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TELUS COMMUNICATIONS COMPANY Reply Comments For

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TELUS COMMUNICATIONS COMPANY Reply Comments For TELUS COMMUNICATIONS COMPANY Reply Comments for CONSULTATION ON A LICENSING FRAMEWORK FOR MOBILE BROADBAND SERVICES (MBS) — 700 MHz Band DGSO-002-12 April 2012 Spectrum Management and Telecommunications July 25, 2012 i Table of Contents Executive Summary ...................................................................................................................................... 1 TELUS’ Reply to Specific Questions Posed by Industry Canada ................................................................ 5 3. General .................................................................................................................................................. 5 3.1. Service Area for Lloydminster (Alberta/Saskatchewan) ............................................................... 5 3.2. Other General Items (New TELUS section) .................................................................................. 8 4. Auction Format and Rules .................................................................................................................. 15 5. Bidder Participation — Affiliated and Associated Entities ................................................................ 27 5.1 Prohibition of Collusion ................................................................................................................ 31 6. Conditions of Licence for Spectrum in the 700 MHz Band ................................................................ 32 7. Auction Process .................................................................................................................................. 46 7.2 Opening Bids ................................................................................................................................ 46 7.3 Proposed Eligibility Points for the 700 MHz Spectrum Auction .................................................. 46 7.4 Pre-auction Deposits ..................................................................................................................... 48 10. Licence Renewal Process .................................................................................................................. 51 Appendix A – Procedural Recommendations ......................................................................................... 53 ii Executive Summary 1. TELUS appreciates the opportunity to provide reply comments and in doing so makes the following general observations: 2. The 700 MHz spectrum to be made available in this auction affords one irretrievable opportunity to ensure that Canadians have available to them sufficient spectrum in order to satisfy their rapidly increasing demand for mobile broadband services (MBS). The consequences of error are profound for both consumers and the industry alike and TELUS encourages the Department to consider carefully its determinations flowing from this consultation. 3. The Department has stated that in developing a licensing framework for MBS in the 700 MHz band, Industry Canada will be guided by the objectives stated in section 7 of the Telecommunications Act, the policy objective stated in the Spectrum Policy Framework for Canada (SPFC) to maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum, and the policy objectives outlined in SMSE- 002-12, as follows: • sustained competition in the wireless telecommunications services market such that consumers and businesses benefit from competitive pricing and choice in service offerings; • robust investment and innovation by wireless telecommunications carriers such that Canadians benefit from world-class networks and the latest technologies; and • an availability of these benefits to Canadians across the country, including those in rural areas, in a timely fashion. 4. TELUS directionally supports the Department’s proposed approaches with some suggested general and specific recommendations for modification to ensure that the benefits of competition, investment and innovation are delivered to the broadest number of Canadians possible, in particular rural Canadians, in a timely fashion. 1 5. In its reply comments TELUS builds upon its initial recommendations and supports or opposes comments of others with reference to the aforementioned objectives. 6. There were a wide range of unsolicited recommendations to alter in some form the March 14th, 2012 SMSE-002-12 decision. TELUS considers these recommendations outside the scope of the current consultation. 7. In its reply comments TELUS notes there appears to be considerable confusion about the definition and the rules regarding associated entities and TELUS recommends further clarification from the Department. 8. Furthermore, the replies of at least nine carriers contemplated the possibility of understandings or agreements with other carriers. Given these perspectives, the limited spectrum available, and the incompatibility of the various blocks, TELUS now believes and submits in its reply that open (non-anonymous) bidding is the best and most prudent approach in order that the Department’s objectives are realized. While TELUS appreciates the rationale for anonymous bidding, block incompatibility has not been as critical an issue in previous combinatorial clock auctions (CCAs) where anonymous bidding has been used. 9. TELUS' recommendations are summarised below. Auction Format and Rules • TELUS has notable concerns with the CCA format but on balance does not recommend eliminating the CCA in favour of an alternative format. • TELUS advocates open bidding as it provides better transparency and the opportunity for all operators to realise greater operational benefits stemming from greater spectral efficiencies. • TELUS cautiously supports the generic blocks as proposed. • TELUS supports bid increments of between 5% and 10% to a maximum of $10M on a per licence basis. 2 • TELUS supports inclusion of financial deposits on a weekly basis which would be able to support respective peak bids of auction participants, to mitigate gaming. • TELUS urges the Department to release the auction software at the earliest opportunity. • TELUS supports the reserve prices and deposits, but suggests lower opening bids would improve price discovery. • TELUS recommends that the proposed unpaired spectrum eligibility points be adjusted. Conditions of Licence • TELUS endorses the comments of the Canadian Wireless Telecommunications Association with respect to the proposed wording of the condition of licence related to lawful intercept requirements. • TELUS requests that the Department issue a decision removing the condition of licence related to R&D. • TELUS believes the Department and industry must be more ambitious with the general deployment requirements and reviews the 7 potential issues and consequences TELUS outlined in its initial submission. TELUS reiterates its proposal for modifications to the MBS general deployment requirements. • TELUS recommends greater transparency and certainty with respect to remedial action in the event of a breach of the deployment requirements. Bidder Participation – Affiliated and Associated Entities • TELUS supports the amendments the Department has proposed to the treatment of associated entities for the purposes of the 700 MHz spectrum auction. With respect to auction integrity and transparency, TELUS proposes clarifying language to describe the features of the Department’s proposed narrative. 3 • TELUS fully supports the Department’s proposed updates to the rules prohibiting collusion that would apply to bidders in the 700 MHz auction. • TELUS proposes some minor updates to the wording for the proposed condition of licence on spectrum aggregation limits that would help improve clarity. • TELUS proposes some minor modifications to the wording for the proposed condition of licence related to transferability and divisibility that would help improve clarity. Training and Access to Information • TELUS recommends providing schedules and establishing a process where potential bidders can get access to information as soon as possible. • TELUS recommends providing at least two training sessions / mock auctions well in advance. • TELUS supports making accessible bidding tools, user guides, bid templates, output file formats, etc. at least three months in advance. General • TELUS recommends that, as proposed by the Department, the existing allocation of the City of Lloydminster to the Alberta tier 2 serving area be maintained in order to minimize technical interference issues and customer confusion. • TELUS rejects the submissions of Rogers and Mobilicity calling for amendments to the spectrum aggregation limits published in SMSE-002-12. 10. Greater detail behind TELUS’ reply submission is provided in the main body of this document. 4 TELUS’ Reply to Specific Questions Posed by Industry Canada 3. General 3.1. Service Area for Lloydminster (Alberta/Saskatchewan) Industry Canada is seeking comments on whether or not the service area boundary for licences in the 700 MHz band should deviate from the provincial boundary around the City of Lloydminster, (Alberta/Saskatchewan) 11. In this consultation, the Department has proposed that the service area boundary for the City of Lloydminster for licences in the 700 MHz band should follow current practice and fall within the province of Alberta and has requested that interested parties comment. 12. The Department’s proposal would mean that all current mobile spectrum bands 1 in Lloydminster were allocated on the basis of the same standard
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