Feds again being asked to compensate for transitions
By Ahmad Hathout
OTTAWA – The federal government has historically not compensated companies that must relocate their services to different spectrum bands to make room for emerging technologies. But companies with a vested interest in the repurposing of the C-band spectrum for 5G technology are urging the a change to that position.
Over the air (OTA) broadcasters had to absorb the cost of moving off the 700 MHz band for broadband use years ago. Broadcasters were told more recently by Innovation Canada (ISED) that they wouldn’t be financially covered for the millions of dollars in costs to move off the 600 MHz spectrum being repurposed for mobile wireless use.
Now, the federal government is eyeing converting parts of the C-band — the stretch of contiguous spectrum between 3700 and 4200 MHz used by broadcasters and satellite companies — for 5G services. The difference this time around could come from the highly technical nature of such a move and the fact that the vacancies affect more than one industry: it touches mobile wireless, satellite and broadcasting companies.
ISED hopes to make the repurposed spectrum available by 2023 to align the release with the United States. The wrinkle is that the U.S., which has a history of compensatory measures for spectrum vacancies, has not only compensated but incentivized that accelerated timeline by providing those affected with cash to help pay for the technical difficulties and costs of vacating the spectrum.
While many telecoms have said clearing mid-band spectrum for 5G services is crucial for the next generation of wireless technology, the consultation has solicited some worrying replies from broadcasters — who are concerned about service disruption — and satellite companies about the clearing process. Earlier this month, reply comments for the consultation on the Technical and Policy Framework for the 3650-4200 MHz Band and Changes to the Frequency Allocation of the 3500-3650 MHz Band were due into ISED.
The discussion seemed to revolve in part around Telesat’s submission: how compensation, if any, should be handled. Telesat said in its submission the government should allow it to sell the first 200 MHz of repurposed C-band spectrum in private sales to wireless companies and then use the proceeds to compensate the affected companies. It said the government should take it a step further and provide an incentive on top of being compensated.
Telesat is the only satellite operator licensed to use the 3800 MHz band in Canada.
“We have been briefed by Telesat on ISED’s Consultation regarding the reallocation of certain C-band spectrum to 5G and hereby support Telesat’s proposal, which aims to protect the existing users of the band, as well as cover the costs associated with the transition,” Mississauga-based Galaxy Broadband said in response to the consultation. “We have been working with Telesat for the past 10 years and are confident that Telesat is committed to providing continuity of service during and after the transition and we also recognize that they cannot do this at their cost,” Galaxy continued.
Galaxy’s CEO Rick Hodgkinson gave Telesat a vote of confidence at a conference late last month when he said — despite the harsh economics of the satellite business — Telesat’s business model of delivering backhaul, or satellite backbone to local service providers was a better bet than SpaceX’s direct-to-consumer model.
“In the absence of Telesat’s plan being implemented, we have strong concerns over the loss of service and/or the financial and technical burden imposed on us,” – Rick Hodgkinson, Galaxy Broadband
Those difficult economics magnify the stakes in a situation where the federal government stands its ground in its historical position not to make movers whole. “In the absence of Telesat’s plan being implemented, we have strong concerns over the loss of service and/or the financial and technical burden imposed on us,” Hodgkinson said in Galaxy’s submission.
Intelsat U.S. said that compensation is “critical” and the Canadian process should align with the U.S.’ clearing of the spectrum. If the spectrum is auctioned off, a portion of the proceeds should cover clearing costs to incentivize “the impacted satellite operators to deliver the spectrum on the accelerated timeline, which would otherwise not be possible without such compensation and covers the repointing costs of earth stations,” the company said.
The telecom companies themselves generally support compensation. Bell said proceeds from the 3800 MHz auction, announced this summer, should pay for the move. Rogers supported compensation to incentivize a clearing acceleration, hinting at using the upcoming 3500 MHz auction proceeds for that.
Though some disagreed with Telesat’s proposal that it be allowed to privately sell the repurposed spectrum. Shaw and Sasktel said they prefer those bumped off be compensated through the auction process. Bragg (Eastlink), Quebecor, Cogeco, Shaw and Sasktel all thought giving Telesat the sale rights to the repurposed C-band — instead of through a public sale — would usurp ISED authority over governing frequencies.
K-Net, a First Nations provider out of Sioux Lookout, Ontario, however, agreed with Telesat’s proposal to have a private sale to ensure that it can be compensated adequately and no interruptions to service will be experienced. K-Net and Telesat have been working together for 25 years.
Telesat said it is concerned about its ability to compete against well-capitalized foreign players, such as Amazon’s Project Kuiper and Elon Musk’s SpaceX, which is currently offering beta satellite service to Canadians and recently won nearly $900 million in subsidies from the Federal Communications Commission.
Telesat operates in the U.S. and will receive about $344 million US as compensation from the FCC for reallocation.
The timeline for the U.S. to move the spectrum for flexible use is 2023, an accelerated timeline that Luxembourg-based SES said is only possible because it has put in the monetary incentive to move early.
John Purvis, who manages C-band projects in the U.S. and Canada, said in an interview that the timeline to December 2023 is already extraordinarily ambitious even with financial compensation, as spectrum vacancies can take many more years to complete. SES expects to be paid some $4 billion US from the FCC for vacating, and said that ISED should not only compensate but incentivize accelerated clearance.
The Telesat proposal rubbed some other satellite providers the wrong way, with Intelsat and SES submitting that the government shouldn’t forget about other satellite service providers in Canada. Intelsat has a large number of earth stations and SES using the C-band to offer services from its geostationary satellites.
SES said it also expects to launch a “next-generation” of MEO satellites called mPOWER, which it said will include higher capacity capabilities.
Telesat, Intelsat and SES SA have spent a good amount of time lobbying the federal government on the C-band spectrum, according to the federal lobbyist registry.
ISED did not directly answer a question about whether it would reconsider its historical position not to compensate those that vacate the spectrum. “Through the public consultation on repurposing C-band, Innovation, Science and Economic Development has collected a range of views from a variety of stakeholders including the satellite operators, and the department is working on a path forward that is in the best interest of Canadians,” an ISED spokesperson said.
ISED reiterated that it has taken measures to make things right with operators. During the pandemic, it had extended the payment date for annual licence renewal fees, allowed for unused spectrum to be shared between telecoms to increase coverage and capacity, and accelerated the process of obtaining licences.
