Canada Gazette, Part I, Volume 154, Number 52: Regulations Amending the Radiocommunication Regulations

December 26, 2020

Statutory authority
Radiocommunication Act

Sponsoring department
Department of Industry

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The capacity-based fee model for fixed point-to-point systems in the fixed service

Innovation, Science and Economic Development (ISED) Canada's current capacity-based fee regime for fixed point-to-point systems has the undesired effect of generating higher fees for systems that use spectrum efficiently. This outdated fee model poses an increasing issue as service providers are actively upgrading their networks with state-of-the-art technologies. New and innovative technologies continue to be developed, allowing for the more efficient use of spectrum (i.e. increased data over smaller bandwidths) and faster data rates. Modern radio equipment can transmit more capacity using the same or even less spectrum than previously required. Charging a fee based on capacity means that a system transmitting more data using a given amount of spectrum would be subject to higher fees than another system transmitting less data using the very same amount of spectrum.

The current fee regime for these systems also does not recognize the higher cost associated with deployment in rural and remote areas, especially in the most remote regions of Canada where subscriber density is low relative to the infrastructure needed to support service. Wireless technology is a key component of connectivity for rural homes and businesses, particularly in areas where wireline solutions, such as fibre, are less feasible.

Insufficient flexibility in the duration of radio licence terms

In ISED's current regulatory scheme, the licence fee payable in respect of a radio licence may either be an annual fee for the period from April 1 to March 31 of the following year, a monthly fee payable for the period of a year up to March 31 during which the licence is valid, or 30 days (1 month). A licence with a term shorter than a month is charged the monthly fee. The lack of flexibility of licensing terms means that licensees who require a licence for more than one month but less than one year must choose between either an annual licence, a partial year licence with a term ending March 31, or renewing a monthly licence every month. Some respondents to the Consultation on Licence Fees for Fixed Point-to-Point Radio Systems (Consultation on Point-to-Point Systems Fees) noted that greater flexibility would allow licensees to better manage change in their radio systems and deploy equipment on a short-term basis while ensuring that their licence fees reflect their spectrum usage.

Unused and obsolete radio licence fees and outdated drafting conventions

Currently, the Radiocommunication Regulations (the Regulations) contain provisions related to fees payable for cellular mobile radio frequencies, broadband personal communications services radio frequencies, and radiocommunication service providers for space stations that communicate with mobile stations. These fees were phased out due to changes in the way that spectrum is licensed. They have been replaced by Ministerial fee orders under the Department of Industry Act. These provisions are thus obsolete and must be removed. A few miscellaneous changes are also required to bring the Regulations up to date with the Department of Justice's current drafting best practices.

Background

The Radiocommunication Act (the Act) governs the technical aspects of all wireless communications. Radiocommunication is a type of telecommunication and so is also subject to the Telecommunications Act. While the Telecommunications Act sets out the Canadian telecommunications policy objectives, the Act and the Regulations provide the mechanisms for the orderly development of radiocommunication in Canada. The Minister of Innovation, Science and Industry (the Minister) is responsible for developing goals and national policies for spectrum utilization and for ensuring effective management of the radio frequency spectrum. The Spectrum Policy Framework for Canada (SPFC) sets out the policy objective and enabling guidelines for the Canadian Spectrum Management Program that guide ISED in managing the radio frequency spectrum resource in Canada. ISED also seeks to advance other priorities through spectrum management, such as those of Canada's Innovation and Skills Plan. Connect to Innovate is one initiative of the Innovation and Skills Plan that is bringing high-speed Internet services to some of Canada's most rural and remote communities.

The radio frequency spectrum is a unique resource from which all aspects of society benefit. The radio frequency spectrum is divided into different bands which are used by a variety of communications services including — broadcasting, cellular, satellite, public safety and two-way radio. Radio licence fees are one mechanism designed to promote both the effective use of spectrum and to earn a fair return for the Canadian public for the privilege of access to this public resource.

The International Telecommunication Union defines point-to-point communication as “communication provided by a link, for example, a radio-relay link between two stations located at specified fixed points.” Point-to-point systems use point-to-point communication, including backhaul communications (defined as the transport of aggregate communication signals from base stations to the core network). Backhaul communications are a primary use for point-to-point communication and are an essential part of the infrastructure backbone that enables delivery of Internet, as well as data and voice traffic, by fixed and mobile broadband networks.

Backhaul is also used, for example, to interconnect remote sites and buildings for corporate, health and educational purposes and to support broadcasting undertakings in the transmission of news gathering video. Point-to-point communication is therefore utilized by businesses in a variety of sectors as well as by governmental entities, such as municipalities and crown corporations.

In December 2012, ISED published the Consultation on Spectrum Utilization Policies and Technical Requirements Related to Backhaul Spectrum in Various Bands, Including Bands Shared With Satellite, Mobile and Other Services on its website, which initiated a consultation on the technical aspects of point-to-point systems focused on backhaul communications. Many respondents to that Consultation emphasized that a consumption-based fee model would result in high spectral efficiencies by providing incentives for operators to reduce the spectrum consumed. Following that Consultation, ISED stated that it would consult on any proposed revisions to how the fees are established and assessed, potentially resulting from the review of licence fees that was underway at that time.

ISED examined the fee-setting methodologies of other countries such as the United Kingdom (U.K.) and Australia to inform its fee review.

In November 2018, ISED published the Consultation on Point-to-Point Systems Fees on its website, in which ISED proposed to modernize the existing fee structure for fixed point-to-point systems to focus on encouraging the efficient use of spectrum and investment in new technology. The majority of respondents supported ISED's proposal, highlighting the positive impact new fees would have on operating budgets and their ability to offer enhanced network resiliency. Respondents also linked the fee model to supporting 5G deployment. To implement reduced fees for rural and remote parts of Canada in this new fee model, ISED established methodologies for classifying areas as urban, rural or remote using its spectrum licensing policy, as outlined in the Decision on a New Set of Service Areas for Spectrum Licensing (the Tier 5 Decision).

Objectives

This proposal seeks to advance the SPFC policy objective, being “to maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum resource.” This proposal also seeks to advance ISED's Innovation and Skills Plan priorities, such as Connect to Innovate. This proposal seeks to contribute to these objectives by simplifying the fee structure for fixed point-to-point systems and reduce fees overall by moving to a consumption-based fee model to encourage upgrading and deployment of new radiocommunication systems, particularly in rural and remote areas.

This proposal also seeks to modernize the Regulations by removing obsolete provisions and adopting up-to-date regulatory drafting conventions to further enhance their clarity and readability.

Description

Introducing a new fee model for fixed point-to-point systems in the fixed service

This proposal would amend the Regulations to change the current capacity-based fee model for point-to-point systems in the fixed service to a consumption-based fee model with differential pricing for urban, rural, and remote areas. The new consumption-based fee model would be based on the amount of spectrum that is set out on the licence multiplied by a base rate. The base rate is dependent on the frequency, with reduced rates for frequency ranges that have a greater amount of spectrum available as well as reduced rates in rural and remote areas. For example, base rates are reduced by 20% in rural areas and by 50% in remote areas. ISED has established methodologies for classifying areas as urban, rural or remote under its spectrum licensing policy, as outlined in the Tier 5 Decision. This proposal would create a fixed point-to-point service to ensure the fee model is applied correctly. This new service would provide for communications between fixed point-to-point stations in the scope of this proposal.

The new fee model will not apply to stations operating in or communicating with the land mobile, aeronautical, amateur, maritime, public information and radiodetermination services; transportables and their associated links in any service; satellites or earth stations; and passive repeaters.

These stations were scoped out of the Decision on the Licence Fee Framework for Fixed Point-to-Point Systems (the Decision on Point-to-Point Systems Fees). While the Decision on Point-to-Point Systems Fees indicated that the new fee model would not apply to stations used as active repeaters, provided no additional spectrum is used, further review found that stations used as active repeaters do consume spectrum along the route of a licensed link. Therefore, links that are used by active repeaters are covered under the proposed fee model.

Flexible radio licence terms

This proposal would introduce licence terms between 30 days and 11 months for all radio licences and would also introduce definitions to clarify renewable and temporary licences. Renewable radio licences would be issued for a period of one year or less, expiring on March 31, and would be eligible for renewal for a period of one year. Temporary radio licences would be issued for a period of 11 months or less and would not be renewed. Fees for all radio licences shorter than one year will be assessed based on their monthly fee as prescribed in the Regulations.

Unused and obsolete radio licence fees and updates to drafting conventions

Lastly, this proposal would also repeal four unused radio licence fees identified by ISED and make a few miscellaneous changes to bring the Regulations up to date with the Department of Justice's current drafting best practices.

Regulatory development

Consultation

In December 2012, ISED published the Consultation on Spectrum Utilization Policies and Technical Requirements Related to Backhaul Spectrum in Various Bands, Including Bands Shared With Satellite, Mobile and Other Services on its website. A notice of consultation was published on December 22, 2012, in the Canada Gazette, Part I. ISED received 21 comments and 6 reply comments. Stakeholder comments, published in December 2014 in Decisions on Spectrum Utilization Policies and Technical Requirements Related to Backhaul, indicated that a consumption-based fee model would result in high spectral efficiencies by providing incentives for operators to reduce the spectrum consumed, as there would be a direct correlation between the amount of spectrum used and radio licence fees and recommended that such a model be implemented. With the advance of technology, modern radio equipment at that time was already able to transmit more capacity over the same or even less spectrum than previously required.

Therefore, the fees were viewed as penalizing licensees making use of modern highly spectrally efficient equipment and promoting inefficient spectrum use. ISED recognized stakeholders' concerns and the difficulties highlighted with respect to the capacity-based fee structure as it related to point-to-point and backhaul systems.

In November 2018, ISED published the Consultation on Point-to-Point Systems Fees on its website. A notice of consultation was published on December 1, 2018, in the Canada Gazette, Part I. ISED received 20 comments and 8 reply comments from its stakeholders during this consultative process and posted their submissions on its website. The initial comment period ended January 4, 2019, and the reply comment period ended January 25, 2019. In July 2019, ISED released the Decision on Point-to-Point Systems Fees, which summarized the comments and reply comments received during the consultation and listed the respondents. Respondents suggested further refinements to ISED's proposal to modernize the existing fee structure, many of which ISED incorporated into the final model, such as refinements to base rates as well as ensuring significant fee decreases for deployments in rural/remote areas.

Some respondents recommended a cost recovery model, such as that used by the U.S. FCC and indicated that such a model aligns better with ISED's primary objective of maximizing the social and economic benefit of telecommunications, by lowering fees to encourage investment in infrastructure leading to better coverage, service and innovative services. While ISED recognized the recommendations of these respondents, it clarified that spectrum and radio licence fees are not designed to solely recover the costs related to the administration of the licensing regime. Radio licence fees are regulatory charges for a limited privilege, permitting access to, and the use of, spectrum — a public natural resource — managed by the Government of Canada. ISED noted that a consumption-based fee model will advance policy objectives such as promoting the effective and efficient use of spectrum while earning a fair return for the use of the resource for the Canadian public. As such, ISED decided to implement a consumption-based fee model.

After a public consultation, ISED released the Tier 5 Decision on its website, in July of 2019. The Tier 5 Decision set out a new tier of licence areas and provides a way to define urban, rural and remote areas in Canada which is referenced in the proposed Regulations.

Modern treaty obligations and Indigenous engagement and consultation

ISED completed an initial Assessment of Modern Treaty Implications. While this proposal would apply to licensees in modern treaty territories, no modern treaty implications were identified. A detailed assessment was found not to be required. This proposal would apply to indigenous peoples in Canada, who had the opportunity to take part in the Consultation on Point-to-Point Systems Fees and the Tier 5 Consultation. No issues related to modern treaty obligations were raised.

Instrument choice

The radio licence fees as well as licence terms are prescribed through the Regulations. Modernizing the fee model and providing more flexibility in the length of duration of licences to ensure efficient use of spectrum requires amendments to the Regulations. As such, a regulatory amendment is the most appropriate instrument to achieve this objective.

Regulatory analysis

Benefits and costs

Businesses in a range of sectors as well as several forms of governmental entities would be affected by this proposal. Major sectors that would be affected include national, regional and local telecommunications, broadcasting, energy production and delivery, resource extraction, and transportation. Governmental entities including municipal and provincial governments as well as federal government departments and provincial and federal crown corporations. These governmental entities are primarily involved in public administration and public safety.

This cost-benefit analysis uses 2020 radio licence data from ISED's Spectrum Management System, which includes the relevant technical information related to the systems in the scope of this proposal. Once the new point-to-point fee model is implemented, about 815 licensees would be impacted. From this total, approximately 650 licensees are expected to experience a net decrease in fees and approximately 165 are expected to experience a net increase in fees. As of May 2020, the impacted licensees hold approximately 18 700 in-scope licences in total. These licences are used as the baseline for projections regarding the associated fees for any given year over the period of analysis. The new fee model set out in the proposed amendments has been applied to these in-scope licences. The projections assume that the number of licences and type of equipment used by licensees remains constant over time. As a result, the estimated benefits from the reduction in fees should be seen as an approximation. In reality, licensees may decide to change their number of licences or their equipment, which may result in higher or lower estimates, However, these changes are not captured in this analysis because of the lack of appropriate and readily available information around potential options that may be chosen by stakeholders to achieve the most benefit of the new fee model.

The cost-benefit analysis uses a 10-year analytical period from fiscal year 2021–2022 to fiscal year 2030–2031, presents the estimated costs and benefits to business and government in 2020 Canadian dollars and discounts the estimates to 2021 using a 7% discount rate. Overall, the proposal would result in a net cost and is estimated to be about $338,480 in present value over the period or an annualized value of $48,191.

Costs to businesses

This proposal is expected to result in costs to some of the businesses operating in the sectors indicated above including, in part, businesses in national, regional and local telecommunications, broadcasting, and in resource extraction.

Based on 2020 data, licensees that are businesses that are expected to experience a net increase in fees are projected to experience up to a total of $314,408 in present value costs over 10 years, equating to an approximate $44,764 in annualized average costs. These costs would be compliance costs resulting from increased licence fees for certain systems. Licensees with systems that use spectrum inefficiently will mainly experience fee increases as the new fee model will be based on the amount of spectrum consumed, not the capacity of the system. It has been conservatively assumed for the purpose of this cost-benefit analysis that licensees would pay the higher fee rather than transitioning to new equipment. However, many of these licensees would be able to transition to equipment that uses spectrum more efficiently to take advantage of the new fee model. Assuming that a licensee would switch to equipment that is more efficient if it was cheaper than paying the higher fees, the costs to businesses may be overestimated.

Costs to governments

The proposed fee model is expected to impose costs on governments. Governmental entities that are licensees are expected to experience costs of up to $780,729 in present value over 10 years, equating to about $111,158 in annualized average costs. Similarly to those felt by businesses, these compliance costs would primarily be the result of increased licence fees for systems that use spectrum inefficiently. These fees are in part charged to federal governmental entities, such as the Department of National Defence, meaning that the Government of Canada would bear a portion of the costs.

All radio licence fees are directed to the federal government's Consolidated Revenue Fund, therefore the federal government will collect less revenue as there will be a reduction in fees if the new fee model is implemented. The reduction in fee revenue is projected to result in approximately $218,129,255 in present value, equating to an approximate annualized value of $31,056,698.

Changes to ISED's licensing and fee-charging system would be required to implement the proposal. These changes are expected to result in approximately $338,480 in present value costs, equating to an approximate $48,191 in annualized average costs. Should this proposal result in an increased number of licence requests for ISED, it may lead to increased costs to process new or amended licence applications. Given the normal year-to-year fluctuations in volume of licence applications, this potential increase is expected to be manageable using current resources and any increase in costs to process these applications would be absorbed by ISED's standard operating budget.

ISED would incur other miscellaneous costs to implement this proposal, including time spent training staff and amending supporting policy and guidance documents. These activities would be carried out during the course of ISED's standard operations, with any costs being managed using ISED's standard operating budget.

Benefits to business

This proposal is expected to result in cost savings to businesses. The new fee model will reward spectral efficiency, simplify the fee structure, and reduce fees overall. Businesses are expected to experience savings of up to $207,182,075 in present value over 10 years, or about $29,498,066 in average annualized value. These cost savings would be the result of decreased payment in licence fees. National, regional, and local telecommunications service providers will primarily experience these cost savings.

This proposal will also benefit businesses by introducing additional flexibility in radio licence terms, thereby reducing the burden on licensees by removing the need for licensees to constantly re-apply for licences for events that last more than one month. The added flexibility would enable these entities to match licence terms to the duration of the activities, resulting in more efficient use of licences and potential reduction in payment of fees. It is not possible to quantitatively estimate the magnitude of this benefit due to lack of information regarding the extent to which increased flexibility in licence durations would be used. Nonetheless, this benefit is acknowledged qualitatively.

Benefits to governments

This proposal is expected to benefit all levels of government. Over the 10-year analytical period, governmental entities are expected to experience savings of up to $10,947,179 in present value, or about $1,558,632 in annualized value. These quantified benefits would be the result of decreased payments in licence fees. Benefits are expected to accrue to governmental entities operating in a range of sectors, including, in part, broadcasting, energy production and delivery and public safety.

Governmental entities will also benefit from the additional flexibility in radio licence terms resulting from this proposal. Similarly to businesses, the additional flexibility in radio licence terms would reduce the burden on licensed governmental entities by removing the need to constantly re-apply for licences for events that last more than one month. The added flexibility would enable these entities to match licence terms to the duration of the activities, resulting in more efficient use of licences and potential reduction in payment of fees.

The federal government will collect more revenue from increases to some in-scope licence fees if the new fee model is enacted. The increase in fee revenue is projected to result in approximately $1,095,137 in present value, equating to an annualized average revenue of approximately $155,922.

Benefits to Canadians

The proposed consumption-based fee model will ultimately benefit Canadians by encouraging innovation through facilitating the adoption of innovative new technologies that allow for the more efficient use of spectrum and faster data rates. Reduced point-to-point fees in rural and remote parts of Canada will contribute to network development in these areas, facilitating greater connectivity and access to high-quality wireless networks at competitive prices. Encouraging the upgrading and deployment of new systems will contribute to the ability of Canadians to innovate and participate in our economy, democracy and way of life using new digital tools and cutting-edge services. Consumers may also benefit from this proposal if some of the cost savings are passed on to them by licensees that are wireless telecommunication service providers in the form of lower prices.

Other benefits

Other benefits with respect to spectrum management are expected as a result of increased flexibility in licensing terms. Stakeholders taking advantage of this increased flexibility will contribute to reduced congestion in areas of high spectrum usage. The increased flexibility would also enable ISED to reassign the spectrum based on need, which will increase its efficient use.

The removal of obsolete fees and unnecessary provisions, as well as making the other miscellaneous changes set out in the proposed amendments, would ensure that the regulations are kept up to date, improve their readability and would ensure that the regulatory text is in line with current best practices in regulatory drafting.

Net impact

The statement below shows the estimated total present value and annualized average total costs and benefits associated with the proposal. These impacts include the projected changes in licence fees for systems in scope of this proposal for both businesses and governmental entities, the reductions in the federal government's revenue from these fees as well as the cost to implement changes to ISED's licensing and fee-charging system.

In sum, the proposed amendments are expected to result in net cost savings for licensees, which would be offset by an equivalent loss in revenue for the federal government. As well, the federal government would incur implementation costs in the first year. The key non-monetized impact associated with the proposed amendments is the benefits associated with increased ability for licensees to expand network development and coverage to rural and remote areas.

Cost-benefit statement
 

Base year (2021–2022)

Final year (2030–2031)

Total
(present value)

Annualized average

Quantified impacts (in Can$, 2020 price level / constant dollars)
Benefits

Licensees — Businesses

$27,568,286

$14,995,321

$207,182,075

$29,498,066

Licensees — Governments

$1,456,666

$792,329

$10,947,179

$1,558,632

Increase in revenue to ISED

$145,722

$79,263

$1,095,137

$155,922
Costs

Licensees — Businesses

$41,836

$22,756

$314,408

$44,764

Licensees — Governments

$103,886

$56,507

$780,729

$111,158

Federal government revenue losses

$29,024,952

$15,787,651

$218,129,255

$31,056,698

Implementation

$338,480

$0

$338,480

$48,191

Net costs

$338,480

$48,191

Qualitative impacts

Benefits

  • Increased ability to utilize more efficient point-to-point systems
  • Increased ability to expand network development
  • Increased opportunity to expand network coverage to rural and remote areas
  • Increased flexibility in licensing terms

Costs

  • Staff training, modifications to supporting policy and guidance documents
  • Processing increased number of radio licence authorizations

Small business lens

From the approximately 815 licensees that are expected to be impacted either positively or negatively by the proposed amendments, 256 of them are considered to be small businesses. Therefore, the small business lens applies. A small business, for the purpose of the small business lens, is any business, including its affiliates, that has fewer than 100 employees or less than $5 million in annual gross revenues. Similarly to other businesses, small businesses might incur incremental costs or reap incremental benefits depending on whether their systems use spectrum efficiently.

The impacts on small businesses are estimated over 10 years, discounted to 2021 using a 7% discount rate and expressed in 2020 Canadian dollars. Overall, the net benefit to small businesses is expected to be about $5,279,600 over 10 years or approximately $751,696 annually.

Compliance costs to small businesses

Increase in payment of fees are expected to be felt primarily by licensees whose systems use spectrum less efficiently. In the case where a small business solely operates systems that use spectrum inefficiently (e.g. when using older equipment), the new fee model will most likely lead to a net increase to the fees of that business. It is estimated that approximately 57 small businesses would be using inefficient equipment. The total cost to these small businesses is estimated to be up to about $73,471 over 10 years or an annualized cost of $10,460.

Licensees, including small businesses, that are expected to see increases to fees would be advised in advance. ISED plans to release an easily accessible account fee impact report tool in the fall of 2020 so that all businesses, including small businesses, would be able to easily obtain estimates of how their licence fees will be changing. Licensees were also notified of the proposed implementation date as a part of the Decision on Point-to-Point Systems Fees, which was released in July 2019. It is expected that these businesses may be able to make adjustments to their systems to take advantage of the new fee model and therefore be able to prepare well in advance of the proposed implementation in April 2021.

Benefits to small businesses

It is estimated that a majority of licensees that are small businesses, approximately 199, would substantially benefit from the reduction of fees caused by the new point-to-point fee model, especially in cases where they have point-to-point systems that use spectrum efficiently. The decrease in fees as a result of the new fee model is estimated to amount to up to about $5,353,071 over 10 years or approximately $762,156 annually.

Small businesses would also benefit from the greater flexibility in licensing durations. This flexibility may especially benefit small businesses that require a licence temporarily by allowing them to more accurately target their required licence duration. Benefits to licensees that are small businesses are expected to be felt primarily by local telecommunications service providers, but will also be shared by licensees across a range of other sectors such as broadcasting, energy production and delivery, resource extraction.

Conclusion

The small business lens analysis indicates that most licensees that are small businesses would benefit from the proposed amendments. The total cost per small business over the 10-year period of analysis is not significant and is estimated to amount to $287 or $41 annually.

This proposal is not expected to lead to disproportionate costs for small businesses in comparison to ISED's other licensees. Prior to developing the proposed amendments, flexibilities for small business were considered in the development of the fee model to ensure that small businesses do not bear a disproportionate burden.

Small businesses were given the opportunity to take part in ISED's Consultation on Point-to-Point Systems Fees. During the consultation process, fixed wireless access systems were scoped out of the new point-to-point fee model due in part to the disproportionately high fees that would result from the application of the new model. Fixed wireless access systems are often licensed to small businesses that provide wireless internet services in remote and rural areas of Canada. In addition, a prominent issue raised by small businesses was the need to incentivize smaller service providers to increase deployment of point-to-point systems in rural areas. This suggestion was considered and ultimately incorporated into the fee model by setting out discounted rates for links in rural and remote areas. In light of these actions and to preserve the effectiveness of the proposed amendments, no further flexibilities for small businesses have been built into the proposed amendments.

The summary below shows the estimated total present value and annualized average total costs and benefits to small businesses associated with the proposed amendments.

Small business lens summary

Number of small businesses impacted

256

Number of years

10

Base year for costing

2021–2022

Compliance costs (Increase in Licence Fees)

Annualized Value

Present Value

TOTAL

$10,460

$73,471

TOTAL COST (all impacted small businesses)

$10,460

$73,471

Cost per small business

$41

$287

Benefits (reduction in licence fees)

Annualized Value

Present Value

TOTAL BENEFIT (all impacted small businesses)

$762,156

$5,353,071

BENEFIT per small business

$20,910

$2,977

NET BENEFIT

$751,696

$5,279,600

One-for-one rule

The one-for-one rule does not apply, as there is no incremental change in administrative burden. Although the changes in the fee model may lead to a change in the number of applications for radio licences, the proposal would not modify any of the actual administrative requirements, nor their scope.

Regulatory cooperation and alignment

Canada is not party to any international agreement whose obligations would need to be satisfied as part of implementing the proposed amendments.

The proposed amendments are not developed as part of a formal regulatory cooperation initiative. However, ISED examined the fee-setting methodologies of other countries, such as the U.S., the U.K. and Australia.

While many factors used to calculate fees in other countries are comparable, it is difficult to draw definitive conclusions on the international value of spectrum given the differences in each country's spectrum environment and market. Differences include demographics, geography, timing of fee initiatives, and relative competitiveness — all of which have a significant impact on the value of spectrum. Most regulators seek to reflect the utility of spectrum in licence fees, but the approaches for accomplishing this vary considerably and are often affected by other historical and institutional factors.

In the area of spectrum management, ISED compares relatively closely with the regulators in the U.K. and Australia, where fees are used as a policy tool to promote efficient use of this resource and are directly linked to spectrum consumption. A description of fee-setting and the factors considered in designing the fees in these countries is presented in the background section.

The proposed consumption-based fee model for point-to-point systems in Canada would increase alignment between Canada and the U.K. and Australia. Canada's model will have unique base rates and frequency ranges reflective of its spectrum environment and market. Like Australia, Canada will now reflect spectrum availability in rural and remote areas by providing lower base rates. Reflecting spectrum availability in pricing by providing lower base rates in rural and remote areas is expected to encourage network deployment in these areas, ultimately facilitate greater connectivity and access to high quality wireless networks at competitive prices.

Strategic environmental assessment

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan found no evidence that the proposed amendments would have any potential for impacts to the environment. Therefore, a strategic environmental assessment is not required.

Gender-based analysis plus

A preliminary gender-based analysis plus (GBA+) was conducted to determine if any group would be affected differently than others based on gender or other socio-economic characteristics. While the proposed amendments would improve the fee structure and are expected to bring benefits to rural areas and people living in those communities, there is no evidence that women, men or any socio-economic groups would be impacted differently or that there would a disproportionate distribution of the benefits among groups. Thus, no GBA+ impacts have been identified for this proposal.

Implementation, compliance and enforcement, and service standards

Implementation

If they are made, the proposed amendments are planned to come into force on April 1, 2021. To ensure the effective and efficient implementation of these proposed amendments, ISED would modify its licensing and fee calculation system, make the required updates to its external and internal policies and procedures, appropriately train its staff, and engage in external communications to ensure its stakeholders are informed of the proposed changes.

The performance measurement of the proposed new fee model for point-to-point systems would be incorporated into ISED's annual Departmental Fees Report, as required by the Service Fees Act.

Compliance and enforcement

As the proposed regulatory amendments would modernize licencing fees, they would not alter ISED's existing compliance and enforcement strategies. Further information on compliance and enforcement can be found on ISED's website.

Service standards

ISED has a number of established standards related to the processing of licences once a complete application has been submitted. The processing of licences associated with the new fee model for point-to-point systems will have the same service standards as fixed microwave radio stations, 28 calendar days (four weeks) for new licences or for amending existing licences subject to frequency coordination with users in some cases. For more information on service standards, refer to ISED's Spectrum Management Service Standards web page.

Contact

Line Perron
Director
Broadcast, Coordination and Planning
Spectrum Management Operations Branch
Spectrum and Telecommunications Sector
Innovation, Science and Economic Development Canada
235 Queen Street, 6th Floor
Ottawa, Ontario
K1A 0H5
Telephone: 613‑863‑3362
Email: ic.spectrumregulatory-reglementationduspectre.ic@canada.ca

PROPOSED REGULATORY TEXT

Notice is given that the Governor in Council, pursuant to section 6 footnote a of the Radiocommunication Act footnote b, proposes to make the annexed Regulations Amending the Radiocommunication Regulations.

Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. All such representations must cite the Canada Gazette, Part I, and the date of publication of this notice, and be addressed to Line Perron, Director, Broadcast, Coordination and Planning Directorate, Spectrum Management Operations Branch, Innovation, Science and Economic Development Canada, 235 Queen Street, 6th Floor, Ottawa, Ontario K1A 0H5 (tel.: 343‑291‑3441; email: ic.spectrumregulatory-reglementationduspectre.ic@canada.ca).

Ottawa, December 10, 2020

Julie Adair
Assistant Clerk of the Privy Council

Regulations Amending the Radiocommunication Regulations

Amendments

1 The long title of the Radiocommunication Regulations footnote 1 is replaced by the following:

Radiocommunication Regulations

2 Section 1 of the Regulations and the heading before it are repealed.

3 (1) The definition Minister in section 2 of the Regulations is repealed.

(2) Section 2 of the Regulations is amended by adding the following in alphabetical order:

fixed point-to-point service
means a radiocommunication service that provides for communications on radio frequencies above 30 MHz between two fixed stations that are each authorized to operate at a specific point, other than fixed stations that also operate within the land mobile service on the same radio frequency as the one assigned to the land mobile service. (service point à point fixe)
renewable radio licence
means a radio licence that is issued for a period of one year or less, that expires on March 31 and that can be renewed for a period of one year. (licence radio renouvelable)
temporary radio licence
means a radio licence that is issued for a period of 11 months or less and that cannot be renewed. (licence radio temporaire)

4 Paragraph 3(a) of the Regulations is amended by striking out “and” at the end of subparagraph (viii), by adding “and” at the end of subparagraph (ix) and by adding the following after subparagraph (ix):

5 (1) The definitions broadband personal communications services radio frequencies and cellular mobile radio frequencies in section 55 of the Regulations are repealed.

(2) Section 55 of the Regulations is amended by adding the following in alphabetical order:

link means the spectrum dedicated to an assigned radio frequency that is used to communicate between two stations. (liaison)

remote area
any area not identified as a “Metro area”, “Urban area” or “Rural area” on the map set out in Annex B of the decision of the Department of Industry entitled DGSO-006-19, Decision on a New Set of Service Areas for Spectrum Licensing published in July 2019. (région éloignée)
rural area
means any area identified as a “Rural area” on the map set out in Annex B of the decision of the Department of Industry entitled DGSO-006-19, Decision on a New Set of Service Areas for Spectrum Licensing, published in July 2019. (région rurale)
urban area
means any area identified as an “Urban area” or “Metro area” on the map set out in Annex B of the decision of the Department of Industry entitled DGSO-006-19, Decision on a New Set of Service Areas for Spectrum Licensing, published in July 2019. (région urbaine)

6 Section 56 of the Regulations is replaced by the following:

56 The radio licence fee payable in respect of a radio licence that is issued in respect of radio apparatus installed in a station and that authorizes the use of certain frequencies is

7 (1) Subsection 61(1) of the Regulations is replaced by the following:

61 (1) Subject to subsection (2), the radio licence fee payable by a radiocommunication user in respect of radio apparatus installed in a fixed station, other than a fixed station that operates in the land mobile service or a fixed station described in section 61.1 or 62, is for each transmitter and each receiver installed at the station the sum of the applicable fees set out in Part II of Schedule III that corresponds to the number of telephone channels per radio frequency assigned to that transmitter or receiver.

(2) The portion of subsection 61(2) of the Regulations before paragraph (a) is replaced by the following:

(2) If a fixed station, other than a fixed station described in section 61.1, 62 or 63, communicates solely on one transmit radio frequency and one receive radio frequency that are not manually selected with another fixed station, other than a fixed station in the land mobile service, operated for the automatic reception and retransmission of radiocommunications within a communication system that does not accept traffic from or deliver traffic to external points by means other than radio, the radio licence fee payable is the sum of

8 The Regulations are amended by adding the following after section 61:

Fixed Point-to-Point Service

61.1 (1) The radio licence fee payable by a radiocommunication user in respect of radio apparatus installed in a fixed station that is part of the fixed point-to-point service consisting of two stations located in an urban area or one station located in an urban area and another in a rural area is, for each link authorized by the licence, the applicable base rate set out in item 1 of Part IV.1 of Schedule III multiplied by the assigned spectrum, in MHz, that is set out in the licence.

(2) The radio licence fee payable by a radiocommunication user in respect of radio apparatus installed in a fixed station that is part of the fixed point-to-point service consisting of two stations located in a rural area is, for each link authorized by the licence, the applicable base rate set out in item 2 of Part IV.1 of Schedule III multiplied by the assigned spectrum, in MHz, that is set out in the licence.

(3) The radio licence fee payable by a radiocommunication user in respect of radio apparatus installed in a fixed station that is part of the fixed point-to-point service consisting of at least one station located in a remote area is, for each link authorized by the licence, the applicable base rate set out in item 3 of Part IV.1 of Schedule III multiplied by the assigned spectrum, in MHz, that is set out in the licence.

(4) The minimum radio licence fee payable by a radiocommunication user in respect of radio apparatus installed in a fixed station that is part of the fixed point-to-point service is, for each link authorized by the licence,

9 Paragraphs 62(1)(b) and (c) of the Regulations are replaced by the following:

10 Section 65 of the Regulations is replaced by the following:

65 The radio licence fee payable by a radiocommunication service provider in respect of radio apparatus installed in a fixed station, other than a fixed station referred to in any of sections 65.1 to 71, is for each transmitter and each receiver installed at the station the sum of the applicable fees set out in Part II of Schedule III that corresponds to the number of telephone channels per radio frequency assigned to that transmitter or receiver.

Fixed Point-to-Point Service

65.1 (1) The radio licence fee payable by a radiocommunication service provider in respect of radio apparatus installed in a fixed station that is part of the fixed point-to-point service consisting of two stations located in an urban area or one station located in an urban area and another in a rural area is, for each link authorized by the licence, the applicable base rate set out in item 1 of Part IV.1 of Schedule III multiplied by the assigned spectrum, in MHz, that is set out in the licence.

(2) The radio licence fee payable by a radiocommunication service provider in respect of radio apparatus installed in a fixed station that is part of the fixed point-to-point service consisting of two stations located in a rural area is, for each link authorized by the licence, the applicable base rate set out in item 2 of Part IV.1 of Schedule III multiplied by the assigned spectrum, in MHz, that is set out in the licence.

(3) The radio licence fee payable by a radiocommunication service provider in respect of radio apparatus installed in a fixed station that is part of the fixed point-to-point service consisting of at least one station located in a remote area is, for each link authorized by the licence, the applicable base rate set out in item 3 of Part IV.1 of Schedule III multiplied by the assigned spectrum, in MHz, that is set out in the licence.

(4) The minimum radio licence fee payable by a radiocommunication provider in respect of radio apparatus installed in a fixed station that is part of the fixed point-to-point service is, for each link authorized by the licence,

11 The heading before section 69 and sections 69 to 70 of the Regulations are repealed.

12 Section 74 of the Regulations is repealed.

13 The heading of Part II of Schedule III to the Regulations is replaced by the following:

Fee Schedule Applicable for Fixed Stations that Communicate with other Fixed Stations or Space Stations

14 Schedule III to the Regulations is amended by adding the following after Part IV:

PART IV.1

(Subsections 61.1(1) to (3) and 65.1(1) to (3))

Fee Schedule Applicable for Stations in the Fixed Point-to-Point Service

Item

Column I

Area and Assigned Radio Frequency

Column II

Monthly Base Rate ($/MHz)

Column III

Annual Base Rate
($/MHz)

 

1		 Urban Area

(a) ≤ 890 MHz

229.17

2,750.00

(b) > 890 and ≤ 960 MHz

11.50

138.00

(c) > 960 and ≤ 4200 MHz

3.75

45.00

(d) > 4.2 and ≤ 8.5 GHz

2.83

34.00

(e) > 8.5 and ≤ 15.35 GHz

2.00

24.00

(f) > 15.35 and ≤ 24.25 GHz

1.33

16.00

(g) > 24.25 and ≤ 52.6 GHz

0.83

10.00

(h) > 52.6 GHz

0.04

0.50

 

2		 Rural Area

(a) ≤ 890 MHz

183.33

2,200.00

(b) > 890 and ≤ 960 MHz

9.20

110.40

(c) > 960 and ≤ 4200 MHz

3.00

36.00

(d) > 4.2 and ≤ 8.5 GHz

2.27

27.20

(e) > 8.5 and ≤ 15.35 GHz

1.60

19.20

(f) > 15.35 and ≤ 24.25 GHz

1.07

12.80

(g) > 24.25 and ≤ 52.6 GHz

0.67

8.00

(h) > 52.6 GHz

0.03

0.40

 

3		 Remote Area

(a) ≤ 890 MHz

114.58

1,375.00

(b) > 890 and ≤ 960 MHz

5.75

69.00

(c) > 960 and ≤ 4200 MHz

1.88

22.50

(d) > 4.2 and ≤ 8.5 GHz

1.42

17.00

(e) > 8.5 and ≤ 15.35 GHz

1.00

12.00

(f) > 15.35 and ≤ 24.25 GHz

0.67

8.00

(g) > 24.25 and ≤ 52.6 GHz

0.42

5.00

(h) > 52.6 GHz

0.02

0.25

PART IV.2

(Subsections 61.1(4) and 65.1(4))

Minimum Fee Schedule Applicable for Stations in the Fixed Point-to-Point Service

Item

Column I

Area

Column II

Minimum Monthly Fee ($)

Column III

Minimum Annual Fee ($)

1

Urban Area

5.83

70.00

2

Rural Area

4.67

56.00

3

Remote Area

2.92

35.00

15 Items 4 and 5 of Part V of Schedule III to the Regulations are repealed.

16 Part VII of Schedule III to the Regulations is repealed.

Coming into Force

17 These Regulations come into force on April 1, 2021, but if they are registered after that day, they come into force on the day on which they are registered.