Understanding Spectrum Management in Canada

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Wireless communications services are constantly changing how Canadians live and participate in society. They improve connectivity across the country, especially in sparsely populated areas. Wireless services are also at the forefront of technological developments, such as fifth generation (5G) wireless services, which will open the door to developing new applications, such as the Internet of Things.

The upcoming spectrum auction by Innovation, Science and Economic Development Canada will be key to deploying 5G technology across Canada. Since spectrum is a non-exhaustible but limited public resource, effective management of the radiofrequency spectrum is required.

This HillNote provides an overview of spectrum management in Canada and the associated challenges.

Spectrum 101

The electromagnetic spectrum comprises energy waves that are transmitted through space at the speed of light. Spectrum is divided into ranges based on wavelength (or frequency bands), one of which is the radiofrequency range. This is a man-made range that serves as a channel for sending or receiving wireless signals. Therefore, spectrum is a key part of wireless services management. In this document, the term “spectrum” refers to the radiofrequency range.

Spectrum has various uses, depending on the frequency band. These bands are measured in Hertz, which refers to the number of waves that pass a fixed point in one second. The radiofrequency spectrum covers the range from 3 kilohertz (kHz) to 300 gigahertz (GHz), where coverage is inversely proportional to data transfer capacity. As shown in Figure 1, lower bands cover larger areas, while higher bands cover smaller areas, but provide a higher data transfer capacity.

Figure 1 – Coverage and Penetration by Frequency Band

Frequency band coverage is inversely proportional to data transfer capacity. Low frequencies (under 1 GHz) have high coverage, but low data transfer capacity (low penetration). Medium frequencies (between 1 GHz and 10 GHz) have average coverage and penetration. High frequencies (over 10 GHz) have low coverage but can transfer large quantities of data.

Source: Figure prepared by the Library of Parliament using data from Innovation, Science and Economic Development Canada (ISED), Spectrum Outlook 2018–2022, 6 June 2018.

A number of frequencies will be needed to deploy 5G technology, but ISED believes the 3500 MHz and 3800 MHz bands will be key.

Figure 2 shows an example of how frequency bands are currently distributed in Canada. The Canadian Table of Frequency Allocations shows more details on how each frequency is used in Canada.

Figure 2 – Typical Distribution of Frequency Bands

Different spectrum frequency bands are used depending on geography and population density. Low-frequency bands, such as those in the 600 MHz range, are ideal for covering large geographic areas and penetrating buildings, which makes it important in rural and urban areas. Medium-frequency bands provide both coverage and capacity. The medium-frequency 3800 MHz band is commonly used in rural regions in Canada. High-frequency bands, such as those in the 24 GHz range, are often used in major cities, as they have limited coverage but high data transfer capacity.

Source: Figure prepared by the Library of Parliament using data obtained from Innovation, Science and Economic Development Canada, Spectrum Outlook 2018 to 2022, 6 June 2018.

Spectrum Management

Each country manages the spectrum within its territory at its discretion. However, the Radiocommunication Sector of the International Telecommunication Union (ITU) coordinates the international standardization of spectrum management. The ITU divides the world into three regions, as shown in Figure 3. Each region must harmonize frequencies to prevent any interference and ensure continuity of service.

Figure 3 – Map of International Telecommunication Union Regions for Harmonizing Spectrum Use

The International Telecommunication Union has divided the world into three regions that must each harmonize spectrum frequency use: Region 1 includes Europe, former Soviet Union countries, Africa, Mongolia, and the Middle East to the west of the Persian Gulf, including Iraq and Kuwait. Region 2 includes the Americas, as well as Greenland and the Pacific islands, such as French Polynesia. Region 3 includes Oceania and most Asian countries that were not part of the former Soviet Union. Countries in this region are located south of the borders of Iran, Afghanistan, China and Japan.

Source: Figure prepared by the Library of Parliament using data obtained from the International Telecommunication Union, Frequency Bands allocated to Terrestrial Broadcasting Services.

In Canada, ISED manages spectrum (except the spectrum used for broadcasting, which is managed by the Canadian Radio-television and Telecommunications Commission [CRTC]) using primarily a first-come, first-served approach to assign frequencies and issue licences. Licences are divided into service areas with five tiers, based on Statistics Canada’s census divisions, covering the whole of Canada.

Since 1999, ISED has held public auctions for licences when demand exceeds supply. Occasionally, ISED will reserve a portion of the licences (known as set-asides) for regional or small telecommunications service providers (TSPs) to encourage competition. Figure 4 shows the usual spectrum auction process.

Figure 4 – Spectrum Allocation Process in Canada

The spectrum allocation process has a number of steps in Canada: 1) The first step is public consultations, which takes six to nine months. At this step, the federal government is seeking to understand stakeholder needs for spectrum licences and to set the auction parameters, including the size of spectrum blocks to be allocated and the service area tiers. 2) The second step in the process is the public auctions, which take somewhere between a few days and a few weeks. During the auction, applicants can bid on multiple licences. It uses a live electronic bidding system, with multiple simultaneous auctions in a series of rounds. The results of each round are announced before the start of the next round. 3) The third step in the process is that winners must pay in full for the licences they obtained. Buyers may share the licences they obtained if the licence conditions are met.

Source: Figure prepared by the Library of Parliament using data obtained from Government of Canada, Questions and Answers – Framework for Spectrum Auctions in Canada.

The last spectrum auction was held in the spring of 2019 for the 600 MHz band.

The next auction will take place on 15 June 2021. It will make 200 MHz of spectrum available in the 3500 MHz band across Tier 4 service areas for flexible use. Licensees will be able to choose the type of services they deploy, such as mobile (5G) or fixed wireless services.

Spectrum Licence Fees

Telecommunications and spectrum licence fees in Canada have been subject to the Service Fees Act since 2017. With this act now in effect, spectrum licence fees are adjusted annually, based on the April All-Items Consumer Price Index (CPI) published by Statistics Canada. The first CPI-based fee increase was 2.2% and was applied on 31 March 2020. As of that date, the CPI adjustment applies to the fees of all new, renewed and amended licences. The federal government had not increased spectrum licence fees since 2004.

Reports have been published comparing spectrum licence fees based on the average price per MHz of spectrum per person. According to a 2010 report comparing spectrum licence fees in G7 countries, the average price (CAN$) was $0.0120. Canada had the highest price among G7 countries at $0.0351, followed by Italy ($0.0195) and Japan ($0.0163). In a 2017 report comparing spectrum licences prices (US$) in a number of countries, Canada had the highest prices for some frequencies, but the United States, India and Thailand had higher prices for other frequencies.

Challenges

Spectrum management in Canada faces a number of challenges, such as:

  • Rural regions rely heavily on wireless services for their broadband Internet access. However, these regions often have less access to spectrum licences because, as was outlined in a report shared by the CRTC and in a report of the Standing Committee on Industry, Science and Technology, incumbent TSPs prefer to use their licences in more densely populated areas, which are more profitable; and
  • The allocation of frequency bands based on technological developments is also a challenge. ISED has changed the use of some bands to address needs, but this approach will not always be an option, as most bands are now already being used. Therefore, ISED is looking to optimize the use of various spectrum bands using new technologies and techniques that change the way spectrum is accessed. These new approaches will make it possible for multiple different services to share spectrum in real time.

Lastly, in March 2021, Rogers announced that it wanted to acquire Shaw for $26 billion. This announcement raised questions about spectrum, particularly about the spectrum licences Shaw holds, which it obtained thanks to set-asides. Questions were also raised about Shaw’s role in the upcoming spectrum auction if the government has not yet made a decision about the merger. However, in April 2021, ISED published the list of applicants for this auction: Rogers is on the list, but Shaw is not.

It is clear that spectrum, while invisible, plays a key role in the lives of Canadians. Strategic management will ensure that a number of accessibility and technological development issues can be addressed.

Author: Sarah Lemelin-Bellerose, Library of Parliament 



Categories: Information and Communications, Science and Technology

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