1* 1 Industry Canada lndustrie Canada Ottawa Ontario KIA OCS March 30,2006 Mr. Kenneth Englehart Mr. Mirko Bibic VP, Regulatory Affairs Chief, Regulatory Affairs Rogers Communications Inc. Bell Canada 333 Bloor Street East 1 10 O'Connor Street, 14mFloor Toronto, Ontario M4W 1G9 Ottawa, Ontario KIP 1H 1 Dear Sirs: Thank you for your letter of August 2,2005, in which you applied for the transfer of Inukshuk's Multipoint Communications Systems (MCS) licences. Industry Canada officials have reviewed your application for a transfer and barring unforeseen circumstances will approve the licence transfer to Inukshuk Wireless Partnership pursuant to Section 4.5.2 of the policy and licensing procedures for 2500 MHz MCS Systems upon receipt and approval of the executed documents required relating to the Canadian ownership and control. Given the significant interest and anticipated developments smunding the 2500 MHz band, I would like to take this opportunity to clariQ several issues. Mobile Use Of particular interest is that in the United States, as well as in other countries, the decision has been made to include a mobile allocation in this band. The Department supports this development and is interested in ensuring that Canadians are able to maximize the benefits derived fiom this spectrum, recognizing the importance of harmonizing this band with other markets. As noted in the conditions of licence (attached for your information), the MCS licences continue to be restricted to fixed service. The Department has determined that the equipment currently deployed has a limited degree of incidental mobility that is acceptable. However, the sale and marketing of any service intended to be used by subscriber tenninals while in motion is prohibited. Should any licensee authorized under the fixed service in the band 2500-2690 MHz wish to offer services in the future that equal or exceed the mobile capabilities of technologies such as 802.16e, the licensee will be required to apply to the Department for a mobile authorization prior to any implementation of such services. The use of this band for mobile applications will be subject to a revised spectrum policy that is expected to be released in the near future. The addition of mobile services constitutes a fundamental reallocation. The added regulatory flexibility to permit mobile services, together with the greater spectrum efficiencies associated with mobile technologies and the increased value associated with mobile spectrum, constitute a significant material change. Accordingly, the implementation of mobile services justifies a reassessment of the licensing requirements, including the amount of spectrum to be retained by incumbent licensees. Condition of licence 2 requires deployment and maintaining commercial service to all areas identified on the attached Detailed MCS Deployment Schedule. For the purposes of this condition of licence, as well as the evaluation referred to in condition of licence 1, commercial service is defined as: a) the licensee has installed sufficient base station transmitting and receiving equipment, together with related switching and ancillary equipment such that the service offering is available to seventy percent of the households within the specific deployment area (city or community); b) the service is being offered for sale to the public; and c) the service is being provided within a reasonable period of time to those opting for it. Alternatively, items b) and c) of this definition will be deemed to be met if the licensee or its associated resellers have subscribers equivalent to at least five percent of the households in the particular deployment area. As outlined in your letter to the Deputy Minister, dated September 12,2005, an evaluation will be made as of December 3 1,2009, to determine the extent to which deployment has taken place and to what extent there remains "unused" spectrum. This evaluation to be conducted by the Department, may include an assessment by an independent third party selected by the Department. The evaluation will be done on the basis of both geographic areas deployed, as well as the amount of spectrum put to productive and spectrally efficient use in those areas deployed. In terms of geography, the smallest assessment area will be defined by Statistics Canada Census Subdivisions and the smallest assessment in terms of spectrum will be units of 1 MHz. Following the above-noted evaluation, upon notification by the Department, you will be required to surrender the licences immediately. A renewal licence for the tern to March 3 1,2011, will be issued covering those particular geographic areas and those parts of the spectrum where the licensee has demonstrated to the satisfaction of the Department that the spectrum has been put to productive and spectrally efficient use taking into account commercially available technology, cost considerations and good engineering practices. &en Network During the original competitive process, the Inukshuk application made many references to its commitment to establish an open network whereby it would allow access to its network on a wholesale basis to those who intended to offer broadband wireless services. You are reminded that the Canadian Radio-television and Telecommunications Commission (CRTC) has retained certain powers and duties, including those with respect to section 24 and subsection 27(2) of the Telecommunications Act with respect to your services. As such, the CRTC may deal with any issue or evidence of a dispute regarding the reasonableness of the terms on which access is being offered to a third party. Learning Plan Please note that the annual requirements for deployment and learning plan investments will be assessed in accordance with the conditions of licence. These requirements, as well as all other requirements of licence, must be met on an ongoing basis in order for the licensee to be considered in compliance with the conditions of licence. In closing, I would point out that the terms and conditions established for the MCS licences will not restrict the Minister from taking any action in the future under the powers conferred under the Radiocommunication Act. Should you have any questions or require assistance with the above, please contact me at (6 13) 990-48 17. Sincerely, I/ Jan Skora Director General Radiocommunications and Broadcasting Regulatory Branch Enclosures Licence Conditions for 2500 MHz Multipoint Communications Systems Licensees - lnukshuk Wireless Partnership These conditions are established in consideration of the policy framework for Multipoint Communications Systems (MCS) in the 2500 MHz Range - Policy and Licensing Procedures document, (hereafter referred to as the 'MCS policy") issued by the Department in June 1999. 1. Licence Term The term of the licence will end March 31,201 1 subject to the following: During the licence term, the Department will evaluate the licensee's deployment as of December 31, 2009. Based on this evaluation, the licensee's authority to operate will be reduced to only the areas where commercial service has been deployed. Authority to operate will continue in any deployment areas identified on the Detailed MCS Deployment Plan, Census Subdivisions (CSD), Census Metropolitan Areas (CMA), and Census Agglomerations (CA) provided commercial service has been deployed in that area. Furthermore, as of December 31, 2009, in any area where commercial services have been deployed, if the licensee has failed to demonstrate to the satisfaction of the Department that any portion of the spectrum has been put to productive and spectrally efficient use taking into account commercially available technology, cost considerations and good engineering practices, that portion of the spectrum will also be removed from the authority granted by this licence. Following the above-noted evaluation, upon notification by the Department, the licensee will surrender the licence immediately and a renewal licence will be issued for the term ending March 31, 201 1 for those particular geographic areas and those parts of the spectrum where the licensee has demonstrated to the satisfaction of the Department that the spectrum has been put to productive and spectrally efficient use as noted above. 2. Implementation of Spectrum Usage Licensees must deploy and maintain commercial service to all areas identified on the detailed deployment schedule attached to this licence (with respect to this licence as well as with respect to every other MCS spectrum licence held by you). Any noncompliance with the annual requirements could result in suspension or revocation of any or all of the MCS licences held by you as per paragraph 5(2)(b) of the RadiocommunicationAct. The Department may assess the status of the deployment at any time. In particular, assessments will be done on the system deployment as of July 31,2006, and annually thereafter on March 31* until March 2009, and a further assessment on December 31,2009. 3. Learning Plan Licensees must invest in the Learning Plans as agreed to by the Partnership Committee (made up of members of the learning community and Inukshuk) established in the service area in accordance with your Learning Plan. The required level of investment must be made for each fiscal year ending March 31a and in accordance with the amounts indicated below: For each licence area, the annual Learning Plan contribution must be the greater of: A) $50,000 B) twice the annual licence fees C) 4% of the sum of: Page 1 of 3 - annual gross revenues generated by wholesale sales to 3rd parties (other than to Bell and Rogers and their affiliates); plus - 50% of annual gross revenues generated by retail sales of access services covered by the licence, by Bell, Rogers and their affiliates 4. Services The licensee is restricted to the provision of Fixed Services as defined in Section 2 of the Radiocommunication Regulations. The licensee, its affiliates, or any third party that has an arrangement with the licensee to use the spectrum specified in this licence is prohibited in the sale and marketing of any service intended to be used by subscriber terminals while in motion.