Re: Canada Gazette DGSO Consultation on a Licensing Framework for Mobile Broadband Services (MBS) 700 MHz Band
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1 5 Place Ville Marie, bureau 1700 Montréal (Québec) H3B 0B3 Telephone: (514) Fax: (514) June 22, 2012 VIA Mr. Peter Hill Senior Director, Spectrum Management Operations Spectrum Management Operations Branch Industry Canada 300 Slater Street Ottawa, Ontario K1A 0C8 Re: Canada Gazette DGSO Consultation on a Licensing Framework for Mobile Broadband Services (MBS) 700 MHz Band Dear Mr. Hill: Cogeco Cable Inc. ( Cogeco ) is pleased to submit the attached comments in response to Canada Gazette Notice DGSO As an interested observer and active participant in the Canadian telecommunications industry, Cogeco has a very real interest in future developments in the mobile wireless industry in Canada. We thank you for the opportunity to provide comments and remain available to answer any questions you may have regarding our submission. Yours very truly, Michel Messier, Director, Regulatory Affairs, Telecommunications Michel.Messier@cogeco.com 1
2 Canada Gazette Notice No. DGSO Consultation on a Licensing Framework for Mobile Broadband Services (MBS) 700 MHz Band Published in the Canada Gazette, Part 1 dated 5 May 2012 Comments of Cogeco Cable Inc. June 22, 2012
3 Page 1 of 6 Introduction 1. Cogeco Cable Inc. ( Cogeco ), a cable telecommunications company, owns and operates wireline broadband telecommunications facilities and provides a wide range of Internet, voice, data, video and related services in the Provinces of Ontario and Québec. 2. Cogeco is the second largest cable system operator in each of these provinces, based on the number of basic cable customers served. Cogeco provides services to both residential and business customers. As at February 29, 2012, Cogeco served 873,326 television, 626,017 high speed Internet (HSI), and 456,585 telephone customers in Canada. In addition to its hybrid fibre coaxial local (HFC) distribution plant in the various communities it serves, Cogeco owns and operates an extensive, state-of-the-art fibre optic broadband network in the Provinces of Ontario and Québec, extending from Windsor to the tip of the Gaspé Peninsula. 3. Cogeco is an independent broadcasting distribution undertaking (BDU) operator, as neither Cogeco nor any of its operating cable subsidiaries and partnerships has any ownership interest in, or controls, any television programming service licensee. 4. While its activities contribute directly and significantly to Canada s digital economy, Cogeco does not hold a market share in any of the relevant markets and services that would allow it to exercise any market power. All of its business activities are intensely competitive, and the degree of competitive intensity is increasing very fast.
4 Page 2 of 6 Cogeco s Perspective 5. While it does not market wireless services at this time, Cogeco is highly interested by the development in this sector and specifically wants to encourage Industry Canada to foster a competitive environment in which unencumbered access to spectrum available in secondary markets 1 and wholesale network service offerings are supported in Canada. 6. In Canada, there is a clear prevalence of large mobile carrier walled gardens in which dominant carriers not only retain their customers through bundling of services but discourage competition by buying more spectrum than they plan to put in operation in a reasonable timeframe in either the metropolitan or rural areas of the country. 7. It has become clear that too much of the Canadian spectrum that Industry Canada has licensed is not being used to provide service to Canadians. One doesn t have to go beyond the 2008 AWS spectrum auction, which has seen little of the incumbents spectrum being used. Yielding to the views of major holders of spectrum, Industry Canada has generally provided long timeframes for the deployment of spectrum, including in this consultation which provides a timeframe of 10 years for deployment of the spectrum to between 20 and 50% of the population in different parts of the country, depending on population density. 8. These timeframes are excessive, particularly when one considers that spectrum is a public resource that is in great demand in metropolitan areas and is 1 Industry Canada needs to ensure that it fosters a healthy secondary market for spectrum. One way to do this, as noted in the Study of Market-based Exclusive Spectrum Rights by McLean Foster & Co. is to move away from the regime where both parties in secondary trades have to seek specific Ministerial approval rather than relying on self-certification.
5 Page 3 of 6 lying largely fallow in many suburban and most rural areas. Allowing wellendowed telecom players to warehouse their spectrum for the better part of a decade before building out is not in the public interest and a denial of the government policy on competition, regardless of how much the government received from the bidders through auction proceeds. 9. In order to mitigate this situation and given the clear need for spectrum as outlined in numerous documents that have been published in the last year, Cogeco believes that Industry Canada has an important responsibility in developing Canadian wireless policies in order to encourage further competition in mobile telecommunications, not limited to urban centers but throughout the country. 10. To this effect, Industry Canada should consider launching a public consultation involving all players in the Canadian mobile industry, which would aim to establish and implement a use it or lose it policy for licensees who have unused cellular-like spectrum and which would aim to promote the long term availability of spectrum. 11. Finally, in Cogeco s view, the proliferation of competitive mobile services throughout the country without building additional networks where some are already built will only be possible if mobile service providers can rely on the existence of a vibrant wholesale network service market. While the multiplication of such wholesale offerings is primarily the responsibility of the existing mobile carriers, Cogeco submits that such an environment should be fostered and supported by Industry Canada.
6 Page 4 of Having said this, Cogeco is pleased to provide the following general comments in response to Canada Gazette, Part 1, March 24, 2012, Proposed Revisions to the Frameworks for Mandatory Roaming and Antenna Tower and Site Sharing (DGSO ). Cogeco reserves its right to provide reply comments on any specific issue posed by Industry Canada in the Gazette Notice, in accordance with the schedule associated with this consultation. COMMENTS Affiliated and associated entities 13. In the current consultation Industry Canada requests comments on whether affiliated and associated bidders should be allowed to participate in the 700 MHz auction. Industry Canada makes the point that given the high cost of network deployment, spectrum scarcity and network efficiencies, it should consider changes to the Associated Entities definition that it has used in previous auctions, the most recent being the AWS Auction in Furthermore, Industry Canada suggests that the entities covered by this definition may or may not be allowed to bid individually and have the spectrum cap applied separately in the auction. 14. Cogeco believes that these proposed changes, while having benefits for those associated and affiliated entities, will have the negative effect of further limiting the access to wireless spectrum from would-be competitors in the marketplace. In a market that is already far too constrained through the concentration of spectrum assets in too few hands, taking such a step will make it next to impossible for new competition to emerge and thrive.
7 Page 5 of As an alternative to the proposal advanced in the consultation paper, Cogeco recommends that the department instead decide that affiliated and associated entities, as defined in the consultation, generally would not be able to bid individually nor have the spectrum cap applied separately. These entities could make their case, however, by applying to Industry Canada to allow them to be exempt from this policy well in advance of the auction, in which case Industry Canada could seek expedited public comment on whether such an exemption would be in the public interest. This specific review of each arrangement, with public input, would be the fairest and most transparent way of dealing with these entities. Trying to deal with all of the various deals through a general catch-all definition has neither of these important attributes. Roaming 16. The 700 MHz band is clearly part of the cellular ecosystem of 800 MHz, PCS, AWS, 700MHz, 2500 MHz and other bands that will become available for cellular-like services in North America. Therefore Industry Canada must harmonize the rules across the bands, including mandated roaming rules. In this regard, Industry Canada has recommended in this consultation that mandated roaming be extended to the 700 MHz and 2500 MHz band. 17. Cogeco agrees with this proposal, but would suggest, as others 2 have in the Mandatory Roaming and Antenna Tower and Site Sharing consultation, that mandatory roaming be expanded to all other bands that are similar in use to existing cellular bands. In this way, the government would be signaling that all cellular bands in the future would have the benefits of mandated roaming, thereby providing the benefits of national roaming and eliminating some uncertainty around the functionality of new wireless mobile bands. 2 For example, in response to this consultation both TerreStar Solutions Inc. and Rogers advocated that mandated roaming be extended to all mobile spectrum bands.
8 Page 6 of The world has been witnessing the anti-competitive tactics of certain major carriers in the United States in which they attempted to limit interoperability of handsets to suit their exclusive business needs. This is clearly not in the public interest, and it would appear that the Federal Communications Commission is taking action to ensure interoperability across all bands in the 700 MHz spectrum. Cogeco asks Industry Canada to be vigilant of these threats and to regulate carriers to ensure that across Canada, wireless handsets and chipsets are interoperable and not open to anti-competitive behaviour such as denial of handsets or delay of their introduction to market. *** End of document ***
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