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Rogers Wireless Inc 333 Bloor Street East Toronto, Ontario M4W 1G9 Tel. (416) 935-7211 Fax (416) 935-7719 [email protected] Dawn Hunt Vice-President Government & Intercarrier Relations March 14, 2003 Jan Skora Director General Radiocommunications and Broadcasting Regulatory Branch EMAILED TO: [email protected] Industry Canada 300 Slater Street Ottawa, Ontario K1A 0C8 Dear Mr. Skora, Re: Comments - Canada Gazette Notices: DGRB-004-02 and DGRB-001-03 Consultation on a New Fee and Licensing Regime for Cellular and Incumbent Personal Communications Services (PCS) Licensees Pursuant to the Canada Gazette, Part I, dated December 21, 2002, and February 21, 2003 respectively, RWI is pleased to file the attached comments regarding the above noted proceeding. The comments are submitted in Adobe Acrobat (PDF) version 5.0 software produced on a computer using a Windows 2000 Professional operating system. If there are any questions regarding these comments, please do not hesitate to contact the undersigned. Sincerely, Original Signed by: Joel Thorp On Behalf of: Dawn Hunt, DH:jt Attach. Department of Industry CONSULTATION ON A NEW FEE AND LICENSING REGIME FOR CELLULAR AND INCUMBENT PERSONAL COMMUNICATIONS SERVICES (PCS) LICENSEES DGRB-004-02 COMMENTS OF ROGERS WIRELESS INC. March 14, 2003 COMMENTS OF ROGERS WIRELESS INC. DGRB-004-02 Table of Contents 1EXECUTIVE SUMMARY ................................................................................................3 DETAILED COMMENTS...................................................................................................4 CURRENT SPECTRUM FEES .....................................................................................4 An Assessment of the Cumulative Impact of Federal Policies is Required ...............4 Distortions in the Current Spectrum Fee Regime ......................................................5 PROPOSED SPECTRUM FEES...................................................................................6 Treasury Board of Canada Cost Recovery and Charging Policy...............................6 Overriding and Competing Policy Objectives.............................................................7 Public Benefits...........................................................................................................9 The Proposed Spectrum Licence Fee should be Applied to Other Users ...............11 Increased Fees for Cellular/PCS Spectrum are not Appropriate .............................14 Comparison of Fees in Canada and the US ............................................................16 Spectrum Licence Fee Benchmarks........................................................................17 The State of the Canadian Wireless Industry ..........................................................18 Higher Fees Will Reduce Investment and Will Raise Wireless Rates .....................20 A Two-Tier Spectrum Fee Structure Would Be A Mistake.......................................20 Spectrum Fee Relief for Certain Licensees is Not Warranted .................................21 Radio Station Installations .......................................................................................23 Licence Transferability and Divisibility .....................................................................25 Cellular and PCS Service in Underserved Areas.....................................................26 Renewal of Auctioned PCS Spectrum .....................................................................26 Lawful Interception...................................................................................................27 Provision of Technical Information...........................................................................27 Cellular Analog Resale and Roaming......................................................................27 Spectrum and Geography........................................................................................27 CONCLUSION ................................................................................................................28 March 14, 2003 Page 2 of 28 COMMENTS OF ROGERS WIRELESS INC. DGRB-004-02 EXECUTIVE SUMMARY 1. Rogers Wireless Inc. (“RWI”) is pleased to submit the following comments in response to the public consultation initiated by The Department of Industry (“the Department”), entitled `Notice No. DGRB-004-02 – Consultation on a new Fee and Licensing Regime for Cellular and Incumbent Personal Communication Services (PCS) Licensees’ (“the Consultation Paper”). 2. In the Consultation Paper, the Department has invited public comments on all aspects of the Department’s proposal. 3. RWI has also participated in the development of the comments that have been filed by the Canadian Wireless Telecommunications Association (“CWTA”) and fully supports the CWTA’s comments in their entirety. 4. RWI currently operates Canada’s largest national commercial mobile communications services network, providing coverage to over 93% of the Canadian population. RWI has been granted spectrum licences for radio frequencies in the 800 MHz and 1900 MHz frequency bands. These spectrum licences were obtained by means of comparative review and spectrum auction processes. 5. Using its licensed spectrum, RWI operates a national cellular and PCS network that is comprised of fixed, mobile, circuit- and packet-based technologies, which employ a variety of technical standards. RWI believes that it is in an excellent position to provide the Department with constructive and relevant input regarding the Consultation Paper. 6. At the outset, RWI continues to be alarmed by the high level of direct and indirect taxation that the wireless industry and its customers bear. RWI believes that this problem is a direct result of the fact that numerous federal departments have implemented individual policies and decisions that affect the wireless industry, without having conducted an assessment of the cumulative impact of such policies and decisions. As outlined in greater detail below, coordination is urgently required amongst the federal departments whose policies affect the wireless industry and an assessment of these impacts is required immediately. 7. RWI is concerned that the proposed spectrum fees being considered by the Department are excessive. Absent the recommendations put forward by RWI in the following comments, a new spectrum licence fee regime may curtail the quality, affordability and availability of wireless services in Canada, and may undermine the competitiveness and health of the wireless industry. Current spectrum licence fees are already unreasonably high and, therefore, any new licence fee regime must seek to remedy this problem. March 14, 2003 Page 3 of 28 COMMENTS OF ROGERS WIRELESS INC. DGRB-004-02 8. In addition to setting spectrum licence fees that are more reasonable than current fees, a new spectrum licence regime must seek to be fair and equitable in its treatment of licensees. RWI is concerned that the proposed regime fails to adequately apply the principle that licensees should pay for radio spectrum that they hold, regardless of the extent to which, and the manner in which, they choose to utilize it. RWI believes that this principle should be applied to all licensed spectrum in the 300 MHz to 3000 MHz frequency range (“the UHF band”). 9. RWI believes that a mandatory System Access Fee (“SAF”) statement is unwarranted and should not be imposed as a licence condition. 10. RWI believes that the more onerous requirement for public consultation in connection with antenna structures is unwarranted. The wireless companies already perform public consultation for antenna structures to the degree required by the local community. DETAILED COMMENTS CURRENT SPECTRUM FEES An Assessment of the Cumulative Impact of Federal Policies is Required 11. RWI continues to be alarmed by the high level of direct and indirect fees and taxation that the wireless industry and its customers bear. RWI notes that numerous federal departments affect the wireless industry through their individual policies and decisions. 12. For example, as a cellular/PCS licensee, RWI must pay spectrum licence fees, is required to invest 2% of adjusted gross revenues in research and development (“R & D”), is required to provide specific lawful access capabilities, must pay CRTC Contribution, and is subject to federal and provincial taxes. 13. RWI notes that the Province of Newfoundland has empowered itself and the municipalities of the Province to tax utilities, including Wireless Service Providers (“WSPs”), an amount equal to 2.5% of the revenues generated within their boundaries. Other governments and public authorities have attempted to impose access and right-of-way charges on WSPs. 14. Despite the substantial level of funds extracted from cellular/PCS licensees in this manner, it would appear that neither the Department, nor any other federal department, has undertaken an adequate assessment of the cumulative impact of these policies and decisions. March 14, 2003 Page 4 of 28 COMMENTS OF ROGERS WIRELESS INC. DGRB-004-02 15. RWI provided comments to the Department in response to Gazette Notice DGTP-004-02 -Revision to the 1992 Spectrum Policy Framework for Canada (“DGTP-004-02”). In its comments, and among other things, RWI urged the Department to adopt the following principles within the new spectrum policy framework: • When setting spectrum fees, the Department should take into consideration the aggregate revenues extracted from licensees by all federal departments or
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