14 March 2003 Mr. Jan Skora Director General Radiocommunications and Broadcasting Regulatory Branch 300 Slater Street Ottawa, Ontario K1A 0C8 Dear Mr. Skora: Don Woodford Director - Government & Subject: Bell Wireless Alliance Comments in response to - Consultation on a Regulatory Affairs New Fee and Licensing Regime for Cellular and Incumbent Personal Communications Services (PCS) Licensees, Canada Gazette - Part 1, Notice No. DGRB-004-02, dated 21 December 2002. 1. Bell Mobility, on behalf of the Bell Wireless Alliance (BWA), is pleased to submit the following comments in response to Industry Canada's Consultation on a new fee and licensing regime for cellular and incumbent PCS licensees. 2. As the Department is aware, the applicable Treasury Board polices require that federal government departments and agencies undertake meaningful and effective consultations, with the affected client group, throughout the fee setting process. This is to ensure, as outlined in the Treasury Board's policy documentation, that all relevant factors, including the government's overriding policy objectives for the sector, are considered in the process. The BWA believes that this Consultation represents a key step toward Industry Canada's fulfillment of the Treasury Board's requirement to seek the input and participation, of the Canadian wireless industry, in the process of designing a new fee and licensing regime for the sector. 3. As noted in these comments, BWA is in agreement with the proposed harmonization of the disparate licensing regimes, currently applicable to these service bands, with the enhanced licence rights and privileges associated with the auctioned PCS spectrum. We are, however, at the same time strongly of the view that the proposed rate of $0.052 per MHz per person is inappropriate in the circumstances and should, for the reasons outlined in this submission, be reconsidered. The BWA notes that a rate of $0.037 per MHz per person would likely result in licence fee revenue neutrality for the Department in the 2003 timeframe. The BWA respectfully submits however that a full application of the Treasury Board's fee development guidelines, as well as taking into consideration evolving spectrum usage patterns, would suggest a fee of approximately $0.02 per MHz per person. Bell Mobility 105, rue Hôtel-de-Ville 5e étage Hull (Québec) J8X 4H7 Tel: (819) 773-5575 Fax: (819) 773-4346 Internet ID: [email protected] - 2 - 4. The BWA sincerely appreciates the opportunity to collaborate with the Department in the design and development of an appropriate new fee and licensing regime for the Canadian wireless industry. Finally, given the importance of the outcome of this Consultation to its members, the BWA notes its availability to discuss any of the attached comments in further detail at the Department's convenience. Yours truly, Don Woodford Director - Government & Regulatory Affairs Attachment Canada Gazette Notice No. DGRB-004-02 Consultation on a New Fee and Licensing Regime for Cellular and Incumbent Personal Communications Services (PCS) Licensees Published in the Canada Gazette, Part 1 dated 21 December 2002 Bell Wireless Alliance Comments on behalf of Aliant Telecom Inc., Bell Mobility Inc., MTS Communications Inc., MTT Mobility Inc. Northwestel Mobility Inc. Saskatchewan Telecommunications and The Corporation of the City of Thunder Bay 14 March 2003 Table of Contents Page Executive Summary ......................................................................................................................1 1.0 Introduction .......................................................................................................................4 2.0 Treasury Board of Canada Cost Recovery and Charging Policy ......................................6 3.0 The Canadian Wireless Market in 2003 ............................................................................8 3.1 The Customer Perspective....................................................................................8 3.2 The Service Providers' Perspective.....................................................................10 4.0 The International and Domestic Economic Environment ................................................11 5.0 Wireless as an Economic Enabler ..................................................................................12 6.0 The Requirement for Consideration of Other Federal Government Costs......................15 7.0 BWA's Estimate of the Value of Canada's Cellular and 1995 PCS Spectrum ................17 7.1 Clearnet Acquisition and Previous Spectrum Auctions Do Not Provide Appropriate Valuation Signals for Existing Spectrum..........................................17 7.2 Influences on the Value of Canadian Spectrum ..................................................18 8.0 Financial Impact of Industry Canada's Proposed Model on the Industry ........................21 9.0 BWA Proposed Rate Recommendations ........................................................................23 10.0 Regional Carrier Considerations .....................................................................................25 11.0 Summary of Proposed Rate Per MHz Issues .................................................................25 12.0 Comments on Specific Aspects of the Consultation Paper.............................................27 12.1 System Access Fees...........................................................................................32 12.2 Resale and Roaming...........................................................................................33 12.2.1 Condition Applicable to PCS Licensees Only..........................................33 12.2.2 Condition Applicable to Cellular Licensees Only .....................................34 13.0 Radio Station Installations (Section 5.5.5) ......................................................................34 14.0 Conclusion ......................................................................................................................35 Executive Summary 1. The Bell Wireless Alliance (BWA) is please to submit the following comments in response to Industry Canada's Consultation on a New Fee and Licensing Regime for Cellular and Incumbent Personal Communications Services (PCS) Licensees. The BWA notes that in its Consultation Industry Canada has invited comments concerning all aspects of a proposed new fee and licensing regime that will likely apply to the BWA's members for the next decade or more. 2. The BWA has also been referred to the Treasury Board of Canada's Cost Recovery and Charging Policy as providing the fundamental principles that should guide the establishment of federal government user fees, including those fees charged for the right to use Canada's radio frequency spectrum. The Treasury Board's Policy requires that, in designing or changing such user fees, departments conduct meaningful and effective consultations with their client group. 3. The BWA believes that this Consultation represents a key step toward Industry Canada's fulfillment of the Treasury Board's requirement to seek the input and participation, of the Canadian wireless industry, in the process of designing a new fee and licensing regime for the sector. The BWA believes that a collaborative effort between the Department and the industry, such as that represented by this Consultation, will result in a final fee and licensing regime that is fair, appropriate and one that is in the best interests of all Canadians. 4. The Treasury Board's requirement for full consultation, in the BWA's view, is intended to ensure that all relevant factors, including the government's overriding policy objectives for the sector, are considered in the fee setting process. In this regard, the Treasury Board notes that an essential step in the process is to conduct a thorough analysis of the impact of any fee changes on the sector in question. The Treasury Board also notes that, while Canadians are entitled to a fair economic rent, e.g., in the form of spectrum fees for the use of their resource, one has to be mindful to not set fees at a level such that any overriding policy objectives might be compromised. 5. In these comments, the BWA notes that the infrastructure, provided through considerable private investment by Canada's wireless service providers, is widely acknowledged as being a critical infrastructure which has an enormous enabling impact on the entire Canadian economy. For Canadian business in 2003, the wireless infrastructure serves to enhance the productivity and competitiveness of virtually the entire commercial sector. For - 2 - consumers, the infrastructure enhances the well being and safety of individual citizens whether by enabling them to keep in touch with family and friends or to place a critical call to emergency responders. 6. The BWA submits that these examples are evidence of the significant positive externalities, provided to Canadians and their economy, which the Treasury Board's Policy requires be taken into account when developing spectrum user fees. Further, in the BWA's respectful submission, wireless services represent that instance, described in the Treasury Board's Policy, such that where there is a mix of public and private benefits resulting from the exploitation of the spectrum resource, the Treasury Board states that user fees in such a case should be lower than full cost. 7. The Treasury Board's guidelines also require that departments and agencies be mindful, when designing user fees, of the cumulative