3500 MHz band spectrum auction

3500 MHz band

The Government of Canada is committed to ensuring that Canadians have access to high-quality wireless services and benefit from ubiquitous coverage and affordable prices. In a globalized world, the deployment of 5th generation—or “5G”—telecommunications standards and technologies is essential to Canada’s economic competitiveness. The deployment of 5G will also help ensure that Canadians continue to benefit from world-class wireless infrastructure.

In June 2018, Innovation, Science and Economic Development Canada (ISED) released Spectrum Outlook 2018 to 2022, which included plans to release spectrum that would support 5G services. The Outlook indicated that releasing the 3450–3650 MHz band (referred to as the 3500 MHz band), a key band for 5G, was a high priority.  In June 2019, ISED published the Decision on Revisions to the 3500 MHz Band to Accommodate Flexible Use and Preliminary Decisions on Changes to the 3800 MHz Band as the first step toward making this band available.

Through the release of the Policy and Licensing Framework for Spectrum in the 3500 MHz Band, ISED is setting the rules for the upcoming spectrum auction, the next step toward making this band available for 5G services. 

Spectrum to be auctioned

ISED is making 200 MHz of spectrum available in the 3500 MHz band for “flexible use” licensing that allows licensees to choose the type of services they will deploy, such as mobile (5G) or fixed wireless services (e.g. Internet-to-the-home). Through the transition process, existing licensees are eligible to apply for flexible-use licences for a predetermined amount of spectrum, based on their existing holdings in a specific area. This will enable current licensees to continue serving their existing customers while laying the groundwork for new 5G services. Since existing users are retaining some spectrum, the amount available for auction varies between 30 MHz and 140 MHz across the 172 Tier 4 service areas.   

Auction format

This auction will follow a clock auction format with multiple rounds of bidding, whereby bidders bid on generic licences during the allocation stage and then are able to bid further during the assignment stage on any preferences for specific frequencies within the bands they have won.

Set-aside

For the 3500 MHz auction, ISED will implement pro-competitive measures in the form of a 50 MHz set-aside in markets where enough spectrum is available. This set-aside will provide the opportunity for smaller and regional competitors—competitors that have been shown to put downward pressure on prices—to acquire the spectrum they need to compete in the market for 5G services against the larger established national providers. The amount of spectrum set aside was chosen to balance the needs of many different service providers to access this high-demand spectrum. In some areas, there will be no spectrum set aside because of the limited amount of spectrum available due to the presence of existing service providers. 

Licence term

The term of 3500 MHz licences is 20 years from the initial issuance date following the auction. This will apply to licences won through the auction as well as to licences issued through the transition process.

Under the Framework for Spectrum Auctions in Canada, licensees will have a high expectation of renewal, unless a breach of licence condition has occurred, a fundamental reallocation of spectrum to a new service is required or an overriding policy need arises.

The 3500 MHz band has the potential to facilitate the offering of 5G mobile broadband and fixed broadband services to Canadians. Given that the use of this band for 5G technologies is being adopted globally, there is little risk that there will be any usage changes to this spectrum in the foreseeable future. It is also unlikely that any developments in technology would result in a change to another use that is incompatible with mobile broadband and fixed broadband services.

Transferability, divisibility and flexibility in use of licences

The licences are transferable and can be subordinated, in whole or in part, in both bandwidth (e.g. divided into different sets of frequencies) and geography (e.g. divided into different areas), subject to the Minister’s approval. In order to mitigate the acquisition of spectrum for speculation, transfers of set-aside licences will not be permitted for the first five years of the licence term if these transfers result in a set-aside-ineligible entity obtaining a set-aside spectrum licence.

Deployment conditions

Deployment conditions are used to ensure that service providers build networks to serve Canadians across the country, especially in rural areas. Imposing deployment conditions on licensees ensures that the spectrum is used to bring services such as 5G to all Canadians and can discourage speculators from acquiring spectrum. A deployment requirement mandating the coverage of a certain percentage of the population will apply to all flexible use licensees in all markets. This deployment requirement necessitates that licensees expand their networks, throughout their licence term, to cover more of the population, bringing next-generation services to a greater number of people, faster. Licensees that fail to meet this condition could be subject to penalties, up to and including the revocation of their licence. Licensees can also meet the deployment requirements by making spectrum available to other providers through subordinate licensing agreements or licence transfers, incentivizing further activity in the secondary market for spectrum.

In addition, recognizing that current mobile service providers are well placed to quickly deploy 3500 MHz, we are applying an additional condition that requires them to demonstrate that 3500 MHz spectrum has been put to use in all areas where they have existing mid-band LTE coverage.

Auction participation

To participate in the auction, a potential bidder must submit a completed application form along with a pre-auction financial deposit to Innovation, Science and Economic Development Canada by October 13, 2020. Participants in Canadian spectrum auctions are typically companies looking to provide telecommunications services to Canadians. Eligibility to bid on set-aside spectrum will be limited to those registered with the CRTC as facilities-based providers that are not national mobile service providers but are actively providing commercial telecommunications services to the general public in the relevant Tier 2 service area of interest, effective as of the date of application to participate in the 3500 MHz auction.

The auction is scheduled to begin on June 15, 2021. Information regarding key dates is available on ISED’s website.

Copies of the Policy and Licensing Framework for Spectrum in the 3500 MHz Band, the associated Canada Gazette notice (SLPB-001-2020) and other reference documents are available from the Spectrum management and telecommunications website.