CHRISTINE J. PRUDHAM CHIEF LEGAL OFFICER DIRECT LINE: 905‐944‐7952 E‐MAIL: [email protected]

December 17, 2012

BY E-MAIL

Director General Spectrum Auctions Branch Industry Canada 300 Slater Street Ottawa, Ontario K1A 0C8

Re: Canada Gazette Notice Part I, October 2012 – Notice No. DGSO-004-12 Consultation on a Licensing Framework for Broadband Radio Service (BRS) — 2500 MHz Band

Please find attached the reply comments of Xplornet Communications Inc. and Xplornet Broadband Inc. in response to the above referenced consultation.

Yours truly,

CJP/hb Christine J. Prudham Enclosure

XPLORNET COMMUNICATIONS INC. ● XPLORNET BROADBAND INC. 625 Cochrane Drive ● Suite 1000 ● Markham, Ontario ● L3R 9R9 ● www.xplornet.com

Consultation on a Licensing Framework for Broadband Radio Service (BRS) — 2500 MHz Band

Canada Gazette Notice DGSO-004-12

Reply Comments of Xplornet Communications Inc. and Xplornet Broadband Inc.

December 17, 2012

Introduction

1. Xplornet Communications Inc. and Xplornet Broadband Inc. (collectively, “Xplornet”) are pleased to submit the following reply comments in response to Canada Gazette, Part I (9 October 2012) titled Consultation on a Licensing Framework for Broadband Radio Service (BRS) - 2500 MHz Band (Notice DGSO-004-12, hereinafter the “2500 MHz Licensing Consultation Document”).

2. Xplornet has reviewed the comments submitted by Inc. (Bell); the British Columbia Broadband Association (BCBA); the Canadian Wireless Telecommunications Association (CWTA); Bragg Communications Inc., carrying on business as (Eastlink); Wireless Management Corp. (WIND); Data & Audio-Visual Enterprises Wireless Inc., doing business as (Mobilicity); MTS Inc. and Allstream Inc. (MTS Allstream); Inc. (Public Mobile); Quebecor Media Inc., on behalf of itself and Videotron G.P. (Quebecor); Partnerships (Rogers); Saskatchewan Telecommunications (SaskTel); Communications Company (TELUS); the Kativik Regional Government (KRG); and Drs. Catherine Middleton and Gregory Taylor of Ryerson University.

3. Xplornet, as Canada’s leading rural Internet service provider, cautions the Department against any proposals that will facilitate continued spectrum hoarding by larger carriers with market power and little demonstrated intention to deploy to rural and remote areas.

4. Xplornet notes that there is widespread support for many of the Department’s proposals, including the products and categorization of licences available for auction, and most (but not all) of the proposed conditions of licence, and there is widespread opposition to certain of the Department’s proposals, namely, (i) proposal 6-11 to continue to mandate a research and development condition of licence; and (ii) proposal 7-6 to expand the condition of licence related to lawful intercept requirements for existing BRS licensees.

5. As noted by a number of parties in their initial comments on the 2500 MHz Licensing Consultation Document, the Department’s proposed 2500 MHz licensing framework is

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 2 of 17

largely identical to the Department’s proposals for the 700 MHz Licensing Framework Consultation1, with certain notable, important differences2. Especially significant and disappointing is the Department’s proposal to use, and set rules for, the untested Combinatorial Clock Auction (CCA) format for the 2500 MHz auction given the 2500 MHz auction will be even more complicated than the 700 MHz auction at which the CCA format will be first tested.

6. Given none of the parties to the 2500 MHz Licensing Framework Consultation realistically expect the Department to withdraw its proposal to use the CCA format, Xplornet will restrict its reply comments to the issues that divide the parties.

7. The issues that divide the parties are those in respect of (i) the revealed preference rule in the CCA format; (ii) the rules governing how Associated Entities may participate in the 2500 MHz auction; (iii) information disclosure before, during, and after the 2500 MHz auction; and (iv) the general deployment requirement. These issues, Xplornet submits, are the issues that affect what matters most to Canadians – cost-effective deployment of affordable, competitive wireless technologies to all regions of Canada – not just urban areas.

8. The issues are listed in the table below.

Section Issue Consultation Identification Question The combined eligibility point and 4-1(c) revealed preference activity rule in the A clock rounds, and the revealed preference limit in the supplementary round The information to be disclosed prior to, 5-1(b); 4-1(e) B during, and post-auction

1 Canada Gazette, Part I (5 May 2012), Consultation on a Licensing Framework for Mobile Broadband Services (MBS) – 700 MHz Band. 2 Notable, important differences are (i) the service areas for licensing (Tier 3 instead of Tier 2); (ii) the much greater volume of licences and packages of licences available for auction; (iii) the unique licensing areas (Canada divided into 3 regions); and (iv) the deployment obligations (general deployment obligations for all licences, rather than specific obligations for specific licences).

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 3 of 17

The types of agreements that should be 5-1(a) C captured under the definition of associated entities The proposal that entities that are deemed 5-1(d) associated entities may apply to be treated D as separate entities for participation in the auction The proposal that associated entities may 5-1(e) request to have the spectrum aggregation limit apply to them separately, based on an E analysis of their association and of whether they intend to compete in the same licence service area Comments on the proposed wording of the 6-2 F condition of licence related to the spectrum aggregation limit Comments on the proposed wording of the 6-3 G condition of licence related to transferability and divisibility The proposed time-frame for satisfaction 6-12(b) H of the general deployment condition of licence Comments on the proposed wording of the 7-1 through I condition of licence related to the existing 7-6 BRS licensees J Opening Bids 8-1 K Pre-auction deposits 8-3 Bid payment and forfeiture penalties (Not L consulted)

A. The revealed preference limit in the supplementary round

9. As in the case of the 700 MHz Licensing Framework Consultation, Industry Canada has proposed that (i) bids in the Supplementary Round be limited by revealed preference with respect to the bids that a bidder submitted in the clock rounds; and (ii) supplementary bids for a package - comprised solely of the bidder’s final clock package plus some or all

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 4 of 17

of the unallocated licences - only need to satisfy revealed preference with respect to the final clock round.

10. Also as in the case of the 700 MHz Licensing Framework Consultation, with varying degrees of enthusiasm, Bell3, Videotron4, TELUS5, WIND6, and Mobilicity7, support the Department’s proposed Revealed Preference Limit in the Supplementary Round, or at least the preservation of the proposed rule and not the weakening of it.

11. The Revealed Preference Rule, as proposed by the Department, requires that bids which exceed a bidders’ current eligibility must be consistent with preferences choices made in every previous round in which the bidder reduced eligibility.

12. In their comments, Rogers8 and Public Mobile9 repeat their proposal from the 700 MHz Licensing Framework Consultation to weaken the constraints by requiring that supplementary bids which exceed the eligibility of the bidder in the final clock round only be constrained on the basis of revealed preference in the last round in which the bidder had sufficient eligibility to bid on the package, as opposed to the Department’s proposal which constrains bids to every previous round in which the bidder reduced eligibility. Rogers and Public Mobile argue that, as currently formulated, the Revealed Preference Rule is an impediment to switching between substitutable blocks.10

13. The Revealed Preference Rule, in conjunction with the activity rule, is designed to promote truthful bidding throughout the 2500 MHz auction and to curb vexatious gaming behaviour. It therefore makes no sense for the Department to adopt proposals to undermine the very rule designed to promote truthful bidding at the outset of the auction.

14. Furthermore, given the un-refuted risk under the proposed CCA format that large combinatorial bids in the clock rounds would likely trump the bids of smaller regional

3 Comments of Bell at para. 20. 4 Comments of Videotron at paras. 50-59. 5 Comments of TELUS at paras. 50-51. 6 Comments of WIND at para. 14. 7 Comments of Mobilicity at para. 9. 8 Comments of Rogers at para. 52. 9 Comments of Public Mobile at para. 58. 10 Ibid., at para. 67.

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 5 of 17

service providers and of new entrants, it makes no sense to give larger players with a high degree of market power even more leverage flexibility to trump smaller players. This risk is particularly acute in light of the demonstrated behaviour of larger players not to deploy to rural and remote areas served by smaller regional players such as Xplornet.

15. Accordingly, Xplornet respectfully recommends that the Department reject the Rogers/Public Mobile proposal to undermine the CCA format.

B. Information to be disclosed prior to, during, and post-auction

16. A wide range of parties also submitted proposals in respect of the level of information that should be disclosed to the Department, and to the public, prior to the auction.

17. Prior to the auction: A wide range of parties recommended that the Department provide greater detail and clarity as to what relationship gives rise to an Associated Entity relationship.

18. Most of the parties agree that some level of disclosure of existing relationships, prior to the auction, is necessary in order to allow the Department and the parties to understand how the Associated Entity rule will apply. The parties generally referred to this as an “advanced ruling” process whereby bidders would be required to file a “narrative” describing certain relationships that touch on potential criteria for determining an association.

19. A number of parties also submitted proposals in respect of the level of information that should be provided to the Department, and to the public, for the purposes of determining whether the parties are associated.

20. Public Mobile, citing SaskTel’s proposal in the 700 MHz Licensing Framework Consultation, argued that the Department should only release pre-auction information of

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 6 of 17

the names of participants, and should not disclose auction deposits and bid points submitted by each bidder.11

21. Bell, while supportive of proposals to require bidders to file narratives describing their relationship, opposes proposals to make public that information on the basis that such disclosure of potentially confidential and potentially sensitive commercial information serves no public purpose whatsoever and could be harmful to bidders’ business interests. Bell therefore proposes, to the extent the Department adopt some form of advance ruling process, that it follow the confidentiality model used by the Canadian Radio-television Telecommunications Commission (CRTC).12 TELUS appears to share this view that any confidential information filed with the Department be treated with the “utmost confidentiality”, and that the “associated entities review process must not serve to undermine the confidentiality of the market plans and the trade secrets of mobile operators”.13 According to WIND, “the only information that should be made public is a narrative description of the arrangement sufficient for the other bidders to understand the general relationship between the parties and the Department’s reasons for permitting (or denying) the relationship, if any”, and that any other information requested by the Department as part of its review should be accorded confidentiality in accordance with the supplier’s wishes.14

22. At the other extreme, Rogers advocates for disclosure of complete details of any arrangements to the Department and other bidders 90 days in advance of the auction15, and Mobilicity advocates that the Department require, and publish, four months in advance of the auction very detailed information about all associates, affiliates, related arrangements and understandings, and a description of all partnerships, joint ventures, agreements to merge, consortia or any arrangements, agreements or understandings of any kind, either explicit or implicit, relating to access or sharing or options to access or

11 Ibid., at para. 10. 12 Comments of Bell at paras. 52-55. 13 Comments of TELUS at paras. 71-72. 14 Comments of WIND at paras. 27-28. 15 Comments of Rogers at para. 101(b).

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 7 of 17

share a party’s network in relation to any of the mobile wireless spectrum bands (850 MHz, PCS, AWS and BRS), whether pre- or post-auction.16

23. Xplornet argued that individual bidders should not be required to disclose information as long as the bidders are not bidding together. Any level of disclosed information regarding the arrangements of associated entities (unless it is simply to disclose that two companies are bidding together) could: (i) be injurious to the companies’ strategy; (ii) influence the bidding behavior of others; and/or (iii) result in a less than optimal auction outcome.

24. While Xplornet supports the principle expressed by those advocating for more extensive disclosure of commercial relationships with a view to increased transparency, Xplornet is of the view that the Department need only, and therefore should only, require and disclose information sufficient for bidders to understand the criteria upon which the Department’s decisions in respect of Associated Entities are made.

25. Ultimately, the CCA auction is designed to promote “truthful bidding throughout the auction process, i.e. bidding in a manner that is consistent with how a bidder truly values the package”17. Access to information on the particular details of associated entities constituted by other bidders will likely influence the way bidders behave. This outcome could result in bidders moving away from value bidding to less optimal forms of bidding – for example, bidding to deny spectrum to the other parties or bidding to drive up values in rivals’ markets.

26. Xplornet therefore continues to recommend that the disclosure of information prior to the auction remain limited in the situation where bidders are not bidding together. To the extent that two bidders will be bidding together, however, Xplornet recommends the Department adopt a level of disclosure that is sufficient for other bidders to understand the general relationship between the parties in question and the Department’s reasons for permitting or denying the relationship in question, while allowing parties to assert confidentiality, if appropriate, within the parameters of the confidentiality model used by the CRTC.

16 Comments of Mobilicity at para. 35. 17 2500 MHz Licensing Consultation Document. Appendix D - The Combinatorial Clock Auction. at 1.

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 8 of 17

27. During the auction: Industry Canada has proposed an anonymous bidding format for the 2500 MHz auction. After each clock round, bidders would be provided with information regarding their own bidding activity in the previous round and their eligibility for the next round; aggregate demand for each product from the previous round and the price of each product for the next round. Most parties to the 2500 Licensing Framework Consultation have supported this proposal.

28. Bell, however, stands out in proposing that the Department essentially turn the CCA format on its head by revealing everything about each round, including which party bid for what licences and for what price.18

29. Xplornet, like the majority of respondents to this consultation, supports the Department’s proposal for anonymous bidding, and for the limited release of bidding information (aggregate demand for each product and price), and recommends the Department reject Bell’s proposal. As TELUS noted, “anonymous bidding can be a helpful tool to limit certain undesirable bid behaviours such as retaliatory bidding, foreclosure, and/or demand reduction.”19 To adopt Bell’s proposal, especially in the face of widespread support for the Department’s proposal, would be to allow larger players even greater leverage in an auction of spectrum that smaller players require to have a fair chance of purchasing.

30. Similarly, Xplornet opposes Rogers’ proposal to grant full access to bidding information after the Supplementary Round and before the Assignment Round.20

31. Post-auction: Most parties, including Xplornet, expressed support for the Department’s proposal to release the following information after the 2500 MHz auction:

• the list of winning bidders, licences won and final prices to be paid; • the bid submitted by each bidder in every clock round, including the bidder’s identity;

18 Comments of Bell at para. 25. 19 Comments of TELUS at para. 60. 20 Comments of Rogers at para. 73.

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 9 of 17

• the supplementary bids submitted by each bidder, including the bidder’s identity; and • the assignment bids submitted by each bidder, including the bidder’s identity.

32. Public Mobile expressed concerns with releasing information about unsuccessful bids on the basis that such information could reveal considerable commercially sensitive information about bidding strategies and goals (what regions, when a bidder chose to switch packages) that can give competitors significant insight into a company’s strategic direction.21

33. Xplornet continues to support the Department’s proposal as a means to allow bidders, policymakers and academics to audit the outcome to ensure the auction accomplished the Department’s objectives, and that the auction produced fair results. Xplornet also repeats its request that the Department release the results of the Third Party auction verification. Given the limited amount of spectrum available to Canada’s smaller players dedicated to serving areas that larger carriers tend to avoid in order to focus on more profitable urban areas, it is important that Canadians have confidence in the results of all spectrum auctions. If the Department wishes to address Public Mobile’s concerns, it could do so by providing all of the bid information and masking the name of unsuccessful bidders.

C. Types of agreements captured under definition of associated entities

34. Xplornet is Canada’s largest rural broadband provider. The acquisition of spectrum in the upcoming auction would allow the company to increase its service offering as well as improve product speeds, amount of bandwidth and the quality of service to rural subscribers. Xplornet’s plans directly responds to Industry Canada’s goals of rural deployment.

35. In light of the auction framework adopted by Industry Canada, Xplornet may need to develop partnerships in order to - at a minimum - meet the population coverage requirements for 2500 MHz licensees. Therefore, Xplornet needs to be unencumbered to pursue partnerships that allow it to meet Industry Canada’s requirements while also

21 Comments of Public Mobile at para. 23.

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 10 of 17

enabling the company to access spectrum through direct ownership or other arrangement which gives the company long-term security of use.

D. The proposal that entities that are deemed associated entities may apply to be treated as separate entities for participation in the auction

36. Xplornet supports the Department’s proposal to allow associated entities to apply to be treated as separate entities for the purposes of the 2500 MHz auction, however, as in the case of the 700 MHz auction, recommends that the Department develop and publish a method for monitoring market behaviour of such Associated Entities.

E. The proposal that associated entities may request to have the spectrum aggregation limit apply to them separately, based on an analysis of their association and of whether they intend to compete in the same licence service area

37. The extent to which spectrum caps should apply separately to two companies that may form an association should be dealt with exclusively in terms of the spectrum aggregation limit of 40 MHz.

38. Two companies may have, in principle, an agreement to share capacity to some extent. However, if they choose to bid separately then there should be no opportunity for collusion, and there should be no bidding restrictions beyond the rules contained in the auction framework. After the auction closes, the extent to which they can aggregate their spectrum should be subject to spectrum cap rules.

39. Rules with respect to spectrum aggregation between two associated entities - that may allow at least one of the associated entities to exceed its cap - need to be scaled depending on the status of the companies that constitute the associated entity. For instance, incumbents and non-incumbents have different caps, so applying the cap jointly to an associated entity that includes an incumbent and a new entrant raises the question of which cap to apply.

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 11 of 17

40. Therefore, there should be a set of rules with respect to allowing the cap to be exceeded depending on the status of the companies in an associated entity. We suggest the following guidelines:

i. Two incumbents – if allowed to have the cap apply separately, it should be an overall cap of 40 MHz total for the associated entity. Otherwise, if the caps were applied separately, and as listed in the framework, it would allow two incumbents to partner and acquire, and share 66% of the spectrum in region A & C, 100% in region B.

ii. An incumbent and non-incumbent – no restrictions beyond their own individual caps (e.g. up to 40 MHz each).

iii. Two non-incumbents – no restrictions beyond their own individual caps (e.g., up to 40 MHz each).

F. Comments on the proposed wording of the condition of licence related to the spectrum aggregation limit

41. Xplornet supports the proposed wording of the condition of licence related to the spectrum aggregation limits for Regions A and C, but not for Region B. The proposed wording, which includes a spectrum aggregation limit of 40 MHz across all regions (Regions A, B and C) fails to recognize that Region B consists of the most densely populated regions of Canada (with the exception of Saskatchewan) and yet has less BRS spectrum available than Regions A and C.

42. In each of Regions A and C there is 100 MHz of paired spectrum for auction, plus 20 MHz of unpaired spectrum. In Region B there is only 60 MHz of paired spectrum available, and no unpaired spectrum. Given the currently proposed cap of 40 MHz across all of the regions, this means that in Region B (again, the most densely populated areas of Canada) one service provider with market power could conceivably obtain two-thirds of the available spectrum and leave only one competitor remaining.

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 12 of 17

43. To align the Department’s proposal with the Department’s stated goal of promoting competition and giving “four or more service providers in most regions” an opportunity to access the spectrum22, Xplornet continues to recommend that the Department lower the spectrum aggregation limit in Region B to 20 MHz. Doing so would allow 3 competitors to enter each of the Regions (A, B and C), not just Region A and C, under the currently proposed spectrum aggregation limit of 40 MHz. To be fair to those Canadians living in Region B, the rules should not result in less competitive entry than the rules for Region A and Region C.

G. Comments on the proposed wording of the condition of licence related to transferability and divisibility

44. Xplornet supports the proposed condition of licence on transferability and divisibility, so long as the Department does not permit 2500 MHz spectrum transfers to non-arm’s length parties at preferred rates. This condition will allow parties the flexibility to enter into arrangements that optimize spectrum holdings, while preventing carriers from using elaborate corporate structure and branding schemes to circumvent the spectrum aggregation limit.

45. Xplornet notes the importance of the specific condition that “the transferee must satisfy all applicable conditions of licence, including general deployment requirements”, and recommends that the Department carefully monitor satisfaction of that condition to ensure licensees do not enter the 2500 MHz auction simply to purchase spectrum to keep it out of competitors’ hands.

H. Time-frame for satisfaction of general deployment condition of licence

46. In our initial comments, Xplornet opposed the Department’s proposed timeframe for deployment within 10 years of licence issuance. As currently proposed, the lengthy general deployment condition of licence contradicts the stated objectives of the Minister of Industry and Industry Canada to promote sustained competition, robust investment and

22 Canada Gazette, Part I (14 March 2012) Policy and Technical Framework: Mobile Broadband Services (MBS) – 700 MHz Band, Broadband Radio Service (BRS) – 2500 MHz Band (SMSE-002-12) at para. 35.

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 13 of 17

innovation, for the benefit of all Canadians, including those in rural areas. It does so because it allows speculators to purchase 2500 MHz spectrum and then sell it at a profit after 5 years without having to deploy.

47. Xplornet therefore strongly proposes that the Department impose a 5-year general deployment condition of license, instead of the proposed 10-year timeframe.

48. Xplornet notes that similar proposals were made by TELUS23 and MTS Allstream24, and strongly encourages the Department to adopt a 5-year general deployment condition of licence to (i) avoid hoarding by ensuring that only bidders serious about deployment purchase the licences; and (ii) to avoid speculative bidding by aligning the 5-year horizon on the spectrum aggregation limit.

49. Xplornet also notes TELUS’ observation that the Department has not consulted on the general deployment condition of licences for existing BRS spectrum licensees, and supports TELUS’ recommendation that whatever final decision the Department reaches on deployment requirements, that this deployment requirement apply to existing BRS licences based on their licence issue date of March 31, 2011.

I. Comments on the proposed wording of the conditions of licence related to the existing

BRS licensees

50. Consistent with its support for equivalent general deployment obligations for existing BRS licensees and new BRS licensees, Xplornet supports identical conditions of licence

in respect of existing BRS licensees and new BRS licensees.

51. Specifically, Xplornet recommends that the Department adopt identical conditions of

licence as between existing licensees and new licensees in respect of:

a. proposed wording of the condition of licence related to transferability and divisibility for existing BRS licensees (Consultation question 7-3); b. proposed wording of the condition of licence related to eligibility criteria for existing BRS licensees (Consultation question 7-4);

23 Comments of TELUS at paras. 94-97. 24 Comments of MTS Allstream at para. 25.

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 14 of 17

c. proposed condition of licence related to technical considerations, and international and domestic coordination for existing BRS licensees (Consultation question 7-5); and d. proposed wording of the condition of licence related to lawful intercept requirements (Consultation question 7-6).

J. Opening Bids

52. TELUS proposed cutting in half the proposed opening bid prices outlined in Table 5 of the consultation “on the simple basis that this specific spectrum based on this specific band plan has actually been sold at auction over the last few years in Europe at much lower final prices than the Department’s proposed opening bid levels.”25

53. Xplornet supports TELUS’ proposal on the basis that making the 2500 MHz more accessible to smaller bidders, especially those who serve rural and remote areas, is consistent with the Department’s policy objectives of promoting sustained competition, robust investment and innovation, for the benefit of all Canadians, including those in rural areas. Any proposal to raise the opening bids, which are already set at levels higher than past 2500 MHz auctions, would run counter to these objectives by artificially inflating the market and excluding smaller players at the outset.

54. Furthermore, regardless of the starting point, the CCA model is designed to reveal bidders’ true values and preferences.

K. Pre-auction deposits

55. Bell proposed that over the course of the auction, prior to the commencement of each day's bidding, bidders be required to provide Industry Canada with a financial guarantee via a letter of credit equal to 100% of the value of their previous day's last package bid.26

56. Xplornet notes that this is a very onerous and unnecessary requirement serving no purpose other than to put pressure on smaller carriers with fewer resources.

25 Comments of TELUS at para. 116. 26 Comments of Bell, at para. 130.

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 15 of 17

57. Xplornet therefore recommends that the Department reject Bell’s proposal.

L. Bid payment and forfeiture penalties

58. Mobilicity advocates for parties being able to pay their bid amounts in 6 equal installments over 5 years.27

59. Xplornet has no objection to this proposal, on the basis that it may allow parties that might not otherwise be able to participate in the auction a chance to do so.

Conclusion

60. Xplornet, as Canada’s largest rural broadband provider, continues to advocate for rules and conditions of licence that enable, rather than impair, smaller service providers in delivering competitive, innovative services to Canadians living in rural and remote areas, rather than allowing dominant incumbent service providers to hoard spectrum and not deploy it.

61. As such, Xplornet summarizes its key recommendations:

a. Revealed Preference Rule: Preserve the Department’s proposed rules in respect of the Revealed Preference Rule in the Supplementary Round, and reject proposals to that will weaken the constraints on bidders’ supplementary bids and therefore make the auction more difficult for smaller service providers. b. Information Disclosure before, during, and after: Require provision and disclosure information sufficient for bidders to understand the criteria upon which the Department’s decisions in respect of Associated Entities are made. Retain anonymous bidding for the 2500 MHz auction to mitigate against potential gaming by larger players with deeper pockets. Release all information as proposed by the Department after the auction to promote transparency and confidence in the results. c. Spectrum aggregation limits: The spectrum aggregation limit in population- dense Region B should be lowered to 20 MHz to allow at least 3 possible entrants. The spectrum aggregation should be 40 MHz shared between two associated incumbents; 40 MHz each for an associated incumbent and non-incumbent; and 40 MHz each for two associated non-incumbents.

27 Comments of Mobilicity at para. 91.

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 16 of 17

d. General deployment: As also proposed by TELUS and MTS Allstream, shorten the time-frame for general deployment from 10 years to 5 years to align with the 5-year spectrum aggregation limit to avoid the possibility of speculative bidding by those with no intention to deploy. e. Opening bids: Adopt TELUS’ competition-promoting proposal to lower the opening bids in the 2500 MHz auction by half. f. Conditions of licence for existing BRS licensees: These should be identical as between existing licensees and new licensees to ensure a consistent set of rules for Canadians. g. Other proposals: i. Reject Bell’s competition-limiting proposal to require a daily letter of credit.

ii. Permit Mobilicity’s competition-promoting proposal to allow bidders to pay their bids in 6 installments over 5 years.

62. As in the case of the 700 MHz spectrum, the 2500 MHz spectrum is important to the rural and remote Canadians, and to Canada’s smaller service providers upon which they rely for competitive, innovative services. As such, Xplornet is thankful for the opportunity to provide these reply comments in respect of the 2500 MHz spectrum.

***End of Document***

DGSO‐004‐12 Xplornet Reply Comments December 17, 2012 17 of 17