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1 TELUS Mobility Floor Consilium Place Scarborough, Ontario Canada M1H 3J3 Ed Prior Director, Government & Regulatory Affairs Telephone Facsimile October 15, 2001 Jan Skora Director General Radiocommunications and Broadcasting Regulatory Branch Industry Canada 300 Slater Street Ottawa, Ontario K1A 0C8 Dear Mr. Skora: Subject: TELUS Response to Canada Gazette Notice DGRB Consultation on the Auction of Spectrum Licenses for Wireless Communications Services in the 2300 MHz Band and Fixed Wireless Access in the 3500 MHz Band Proposed Policy, Licensing Procedures and Technical Considerations Introduction TELUS is pleased to respond to Canada Gazette Notice DGRB (the Consultation Document). TELUS has participated in the preparation of the comments of the Radio Advisory Board of Canada (RABC) in their response to this Gazette Notice. TELUS is supportive of the RABC s submission and urges the Department to give it careful consideration. TELUS also participated in the development of the comments of the Canadian Wireless Telecommunications Association (CWTA). TELUS supports the CWTA submission. These comments by TELUS address the specific issues in DGRB on which Industry Canada (the Department) has sought comment. The section numbers of the Consultation Document have been retained in our response for ease of reference. 3.2) Comments on the proposed spectrum band plan (WCS Spectrum at 2300 MHz) are invited. TELUS supports the Department s proposal in making this spectrum ( MHz and MHz) available in one paired block of MHz for WCS service.

2 2 4.2) The Department proposes to auction up to 200 MHz of spectrum within the frequency range MHz. Comments on the amount of spectrum to be licensed are invited. In the Consultation Document, the Department has identified four factors that will affect the final decisions on the amount of spectrum at 3500 MHz that can be made available at this time. Of these, TELUS considers two to be particularly significant - the outstanding spectrum policy decisions by the FCC on the use of the MHz band and the allocation decision for 3G spectrum. Additionally and released on September 24, 2001 is the FCC announcement regarding the use of the 2500 MHz band (FCC ) and more recently, the October 5, 2001 NTIA announcement regarding the possible use of the and MHz bands for 3G services. Due to the undertakings that the Department made to the MCS licensees, these announcements may well result in a movement by these licensees into the 3500 MHz band. Given these interrelationships, complexities and uncertainties, it will undoubtedly be difficult for the Department to confidently offer the proposed 200 MHz of spectrum within the frequency range MHz in the very near future. Once these issues have been resolved, TELUS would support the release of up to 200 MHz of spectrum in the FWA band for this auction. 4.3) Comments are invited on the proposed structure of spectrum including pairing, spacing, block size and arrangements that would result in the optimal use of spectrum. TELUS is supportive of the Department s proposal to auction licenses of 50 MHz in paired blocks of 25 MHz + 25 MHz with 100 MHz spacing ) Point-to-Point Systems in the Band MHz TELUS does not object to the proposed displacement of incumbent point-to-point systems in the MHz band provided that our comments under the proposed transition policy provisions (below) are accepted by the Department ) Fixed Satellite Services in the Band MHz comments are sought on this proposal. TELUS does not object to this proposal. 5.2) Transition Policy Provisions - Comments are sought on the proposed transition policy provisions. TELUS believes that all current licensees should be treated equally. There are current licensees with systems that, through no fault of their own, are now non-standard. TELUS sees no value in treating standard and non-standard licensees differently in this particular circumstance. This issue can be resolved by changing the proposed text in this section to read; Following the issuance of a spectrum license, a minimum notification period of two years will be afforded to fixed station incumbents operating in rural areas with standard or non-standard licenses and one year for those operating in urban areas. TELUS would also encourage the Department to

3 3 state explicitly that existing systems operating in either of the two bands in license areas not awarded in the auction are allowed to continue to operate and be subject to the normal displacement time frames as outlined above. To the extent that the existing notification process does not already cover it, existing fixed systems that will not create interference problems for the new licensees, should be permitted to continue operation. Further, TELUS also recommends that the Super 2 GHz radio systems displaced pursuant to this policy be able to be re-deployed and re-licensed as non-standard (i.e. subject to a 6 month notification period) in rural areas. This relocation would be beneficial even if these systems were restricted to the lower two frequency pairs ( MHz, MHz). 6.2) Eligibility to Acquire Spectrum and Spectrum Aggregation Limits The Department seeks comments as to whether a certain amount of spectrum should be set aside and bidding limited to new entrants. Comments should also include a precise description of those who should or should not be eligible to bid and for what amounts of spectrum. Those supporting such a view should stipulate how such provisions would be in the public interest. TELUS does not believe that there are any sound public policy reasons for establishing a spectrum set-aside for new entrants. This notion has been examined and discarded during the consultations leading to both of Canada s previous spectrum auctions. In these two auctions, new entrants were successful in obtaining spectrum. Further, because there were no set-asides the auctions and the market based prices paid therein were not needlessly distorted by a set-aside. TELUS believes that those companies eligible to hold a spectrum license pursuant to the Radiocommunication Act should be eligible to participate, bid and acquire spectrum in the auction. TELUS sees no sound public policy reasons for a spectrum cap for this auction. 7.1) The WCS Band at 2300 MHz Comments are requested on technical considerations for WCS systems in the 2300 MHz band. In the Consultation Document the Department has identified a number of issues primarily surrounding interference. The documents to address these issues are generally prepared by the Department working together with the RABC. As a strong supporter of the RABC, TELUS will work with both the Department and the Board to develop the necessary technical parameters. 7.2) The FWA Band at 3500 MHz Comments are requested on technical considerations for FWA systems in the 3500 MHz band. TELUS has the same comment as outlined in Section 7.1 above. 7.3) FWA Equipment Characteristics and Availability The Department requests that manufacturers and vendors respond to this consultation paper by providing information on

4 4 the availability and characteristics of FWA equipment, including customer premise equipment and base stations. The Department requests manufacturers, vendors and operators to comment on the need to accommodate equipment built for foreign markets and the compatibility of such equipment with the proposed 2300 MHz and 3500 MHz band plans. As an operator TELUS is supportive of the manufacturers desire to build equipment for as broad a market as possible. TELUS and its customers benefit from this approach through lower prices and greater equipment availability. TELUS would therefore encourage the Department, in so far as possible, to accommodate equipment built for foreign markets. As the Department has outlined that winners of spectrum licenses are not constrained in the services they offer, the only constraint should be those imposed due the final band plan adopted. 8.3) Service Areas Comments are sought on the proposal of Tier 4 service areas. TELUS supports the use of Tier 4 service areas for this auction. 8.4) Implementation of Services Comments are sought on implementation requirements. TELUS is of the view that a winner of a spectrum license in an auction should not be subject to rollout conditions, and should have full freedom to decide when and how much to deploy at any given time. Rollout provisions can be very problematic in that they are subject to the vagaries of the capital markets, marketing environment, equipment development and availability and service development. TELUS notes the ten-year licence term will assist in continuing to ensure the efficient and responsible use of spectrum, and should provide ample time for the spectrum auction winner to demonstrate proper use of this public resource. Near the end of this ten year term and at this time only, if the spectrum obtained in this auction had not been put to use at a level acceptable to the Department, the Department could begin a process to afford the license owner the opportunity to demonstrate why its license should not be revoked. 8.6) Post-Auction Licensing Process The Department seeks comment on all aspects of the proposed post-auction licensing process, including service area, license fees and license conditions. TELUS is supportive of the Department s proposed post-auction licensing process. In this particular case, TELUS believes that the reserve prices are a reasonable proxy for fees for the ten year license period. 8.7) Issuance of Licenses TELUS strongly supports the submissions of the RABC and the CWTA regarding the process dealing with the issuance of licenses. The time period for issuance of licenses won in a spectrum auction is unacceptably long, unacceptably complex and, in many situations, unacceptably subjective. TELUS encourages the Department to address this situation on an expeditious and priority basis.

5 5 With respect to the interest lost on monies pre-paid TELUS recommends that the Department implement a system to reimburse these funds. 9.2) Pre-Auction Deposits The Department seeks comment on the opening bids and preauction deposits. TELUS is supportive of the Department s proposed opening bids and pre-auction deposits. Yours truly, (Original signed) Ed Prior Director, Government & Regulatory Affairs