an application to develop & operate fixed- satellite space stations in the 118.7° w longitude orbital position
march 15, 2001
More than 3 million Canadian households and businesses in remote, isolated and northern communities are affected by the digital divide. As Canadians everywhere race to join the information economy, those without access to high-speed connectivity find themselves increasingly excluded from the national conversation. As the pace of change accelerates, the isolation of Canadians facing the digital divide deepens.
Bird will invest $1 billion in building and launching two of the most advanced communications satellites ever constructed. The moment we light up our first satellite, Bird will become the first telecommunications provider to offer high-speed connectivity to every Canadian, regardless of where they may choose to make their home or build their business. In doing so, we will bring to an end the last Canadian telecommunications monopoly, and finally bring the benefits of true competition to the Canadian satellite industry.
In the process, Bird will contribute approximately $100 million over the life of the project to the development and delivery of advanced tele-health and tele-education services to public institutions in remote and underserved areas of Canada.
Our promise to Canadians is digital inclusion. Bird has assembled the technical, financial, and managerial resources to make this promise a reality.
Richard Stursberg President & CEO Bird Satellite Communications Inc.
Notice DGRB-008-00
Table of Contents
I. INTRODUCTION ------I-1 II. PUBLIC BENEFITS ------II-1 A. Competition Policy ------1 1. Background------2 2. The Case for a Second Canadian Satellite Provider ------4 3. Priority For Canadian Users and Service Providers------6 B. Digital Inclusion ------7 1. What is the Digital Divide?------8 2. Where is the Digital Divide? ------9 3. How Big is the Digital Divide?------10 4. Why does the Digital Divide Exist? ------11 5. The Satellite Solution ------12 6. Benefits of Bridging the Digital Divide------12 C. Financial Commitment to Serving Public Institutions ------13 D. Consultation Process------13 1. Building on Existing Initiatives ------14 2. Working Closely with Existing Social Networks ------14 3. Remaining Open to Change------14 E. Industrial Benefits ------16 1. Investment of $1 Billion in New Infrastructure ------16 2. A New Employer in the Canadian Satellite Industry------16 3. Canadian Manufacturing ------16 4. Network Control Centre ------17 III. ELIGIBILITY------ABRIDGED IV. PROPOSED NETWORK------ABRIDGED V. COORDINATION------ABRIDGED VI. BUSINESS PLAN------ABRIDGED VII. FINANCING ------ABRIDGED VIII. ACCEPTANCE OF CONDITIONS OF LICENCE ------VIII-1 IX. CONCLUSION ------IX-1 X. APPENDICES------X-1
Page i Notice DGRB-008-00
A. Charles River Associates “Enhancing Competition in Canadian Fixed Satellite Services: The Case for a Second Canadian Satellite Provider” - ABRIDGED B. PricewaterhouseCoopers “Digital Inclusion: A Consultation Plan for Bird Satellite Communications Inc.” C. Canadian Ownership & Control Documentation - ABRIDGED D. Technical Appendices - ABRIDGED E. PricewaterhouseCoopers Demand Study - ABRIDGED F. Business Plan - ABRIDGED G. Financial Commitment Letters - ABRIDGED
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introduction
Notice DGRB-008-00
I. INTRODUCTION
Bird Satellite Communications Inc. ("BSCI") is a new Canadian owned and controlled satellite company, founded by Richard Stursberg and a number of other Canadian executives experienced in the satellite services sector. BSCI has secured access to significant Canadian financial resources, and has forged a working relationship with one of the most experienced and technically advanced operators in the global satellite industry. BSCI will invest $1 billion in new Canadian telecommunications infrastructure by launching two new satellites at 118.7° W longitude, bringing effective facilities-based competition to the Canadian satellite market for the first time. BSCI is a significant, brand new Canadian high technology company with the technical, financial, and managerial resources to succeed.
The satellite network envisioned by BSCI for 118.7° W longitude is a unique proposition, designed to maximize the use of Canadian spectrum resources in the C-band, the conventional and extended Ku-band, and the emerging Ka-band. Initially, BSCI proposes to develop and operate two dual-band space stations in the orbital position. The space stations would be configured as follows:
Big Bird I Big Bird II In-service by 12/03 In-service by 05/05
C-band 24 transponders
Ku-band (std & ext) 35 transponders 35 transponders
Ka-band 40 transponders
The antenna design of each satellite will be optimized to provide service to all regions of Canada, including Northern Canada, and to the United States. The Ku-band payload on Big Bird I will feature a spot-beam configuration, but will also be capable of being switched to a more conventional Fixed Satellite Service (“FSS”) configuration. The Ka-band payload on Big Bird II may be augmented in the future with a third, dedicated Ka-band spacecraft, as demand for Ka-band services develops over time.
Approval of the BSCI application will bring significant benefits to Canadians.
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Competition - The implementation of the World Trade Organization Agreement on Basic Telecommunications created one market for FSS in Canada and the U.S. on March 1, 2000. But the era of domestic competition in the Canadian fixed satellite market has not yet begun, as there is no domestic competitor to Telesat Canada. Effective facilities-based competition in the domestic satellite market will introduce price discipline, improve customer service, promote innovation and stimulate the rollout of new infrastructure and new services to underserved areas of the country.
Canadian customers will have priority, first-refusal access to all of the capacity on the BSCI satellites falling over Canada. BSCI will consult extensively with Canadian satellite users in the design process to ensure that Canadian customers’ needs are understood and fulfilled.
A sustainable competitive position for Canada in the global marketplace for satellite services will not be assured until Canada's domestic marketplace becomes competitive by authorizing entities other than Telesat Canada to own and operate FSS satellite facilities. If domestic competition is not allowed to enter the Canadian market, Canada will not be able to match the innovations, the choice and the costs of products and services offered by satellite operators based in the U.S. and other countries.
Addressing the Digital Divide - 25% of Canadian households and 15% of Canadian businesses will never gain access to high-speed, broadband connectivity through conventional terrestrial providers. As Canadians embrace an information-based economy, those Canadians without access to connectivity find themselves increasingly isolated. As the pace of change accelerates, the isolation of Canadians facing the so-called “digital divide” deepens. The integrated satellite network envisioned by BSCI addresses this concern, and promotes digital inclusion by providing robust, two-way, high-speed, broadband connectivity to all Canadians in remote and underserved areas.
Service to Public Institutions - BSCI will provide funding and services valued at approximately $100 million to public institutions in remote and underserved areas of the country. In the two years prior to the launch of Big Bird I, BSCI will fund and conduct a comprehensive consultation with all stakeholders, at a cost of $[abridged] million, to ensure that the funding and services made available under this program truly address the needs of these constituencies.
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Industrial Benefits - The BSCI proposal brings significant industrial benefits to Canada. Investment by BSCI will result in a $1 billion improvement to the Canadian communications infrastructure. Creation of the BSCI enterprise itself will result in the creation of jobs for Canadians. Significant components of the BSCI spacecraft will be manufactured in Canada resulting in expenditures of up to $[abridged] million and representing additional high- technology employment for Canadians. The network operations centre will be constructed, located and operated in Canada.
BSCI has been created in order serve Canadian and other North American satellite customers, and to do so by developing and operating two space stations that will provide service to all regions of Canada, including the far North. In accordance with Notice DGRB- 008-00 "Call for Applications to Develop and Operate Fixed-Satellite Space Stations in the 118.7° W Longitude Orbital Position" as amended and clarified ("DGRB-008"), Bird Satellite Communications Inc., on behalf of the companies to be incorporated as described in Section III of this Application, hereby files an application to develop and operate fixed satellite space stations in the orbital position at 118.7° W longitude to serve the Canadian market and beyond.
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public benefits
Notice DGRB-008-00
II. PUBLIC BENEFITS
Approval of the BSCI application will provide Canadians with a number of unique and tangible public benefits. In addition to meeting Industry Canada’s policy objectives with respect to bringing market-based competition to the satellite services sector, implementation of the BSCI proposal will help to close the digital divide facing Canadians in remote and underserved areas, and bring approximately $100 million in services to public institutions in these areas. Canadians will also benefit through the creation of new, high-tech employment, and the construction of significant portions of the BSCI spacecraft at Canadian facilities.
A. Competition Policy
In the spring of 1994, Industry Minister John Manley released a strategic framework to guide the development of Canada’s Information Highway1. The strategic framework set out five operating principles to guide this process. Prominent among the five principles was the principle of “competition in facilities, products and services.”
In May 1996, the federal government issued Building the Information Society: Moving Canada into the 21st Century, containing a far-ranging Canadian strategy for the Information Highway. The Government emphasized the role of the private sector in implementing that strategy, and adopted the five principles set out in the strategic framework.2
The Information Highway Advisory Council, tasked with advancing this public policy agenda by advising the government on outstanding issues and concerns related to the Information Highway, once again identified “competition in facilities, products and services” as one of the five guiding principles shaping its analysis and
1 Spectrum, Information Technologies and Telecommunications Sector, Industry Canada, The Canadian Information Highway: Building Canada's Information and Communications Infrastructure, April 1994. 2 Government of Canada, Building the Information Society: Moving Canada into the 21st Century, 1996, p.5
Page II-1 Notice DGRB-008-00 recommendations.3 In particular, the Council emphasized the importance of encouraging competition in the Canadian telecommunications sector.
Industry Canada has taken concrete steps to create just such an environment, and has actively promoted competitive entry in all aspects of the telecommunications market in Canada, including the satellite services market. The stimulation of competitive facilities and service offerings was highlighted by Industry Canada in its licensing decisions and policy frameworks for the licensing of PCS, LMCS and MCS operators. The Department has affirmed that the policy framework for FSS was “formulated within the context of introducing full competition in the Canadian satellite communications market."4
However, the one de facto telecommunications monopoly remaining in Canada is in the provision of FSS facilities. There is not now, nor has there ever been, a Canadian satellite facilities operator other than Telesat Canada. And the reason for this is self- evident – no Canadian company other than Telesat has ever been given access by the Canadian Government to the critical resource required to operate in the sector – a Canadian FSS orbital slot. Approval of the BSCI proposal as outlined in this Application would overcome this barrier, and clear the way for more than $1 billion in new private sector investment in Canadian telecommunications infrastructure.
1. Background
The Canadian government, Industry Canada, and the CRTC have taken the necessary diplomatic, legislative, regulatory and administrative steps to prepare the Canadian FSS sector for the transition to effective, market-based competition.
Canada entered into the WTO/GATS Agreement5 on market access to basic telecommunications on February 15, 1997. One of Canada’s central commitments under the agreement in respect of satellite services concerned ending the legislated monopoly of Telesat. In addition, Canada agreed to allow the use of foreign satellites to provide domestic and cross-border FSS services. Telesat’s monopoly with respect to
3Information Highway Advisory Council, Preparing Canada for a Digital World: Final Report of the Information Highway Advisory Council, 1997, preface. 4 Industry Canada, RP-008 Policy Framework for the Provision of Fixed Satellite Services in Canada, 1998. 5 The Fourth Protocol to the General Agreement on Trade in Services under the World Trade Organization.
Page II-2 Notice DGRB-008-00 fixed satellite facilities and earth stations serving the domestic and US/Canada markets was eliminated on March 1, 2000.
In anticipation of the loss of its legislated monopoly, Telesat applied to the CRTC in 1998 for complete and unconditional forbearance from the regulation of RF Channel Services provided using FSS facilities. Telesat argued that the WTO/GATS Agreement would open these services to sufficient competition to protect the interests of users starting 1 March 2000. The CRTC denied Telesat’s application.6 In doing so, the CRTC voiced concerns that Telesat faced insufficient competition in respect of services such as the distribution of programming to cable head ends in remote areas, and the provision of telecommunications service to remote regions, to justify forbearance. In particular, it was the CRTC’s conclusion that in respect of these services, Telesat was still a monopolist.
The CRTC held a subsequent hearing to establish a more flexible regulatory regime in respect of Telesat’s RF Channel services. In Telecom Decision CRTC 99-6, the CRTC established the environment within which Telesat operates today, where its FSS facilities leased to broadcasters are subject to a price cap of $170,000 per month per channel.7
In response to the WTO/GATS Agreement, Industry Canada issued its Policy Framework for the Provision of Fixed Satellite Services, report RP-008 in December 1998. This document provided a framework for gradually opening all segments of the Canadian fixed satellite market to full competition. Following extensive consultations on its proposed policy approach, Industry Canada adopted a framework that meets Canada’s commitments to the WTO, while establishing a regime for authorization of new Canadian FSS facilities providers.
The policy provides that fixed satellites in the four Canadian orbital positions at the C and Ku bands must provide coverage of all regions of Canada, including Northern Canada. Foreign satellites operating in Canada, however, do not have to provide such coverage. The rationale for this distinction is that Canadian satellites operating in the four Canadian orbital positions should be expected to provide sufficient FSS capacity to
6 Telecom Decision CRTC 98-24 7 unprotected, pre-emptible, full period channels for minimum five-year lease terms.
Page II-3 Notice DGRB-008-00 serve all regions of Canada. It is unnecessary, therefore, to require foreign FSS providers to meet this requirement8.
Taken as a whole, these actions have laid the groundwork for the introduction of a new Canadian satellite provider such as BSCI to the market.
2. The Case for a Second Canadian Satellite Provider
The question remains, however, whether Telesat already faces sufficient levels of competition as a result of the ability of foreign FSS providers to enter the Canadian market. The market for such services has been open to U.S. FSS providers since March 1, 2000. Is Telesat’s market behaviour in Canada disciplined by the threat of losing customers to such U.S. providers? Is Telesat still a monopolist in services such as the distribution of programming to cable head ends in remote areas, and the provision of telecommunications service to remote regions, as the CRTC found in 1998? In short, does there remain a distinct Canadian market for FSS facilities in which Telesat can operate without market discipline?
In January 2001, BSCI retained the firm of Charles River Associates (“CRA”), experts in competition analysis and telecommunications policy, to examine the state of the FSS services market in Canada and report on the potential impact on that market of awarding the 118.7° WL orbital slot to a new entrant or to Telesat Canada. Michael Trebilcock, a recognized expert in the field of competition law and economics, worked closely with CRA in performing the analysis. Their full report, Enhancing Competition in Canadian Fixed Satellite Services: The Case for a Second Canadian Satellite Provider, is attached as Appendix A to this application.
Adopting the methodology used by the Competition Bureau and other competition authorities in assessing market power, CRA analysed the state of competition in the sector. One of the most significant findings of the CRA report is that a distinct Canadian market continues to exist for FSS services.
8 This appears to be an implicit recognition that competition amongst the four Canadian orbital slots is sufficient to meet the needs of those customers that require full coverage of Canada including Northern Canada. Of course, for such competition to exist, there must be more than one owner of the four orbital slots.
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CRA found that the competition from U.S. suppliers of FSS facilities that was anticipated at the time of the WTO/GATS agreement has not materialized. U.S. satellites do not typically have footprints that allow them to serve all of Canada, including Northern Canada. Telesat’s satellites, on the other hand, provide coverage of all of Canada, including Northern Canada. This simple fact means that Telesat is the only operator currently providing ubiquitous satellite coverage of the Canadian market from a single source to Canadian broadcasting customers and other telecommunications clients requiring such ubiquitous coverage. As a result, there are few competitors to Telesat’s FSS facilities for the vast majority of Telesat’s customers.
Furthermore, CRA found that the current collection of potential substitutes for Telesat’s services do not provide sufficient competitive discipline to Telesat to warrant full deregulation. The facts upon which the CRTC based its forbearance decisions hold true today, notwithstanding the fact that the WTO/GATS Agreement increased the potential for U.S. FSS facilities to compete for Canadian satellite users’ business.
Clearly, a distinct Canadian market for FSS services continues to exist.
The CRA report goes on to examine the likely effects of awarding the orbital slot to a new entrant, as opposed to awarding the slot to Telesat. Among the expected benefits of awarding the slot to a new entrant are lower prices (relative to the price level that would exist if Telesat were awarded the slot), greater choice and improved service to customers.
If, on the other hand, the slot were to be awarded to Telesat, the report argues, the already substantial existing barriers would increase even further, making it highly unlikely that any firm other than Telesat would ever be able to gain entry to the market:
There are only two remaining orbital slots within North America to allocate. The opportunity to launch a second Canadian FSS facilities provider is available today. Should the slot be allocated to Telesat at this juncture, it may well
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foreclose the opportunity for Canadian facilities competition for some time to come.9
The report concludes that the most effective means of ensuring FSS facilities markets in Canada are competitive is to allocate the 118.7° WL orbital slot to a new entrant.
3. Priority For Canadian Users and Service Providers
In DGRB-008, Industry Canada notes, “… it is imperative that sufficient capacity be available to meet the service needs of users and service providers in Canada today and in the future.”10 The BSCI proposal, because of the two-satellite strategy and a unique network architecture, is particularly well-suited to deliver on this requirement.
In a spot beam mode, Big Bird I will have 15 of its 30 Ku-band spot beams, or 50% of its capacity available to serve Canadian customers11. The total capacity of the payload is up to 3.6 Gbps (3.5 Ghz of bandwidth) on the forward link and up to 1.1 Gbps (1.75 Ghz of bandwidth) on the return link. The Ku-band payload on Big Bird II will be identical to Big Bird I, but with the opposite polarization, to permit the most efficient use of available spectrum.
The Ka-band payload on Big Bird II will have 21 of its 40 spot beams, or as much as half of its capacity available to serve Canadian customers. The total capacity of the payload is up to 3.7 Gbps (4.0 Ghz of bandwidth) on the forward link and up to 2.2 Gbps (4.0 Ghz of bandwidth) on the return link.
Once the satellites are in orbit, the spot beams cannot be redirected to provide coverage of a different geographic area. They are irrevocably committed, for the life of the satellites, to Canadian coverage.
BSCI will grant Canadian users and service providers an exclusive right of first refusal over 100% of the Canadian broadband capacity on Big Bird I and Big Bird II. This right
9 Charles River Associates “Enhancing Competition in Canadian Fixed Satellite Services: The Case for a Second Canadian Satellite Provider”, 2001, p.31 10 Industry Canada Call for Applications to Develop and Operate Fixed-Satellite Space Stations in the 118.7º W Longitude Orbital Position DGRB-008-00, December 13, 2000, p. 12 11 see coverage maps in Section IV of this application.
Page II-6 Notice DGRB-008-00 of first refusal will continue for a period of 6 months following the announcement by Industry Canada of the successful applicant for the slot. BSCI intends to market this capacity on a wholesale basis to those companies looking to expand service into areas currently underserved by terrestrial broadband facilities, including existing satellite broadband services providers, DTH/DBS service providers, telecommunications service providers including local telephone companies, ISPs and CLECs.
BSCI will also grant Canadian broadcasters an exclusive right of first refusal over 100% of the C-band capacity on Big Bird I, for a period of 6 months following the announcement by Industry Canada of the successful applicant for the slot.
Once the rights of first refusal expire, all remaining capacity on the satellites will be made available to service providers and users on a first-come, first-served basis.
B. Digital Inclusion
Canada faces a growing digital divide - the gulf between digital "haves" and digital "have-nots" is growing as sophisticated multimedia applications proliferate beyond the capabilities of the existing terrestrial infrastructure. As Canadians rely increasingly on the Internet to work, communicate and participate in society, the need for high-speed connectivity continues to grow. Not only are new communications platforms becoming increasingly important for business, industry, shopping and trade, they are enabling distance learning, telemedicine and telecommuting. The benefits extend beyond commerce to the fundamental ability of Canadians to participate in an increasingly global society. In the fall of 2000, Minister of Finance, Paul Martin commented that the Internet
… embodies a revolution that is compressing time and collapsing distance. It is changing the face of communities. … it is changing how we do business, how we communicate and how we live.
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One of the driving forces behind Canada’s connectivity strategy is the newly formed National Broadband Task Force. With a mandate to “map out a strategy and advise the Government on the best approaches to make high-speed broadband Internet services available to businesses and residents in all Canadian communities by the year 2004”, the Task Force represents a continuation of the energy and emphasis the government has placed on ensuring all Canadians have access to critical communications infrastructure.
“In the past 12 months, “If yes, did you use the have you participated in Internet or have someone any of the following use it for you to do any activities?” part of the activity?”
Related to trip/vacation* 48% 66% 13% Gov’t programs/services 44% 61% 4%
medical/health-related- 43% 71% 13% Comparison shopping 39% 53% 7%
Training/education-related 37% 77% 8% Searched for work 36% 61% 8%
Purchased event tickets 25% 19% 7% On Canada and Canadians 25% 78% 7% On community groups 23% 57% 7%
From Revenue Canada 21% 39% 8%
0% 20% 40% 60% 0% 25% 50% 75% 100% They did Someone else Source: Ralph Heintzman, Citizens Expectations for Electronic Government – A Canadian Perspective; Ekos, 2000
The BSCI proposal will address the digital divide by providing two-way high-speed, broadband Internet access by satellite to every Canadian, including businesses and residents of remote and underserved communities, beginning in December 2003.
1. What is the Digital Divide?
In January 2001, BSCI commissioned PricewaterhouseCoopers to develop an assessment of the breadth and depth of the digital divide in Canada. As an integral aspect of this assessment, BSCI asked PricewaterhouseCoopers to examine the relationship between broadband services and the benefits they may yield to underserved regions in Canada. The final report, entitled Digital Inclusion: A Consultation Plan for Bird Satellite Communications Inc., is attached as Appendix B to this application.
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To understand the needs of underserved communities in Canada it is first necessary to understand what is meant by “underserved.” There are two basic dimensions to this analysis. The first is that underserved Canadian consumers and businesses do not have access to conventional broadband infrastructures like cable modems, DSL or terrestrial wireless. The second dimension is that these Canadians do not have access because of their geographic location. Specifically, they live in rural, remote or northern regions of the country that are often sparsely populated.
Contributing to this is a third dimension - the capabilities of consumers and institutions to take advantage of these technologies when they are available. This suggests that in addition to providing access to communications infrastructure, there may be a need to provide access to the resources that enable individuals to use these technologies in a manner that is meaningful and appropriate to their particular needs.
2. Where is the Digital Divide?
One of the key results of the analysis done by PricewaterhouseCoopers is to reveal the vast areas of this country that do not currently have access to high-speed connectivity, and that have no reasonable prospect of ever gaining such access by conventional terrestrial means. The report contains a series of maps – each highlighting a differing aspect of the digital divide. Schools, hospitals, public institutions, and Aboriginal communities – each mapped against the underserved areas of Canada and revealing the breadth of the challenge facing Canadian regulators and telecommunications providers.
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3. How Big is the Digital Divide?
The map above is a good visual representation of the Digital Divide. The area indicated in red on the map illustrates the underserved regions of the country. To identify the underserved regions, PricewaterhouseCoopers ranked Canadian cities, towns, villages, by their size. Using an estimate that approximately 75% of Canadians will have access to broadband data services by 2003 (See: PricewaterhouseCoopers, Assessment of the Demand for Satellite Services in C, Ku and Ka Band, attached as Appendix E to this Application), the map indicates in blue where 75% of the Canadian population is located.
The following table shows the provincial and territorial breakdown of this methodology:
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Broadband Access Summary For pwc Served And Underserved Areas
Total Total Population Population Total Population Population Population Underserved % Underserved Served % Served Canada 28,603,613 7,160,855 25.03% 21,442,758 74.97% Ontario 10,721,100 1,713,501 15.98% 9,007,599 84.02% Quebec 7,121,602 2,177,134 30.57% 4,944,468 69.43% British Columbia 3,662,943 515,804 14.08% 3,147,139 85.92% Alberta 2,665,480 659,735 24.75% 2,005,745 75.25% Manitoba 1,065,937 358,517 33.63% 707,420 66.37% Saskatchewan 951,879 455,235 47.82% 496,644 52.18% Nova Scotia 902,013 296,448 32.87% 605,565 67.13% New Brunswick 732,544 480,991 65.66% 251,553 34.34% Newfoundland 551,099 357,962 64.95% 193,137 35.05% Prince Edward Island 134,335 87,279 64.97% 47,056 35.03% Northwest Territories 64,138 46,863 73.07% 17,275 26.93% Yukon Territory 30,543 11,386 37.28% 19,157 62.72% Totals 28,603,613 7,160,855 21,442,758
Note: Total population does not include Reservations (CSD type R). Source: Statistics Canada, 1996
4. Why does the Digital Divide Exist?
The high cost of providing service to rural and remote areas has limited many broadband Internet providers from enabling access outside of urban areas. These kinds of economic barriers are common to Canada and other countries. For example, in the report Advanced Telecommunications in Rural America: The challenge of bringing broadband service to all Americans, published in April 2000, it was found that rural areas were lagging far behind urban areas in broadband availability. The report also identified the powerful role satellite-based infrastructure could play in meeting the needs of rural areas.
Cable modem and DSL are the two broadband technologies that are being rapidly deployed, permitting a comparison between rural and non-rural areas. In Canada, deployment in rural areas is not proceeding at a pace comparable to that in urban areas. Cable and DSL providers are concentrating on serving metropolitan urban areas with high population densities. Consequently, the likelihood of receiving broadband Internet access through either technology declines with population density. As a result, it can be expected that residents in rural areas will be the last to receive service.
Rural areas generally have less access to cable television service than their urban counterparts. With the arrival of DTH satellite services for the provision of television, it is even less likely that cable systems will extend further into the countryside. Additionally, as with all types of wireline service, the costs of high-speed cable deployment and
Page II-11 Notice DGRB-008-00 operation in rural areas are high. Because the subscriber base in rural areas is more dispersed than in more densely populated areas, there is less economic incentive to connect rural areas.
As a result, cable modem and DSL services, although occasionally available in rural areas, are still far more available in larger metropolitan areas.
5. The Satellite Solution
Many of the restrictions on delivering broadband services imposed by cable modem, DSL and terrestrial wireless solutions are addressed by satellite-based solutions. Where it is uneconomical to deploy terrestrial infrastructure to distant communities, satellite solutions are able to deliver signals to broad geographic regions simultaneously with little incremental cost. Where terrestrial wireless is limited by line-of-sight restrictions including distance, dense foliage or mountainous terrain, the footprint of a satellite, its area of coverage, can include entire provinces, regions or the entire country.
6. Benefits of Bridging the Digital Divide
Increased levels of connectivity will bring a wide range of benefits to Canadian citizens, institutions and business. These benefits include opportunities for life-long learning, better-informed citizens, and increased capabilities to compete. Longer-term benefits include a stronger society, a healthier economy and a more vital culture.
In its analysis, PricewaterhouseCoopers identified a wide range of benefits flowing from the availability of satellite-delivered high-speed Internet access to underserved regions. A few of the many benefits are:
• Knowledge Sharing: Increased interconnectivity enables the sharing of information, knowledge and experience. This may occur between individuals, communities, institutions, or any combination thereof.
• Real-Time Exchange of Media-Rich Content: The sharing of, for example, medical images for the purposes of diagnosis can open new possibilities for individuals in underserved regions.
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• Overcoming Regional Disparities: By providing opportunities for all individuals in all regions of Canada to tap into the same information, to share the same knowledge and to build on the experiences of one another, social and economic disparities may also diminish as access to education, employment and health opportunities improve.
• Foster Innovation: As demonstrated in programs like the Community Access Program and Community Learning Networks, innovative solutions and approaches, even to identical challenges, can be identified and enabled.
• Employment Opportunities: As communities undergo economic adjustment, content and services delivered over advanced communications network may increase the range of occupational opportunities in remote and rural regions.
The BSCI proposal is based on the premise of digital inclusion. The unique BSCI system architecture is designed to provide a solution to the digital divide that includes all Canadians – not just those in urban areas. From the moment the first satellite becomes operational, BSCI creates a national infrastructure for the provision of high-speed connectivity – a claim no other terrestrial provider can make.
C. Financial Commitment to Serving Public Institutions
In addition to offering services on a commercial basis, BSCI will direct two percent of the gross adjusted annual revenue resulting from the operation of the two satellites, including revenue resulting from the advanced sale or lease of satellite transponders or capacity, at serving public institutions in underserved areas. Based on revenue forecasts, BSCI expects to provide an annual contribution of approximately $6,600,000 over the life of the two satellites, totalling a contribution valued at approximately $100,000,000. The operation and administration of the contribution funds will not exceed 5% or approximately $330,000 annually.
D. Consultation Process
BSCI recognizes that the needs of public institutions in underserved regions of Canada vary greatly and are constantly changing. Moreover, we recognize that successful distribution of the contribution funds must be based on an in-depth understanding of the unique requirements of stakeholders that can only be developed through extensive and
Page II-13 Notice DGRB-008-00 ongoing consultation. In order to develop an inclusive and robust consultation plan, BSCI asked PricewaterhouseCoopers to design a Consultation Process involving extensive consultation with stakeholders in the health and educational sectors, Aboriginal peoples, and others. Their report was based in part on interviews conducted with various intuitions including the Public Interest Advocacy Centre, the Information Highway Applications Branch, the Rural Secretariat, HRDC’s Office of Learning Technologies and the Office of Health and the Information Highway.
The Consultation Process envisioned by BSCI is transparent and accountable. Understanding the needs of communities, who the stakeholders are and ensuring buy-in for this process will be central to the success of this initiative. In developing the consultation process, BSCI was guided by three fundamental principles:
1. Building on Existing Initiatives
Building on existing initiatives such as SchoolNet and Computers for Schools will leverage the resources that have already been invested in developing these successful programs. While supporting new programs clearly facilitates the development of innovation within this sector, the energy required to assess and realize new programs may, in some cases, be better applied to addressing the requirements of initiatives already underway.
2. Working Closely with Existing Social Networks
Working closely with existing social networks can help to release the intellectual capital already present in a community. By empowering motivated individuals, it is possible to assist nascent initiatives that are struggling to develop into potentially valuable contributions to the educational sector. Moreover, it efficiently builds on the existing stakeholder groups as opposed to attempting to redefine the range of players.
3. Remaining Open to Change
Remaining open to change is perhaps one of the most fundamental aspects to releasing the potential of high-speed Internet connectivity. Over the lifespan of the satellite, the needs of stakeholders can be expected to change dramatically. Fifteen years ago, virtually no one anticipated that ubiquitous access to the Internet was a possibility; let alone at high-speed.
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BSCI begins this process with no pre-conceived notions as to the most desirable or effective way in which the contribution funds may be used to reach public institutions in underserved areas. It may be that providing technology solutions that meet the infrastructure and throughput requirements of different aspects of the education sector is found to be desirable. Direct funding of initiatives that open new opportunities for underserved regions across the country is a possibility. Providing training to students, educators and administrators in the education sector may ensure that investments in technology yield maximum results. Finally, the provision of satellite capacity with which to support these initiatives will likely be necessary.
BSCI is committed to seeking the guidance of individuals and organizations that are intimately familiar with the needs of public institutions in underserved regions to develop the principals and criteria that will guide the distribution of funds. To ensure this process is conducted in a manner that is open, inclusive and responsive, BSCI has developed a Consultation Process that includes building awareness, soliciting input for the establishment of a public review process and establishment of Stakeholder Councils.
At a very high level, the Consultation Process has been designed to:
• Map the needs of public institutions, commercial interests and citizens in underserved areas;
• Understand the access issues of communities in Canada’s underserved areas;
• Know who the stakeholders are in education, health and Aboriginal groups;
• Initiate a two-way dialogue with stakeholders and citizens in the targeted areas;
• Provide a transparent, inclusive process for contributing funds to applicants; and,
• Demonstrate a commitment to “digital inclusion” in Canada.
The Consultation Process is described in detail in Appendix B.
BSCI is committed to implementing the Consultation Plan and welcomes the opportunity to work closely with stakeholders from underserved regions to produce an inclusive and dynamic contribution process. Upon being awarded the license from Industry Canada,
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BCSI will immediately implement the Consultation Process at a cost of approximately $ [abridged] million dollars.
E. Industrial Benefits
The BSCI proposal will result in significant benefits to the Canadian telecommunications and high-technology industries.
1. Investment of $1 Billion in New Infrastructure
Implementation of the BSCI proposal will result in improvements and additions to the Canadian telecommunications infrastructure worth more than $1 billion – all in new private sector investment.
2. A New Employer in the Canadian Satellite Industry
The creation of BSCI will immediately result in the creation of new employment opportunities in the Canadian satellite industry. The BSCI business plan12 provides for the creation of more than [abridged] new managerial, technical sales and marketing and administrative positions, and total human resource expenditures of $[abridged] Million over the life of the satellites. As BSCI matures, and over time becomes involved in additional opportunities, these employment and expenditure levels will inevitably grow.
3. Canadian Manufacturing
BSCI will make fair and reasonable efforts to develop, promote and purchase services and components from Canadian manufacturers. BSCI expects that significant components of the BSCI spacecraft will be manufactured by reputable and experienced Canadian companies such as COM DEV, Ltd. and EMS Technologies, Inc., both of which have worked extensively with BSCI’s technical partner in the past.
On the basis of prior experience, BSCI expects that such Canadian manufacturing initiatives will result in expenditures of up to $[abridged] million representing significant person-hours of new high-tech employment for Canadians.
12 see Appendix F
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4. Network Control Centre
The BSCI Network Control centre will be constructed and operated in Canada. This sophisticated technical facility will provide the necessary Telemetry, Tracking & Command (“TT&C”) to operate the satellites, and provide the operational support to facilitate customer use of the satellite capacity, and resolve customer service issues. The capital investment at this site will total approximately $[abridged] Million.
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eligibility
proposed network
co-ordination
business plan
financing
acceptance of conditions of license
Notice DGRB-008-00
VIII. ACCEPTANCE OF CONDITIONS OF LICENSE
Opco will:
• conform on an ongoing basis with the Canadian ownership and control requirements as set out for a radiocommunication carrier in section 10(2)(d) of the Radiocommunication Regulations;
• not transfer or assign the license without full review of the application by Industry Canada and the authorization of the Minister;
• ensure that all implementation milestones as set out in DGRB-008 are met, and will meet the implementation plan set out in this application;
• comply with the ITU Radio Regulations, the Radiocommunication Act and the Radiocommunication Regulations, and Canada’s spectrum utilization policies pertaining to its licensed radio frequency bands;
• operate the satellite facilities to service all regions of Canada, including northern Canada. Prior to entering into a contract for the procurement of a satellite, BSCI will demonstrate to the Department that the satellite design will meet the minimum coverage requirements and that the satellite capacity has been optimized to meet Canadian needs;
• operate the satellite as a Canadian telecommunications common carrier and shall adhere to all commitments made in this application for providing satellite capacity and services, on a non-discriminatory basis, to users and service providers in Canada;
• adhere to all commitments made in this application for the provision of satellite capacity and services to public institutions in underserved areas of Canada;
• demonstrate to the Department that it has made fair and reasonable efforts to promote Canadian manufacturers, designers, and suppliers of telecommunications components in the construction of the satellite facilities, and will provide an accounting of any Canadian industrial benefits achieved as a result of this effort;
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• ensure that the space stations comply with all technical and operational requirements as set out in Articles S21 and S22 of the ITU Radio Regulations;
• coordinate the satellites internationally prior to commencement of operation, and ensure that the satellites are notified to the ITU. Opco will participate at its own expense in the coordination of the satellite network with the satellite and terrestrial networks of other countries; provide the Department in a form acceptable to the ITU with the satellite coordination and notification information required by the ITU; and ensure that the operation of the satellite conforms with any arrangements and agreements undertaken by Canada with respect to the coordination of the satellites;
• coordinate the satellite network with other potentially affected Canadian satellite networks, and operate the satellites in a manner consistent with any arrangements made to facilitate domestic satellite coordination;
• submit the administrative due diligence information, as set out in the ITU’s Resolution 49 (Rev. WRC-2000), Administrative due diligence applicable to some satellite radiocommunication Services, to the Department in a form acceptable to the ITU, within 60 days of completing Milestone 2 as set out in section 4.3.2 of DGRB- 008;
• submit the administrative licensing information, set out in Annex B of Client Procedures Circular 2-6-02 (CPC-2-6-02), Licensing of Space Stations in Services other than the Amateur Satellite Service and the Broadcasting Satellite Service in Planned Bands, at least 90 days in advance of the anticipated launch date of the satellite, and submit a traffic report for the satellite every three months thereafter;
• ensure that all earth stations in Canada communicating with the satellite, except those exempted from the licensing requirement pursuant to the Radiocommunication Act and Radiocommunication Regulations, are licensed prior to operation pursuant to Client Procedures Circular 2-6-01(CPC-2-6-01), Procedure for the Submission of Applications to License Fixed Earth Stations and to Approve the Use of Foreign Fixed-Satellite Service (FSS) Satellites in Canada; and
• provide the Department with a detailed annual report outlining progress made in all areas and indicating compliance with all licence conditions, including copies of any
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existing annual report for the licensee’s fiscal year with respect to this authorization, and after launch, including a current listing of all satellite capacity being made available through this authorization, the capacity assigned to Canadian service providers and others, including the parties to which it is assigned, and any unused capacity including the terms of its availability. These annual reports will be augmented with semi-annual interim reports providing an update on all aspects of the design, procurement, construction, coordination and launch of the satellite until the satellite has been put into service.
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conclusion
Notice DGRB-008-00
IX. CONCLUSION
The proposal contained in this Application is an innovative and comprehensive approach to making the best possible use of the orbital resources available at 118.7º WL. Throughout this Application, BSCI has met, and in many cases exceeded, the information requirements set out by Industry Canada in Notice DGRB-008-00. In particular:
• The anticipated corporate structure results in clearly Canadian ownership and control of Opco;
• BSCI has provided the Department with a credible plan for the timely deployment of new satellite facilities that will meet all mandatory requirements and commitments to provide capacity and service, while ensuring that the Department’s essential milestones are met.
• BSCI has demonstrated that its proposed satellite facilities will provide full coverage of Canada, including the far North, while demonstrating an ability to satisfy all other mandatory requirements.
• BSCI has provided well researched, realistic and financially viable business, technical and operational plans that fully meet the needs of users and service providers in Canada by providing the broadest possible coverage of all regions of Canada; the greatest amount of capacity for Canadian use and the highest quality signals within the domestic coverage; innovative advanced satellite services; and viable plans for delivering and marketing capacity and services to users and service providers in all regions of Canada, including those in underserved areas.
• BSCI has provided a comprehensive plan for providing sustainable benefits that will meet the needs of public institutions in underserved areas of Canada.
Above all, BSCI has demonstrated a credible ability to deploy the proposed satellites, and a clear commitment to fulfilling all other requirements of the Department.
BSCI is excited about the prospect of creating a new Canadian satellite company using the orbital resources at 118.7º WL. As we have detailed in this Application, BSCI
Page IX-1 Notice DGRB-008-00 proposes to invest $1 billion in new Canadian communications infrastructure, and to contribute approximately $100 million in funding for services to public institutions in remote and underserved areas. Beyond pure investment, the BSCI proposal brings substantial and tangible public benefits to Canadians through the achievement of public policy goals in the area of competition and industrial development.
BSCI has assembled a skilled management team, secured the necessary financial commitments, and struck an agreement with an experienced strategic partner – all with a vision of making BSCI a reality. The Canadian FSS market is ready to welcome a strong new Canadian competitor.
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