 urban area. By allowing only the urban area of the overall Tier 4 to meet all the milestones only 1,100 square kilometres of the overall Tier 4 size of 7,400 square kilometers would be served. The Kingston 5-257 urban Tier 5 only represents 15% of the area contained in Kingston 4-070 Tier 4 but represents 78% of the population contained in the larger Tier 4.

By requiring a licensee to meet the service obligation of the smaller Tier 5 areas, the overall condition of licence within the Tier 4 would remain at 88,657, however the distribution of coverage would be evenly spread across the larger Tier with deployment requirements of the 1 urban Tier 5 and each of the 3 rural Tier 5s that are nested with the Kingston Tier 4. When analyzing the population coverage in table 6 it is plain to see that all 3 rural Tiers, that are the focus of the Bill will now be required to have service.

The urban Tier 5 because of its denser population and proximity to the highway corridor will likely be deployed well above the minimum deployment condition of 50% and well in advance of the three-year milestone based on competitive forces the mobile carriers face in the marketplace. TOTAL POPULATION OF TIER 4-070

(2016) MINIMUM POPULATION COVERAGE (3 YEAR) 177,314 50% 88,657 Table 5 Deployment conditions of Bill S-242 in Kingston Ontario SERVICE AREA SERVICE AREA NAME POPULATION

(2016) MINIMUM POPULATION COVERAGE @ YEAR 3 50% ISED TIER CLASSIFICATION TYPE 5-257 Kingston 138,566 69,283 Urban 5-258 Sydenham 18,774 9,387 Rural 5-259 Flinton 8,744 4,372 Rural 5-260 Odessa 11,230 5,615 Rural TOTAL POPULATION SERVED IN THE KINGSTON TIER 4-070 88,657 Table 6 CanWISP's proposal to redistribute deployment requirements to the nested Tier 5. The use of smaller service tier area implementation requirements nested within a larger tier is not a new concept.

ISED used this methodology in its ruling Decision on the Technical and Policy Framework for the 3650-4200 MHz Band and Changes to the Frequency Allocation of the 3500-3650 MHz Band in May 2021, when the department introduced the moratorium on new WBS deployments as well as the termination of WBS in 2025 and 2027 for small rural service providers.18 If the bill measured deployment conditions on Tier 5s, ISED would be afforded the flexibility to increase minimum service requirements when warranted, especially in metropolitan and urban areas where market forces would support more vigorous investments, while still ensuring timely and robust coverage requirements in rural and remote Canada.

Revocation of spectrum licence

(3) Despite subsection (2) and subject to subsection (4), the Minister may, if the Minister is satisfied that the holder of a spectrum licence has not complied with the condition set out in subsection (1. 11), revoke 18 SLPB-002-21a12021-06EN.pdf (ic.gc.ca) page 38 para D17

Branchons nos Communautés • Connecting Communities 15 the licence by providing a notice of revocation to the holder that specifies the effective date of the revocation as determined under subsection (5). CanWISP recommends, if the Population Coverage requirement is not met at 3 years, then the licence holder would need to provide a reasonable plan of action to meet the requirement by year 5. ISED should be empowered to determine if the licence is being used inefficiently such as not providing services but rather deploying to only meet licence obligations.

If the Population Coverage requirement is not met at year 3 and the licence holder does not provide a commercially reasonable remedy that could include sublicensing to a third party, then the licence will be revoked. CanWISP strongly supports a Use-it-or-Lose-It framework and has advocated for this principle in the past. From that perspective, we support the fundamental premise of the Bill. We do, however, believe that the Bill, in its current form, will not encourage rural connectivity. The Bill imposes a one-size fits all approach to deployment requirements.

As ISED noted in its presentation to the committee, spectrum doesn’t work this way. Issues such as geography, population density and even the physics of radio frequencies mean that a one-size fits all approach won’t achieve the goal of rural connectivity. Laws and policies designed for Toronto or Edmonton aren’t going to work in rural PEI or coastal British Columbia. CanWISP agrees with ISED. CanWISP agrees with the goals of the Bill, being to ensure that spectrum is deployed early and to the benefit of all Canadians.

CanWISP believes that ISED should add a deployment milestone at year 3 of a 20 year spectrum licence term. At this 3 rd year milestone, ISED should have the power to review the deployment of the spectrum to ensure the licence holder is meeting the goals of the spectrum auction and at that point make a determination to ensure the licence will be properly utilized or if it is being held for speculative purposes.

If the licence has for example at year 3 made no significate meaningful deployment of the purchased spectrum, then ISED should have the power to revoke the spectrum, in whole or in part, and the ability to remedy the situation. ISED has indicated that they have the tools at their disposal and CanWISP agrees those tools are in place. If ISED enforces appropriately stringent deployment requirements no further penalties should be required. The Minister has the power to amend the terms and conditions of spectrum licences at any time during the licence term (paragraph 5(1)(

b) of the Radiocommunication Act). As well,

section 40 of the act allows among other things, the Minister to reallocate spectrum or to permit others to use the same spectrum. CanWISP agrees appropriate and consequential tools are in place. If ISED revokes spectrum, the forfeiture of the licence fees paid at the time of issuance alone should be sufficient. Civil liability

(7) If the holder of a spectrum licence that is to be revoked under subsection (3) is unable to arrange for service to be assumed by another person, that holder is liable for any loss or damage suffered by any person within the geographic area covered by the licence and may be sued for damages in a court of competent jurisdiction unless that holder has surrendered the licence to the Minister by written notice. Despite subsection (2), a licence surrendered upon written notice is deemed to be revoked on the day the notice of surrender was sent. CanWISP submits that Civil Liability should be removed from the Bill.

Branchons nos Communautés • Connecting Communities 16 The provision creates an undefined and potentially unlimited financial risk to companies investing in new business ventures in rural communities. Reissuance of spectrum licence

(8) If a spectrum licence has been revoked under subsection (4), the Minister must, within 60 days of the effective date of the notice of revocation, use a system of competitive bidding to select the person to whom the licence will be reissued. CanWISP recommends that the Bill be modified to reflect issues such as geography, population density and even the physics of radio frequencies mean that a one-size fits all approach won’t achieve the goal of ensuring the spectrum is reissued in a very timely manner.

Regardless of the method used, the spectrum must be made available for re-use within 180 days of licence revocation. CanWISP submits that ISED should be given the discretionary powers to redeploy revoked spectrum by means other than the use of a system of competitive bidding. CanWISP believes that in some cases ISED has used secondary auctions for spectrum and received no bids, leaving the spectrum fallow. ISED could employ various innovative ideas to re package spectrum including. • Reducing the auction areas to Tier 5 service areas for the re-auction of spectrum.

The use of smaller geographic service areas has the potential to enable small rural operators to participate more effectively. • Allowing use of a “First Come First Served” licencing regime within a service area using Station Licences. • Allow a “All come All served” licencing regime within a service area using Station Licences. • A competitive licencing process using comparative deployment proposals that focus on a network design, population served and

schedule for deployment. Sub Licensing and Subordination CanWISP recommends that the Bill be modified to establish a framework to monitor and track subordination requests for spectrum acquired at auction. In order to effectively promote subordination, ISED should require the large telcos to undertake the following: 1. Annual reporting of subordinate licence requests with details of the requesting service provider, whether a subordination was successfully negotiated, if not, reasons for refusal, etc. 2. Designate a specific individual within the organization with authority for subordination decisions. 3.

Respond to subordination requests within a reasonable timeframe. CanWISP submits that the large telcos should be held to stricter requirements for subordination to rural operators. The current secondary market for spectrum does not provide a clear path to spectrum access for small operators. As Canada’s Auditor General observed, We found that … [t]he secondary market for unused spectrum did not function well, partly because licencees had little business incentive to make unused spectrum available for subordinate licencing. In

Branchons nos Communautés • Connecting Communities 17 addition, the information on unused spectrum was not readily available to interested Internet service providers.19 And We found cases in which wireless Internet service providers in need of spectrum to provide their services had difficulty sub-licencing unused spectrum from licencees. This difficulty was partly because the information on unused spectrum was not readily available to interested Internet service providers. For example, the Department did not maintain a user-friendly database on unused spectrum.

In some cases, however, it was not in the interests of the primary licence holder to sub-licence some of its spectrum, even though the primary licence holder’s deployment conditions could be met through subordinate licences. 20 Deployment conditions should be paired with a real service obligation to ensure service providers with strong financial capabilities are not tempted to light up a few towers per service area to be deemed having met their deployment conditions. ISED currently tracks tower sharing request for any spectrum licencees 21.

The Licencee must submit on a semi-annual basis detailing the preceding six-month period, reports to ISED on the status of antenna tower and site sharing negotiations, on the number of sites and degree of sharing in their network. Licencees submit reports to Industry Canada using a standardized template.

CanWISP believes that the same methodology can easily be adapted to spectrum Sub Licencing requests. 19 Report 1— Connectivity in Rural and Remote Areas (oag-bvg.gc.ca) 20 Report 1— Connectivity in Rural and Remote Areas (oag-bvg.gc.ca) 21 CPC-2-0-17 — Conditions of Licence for Mandatory Roaming and Antenna Tower and Site Sharing and to Prohibit Exclusive Site Arrangements (canada.ca)

Branchons nos Communautés • Connecting Communities 18 Service areas for competitive licencing Innovation, Science and Economic Development Canada (ISED) uses defined service areas for competitive licencing processes such as, spectrum auctions, competitive review processes and first- come first-served licencing.22 Figure 5 Map of Tier 1 Figure 6 Map of Tier 2 Figure 7 Map of Tier 3 Figure 8 Map of Tier 4 Figure 9 Map of Tier 5 SERVICE AREA TYPE NUMBER OF SERVICE AREAS DESCRIPTION TIER 1 1 A single, national service area TIER 2 16 Provincial and large regional service areas TIER 3 59 Smaller regional service areas TIER 4 172 Localized service areas TIER 5 654 Smaller service areas based on population and geography, and designated as one of four specific area categories: • metropolitan • urban (medium and large population centres) • rural • remote Table 7 ISED's Tiering System 22 National Broadband Internet Service Availability Map