February 24, 2015 Senior Director, Spectrum Licensing and Auction Operations, Industry Canada, 235 Queen Street, Ottawa, Ontario K1A 0H5 Email: spectrum.auctions@ic.gc.ca RE: Canada s Gazette Notice SLPB-005-14 Dear Sir/Madam, 6Harmonics Inc. is pleased to submit the enclosed comments to Industry Canada s Gazette Notice SLPB-005-14. 6Harmonics believes that the 600MHz spectrum is a critical national resource and strongly suggests that Industry Canada refrain from auctioning any portion of it at this time. 6Harmonics believes that auctioning a portion of 600 MHz band will limit Canadian technology innovation and economic development. It will also hinder many new initiatives that had been undertaken by Industry Canada in recent years such as the RRBS standard and the TVWS standard. Therefore, it is not in the best interests of Canada, both from the perspective of technology and national strategy. 6Harmonics is a leading Canadian wireless innovation, design and development company with significant expertise in broadband cognitive radio and affordable wireless solutions. 6Harmonics looks forward to working with Industry Canada and other interested parties to successfully implement effective use of 600 MHz spectrum and provide broadband internet for rural areas and for low income citizens while ensuring that the incumbent services are protected and long term national strategy is well positioned for Canadians. Sincerely Yours, Robert Wu and Steve Beaudin CEO and Vice President 6Harmonics Inc. 21 Concourse Gate Ottawa, Ontario K2E 7S4 @2015 6Harmonics Inc. All Rights Reserved 1
COMMENTS: Canada has an excellent record and reputation in wireless communication innovation, spectrum policy and technology development. The Canadian government took the lead in June of 2006 and published a framework to allow a portion of the 600 MHz band to be used for non-broadcast purposes, an initiative known as Remote Rural Broadband Systems, as part of a unique initiative to bring affordable broadband connectivity to rural regions of Canada. In 2015 Canada was the 3 rd country in the world to formally release a set of TVWS regulations, following the US and Singapore, which further demonstrated our leadership in leveraging the TV Broadcast band to provide innovative wireless services. The UHF-TV Broadcast band from 470MHz to 698 MHz deserves special and national strategic consideration for many reasons. Firstly this band is one of the last allocations of sub-1ghz spectrum which is large enough and underutilized enough that it can potentially be repurposed to provide new and innovative wireless services on a meaningful scale. Secondly, for many decades this band has been used for TV broadcast services and millions of Canadians continue to rely on these services to receive affordable TV programming, especially families and individuals in the lower income bracket who cannot afford to subscribe to premium cable or satellite services. US Situation Not all is happy south of the border. There is significant debate as to whether the US 600 MHz incentive auctions will be successful and there is serious criticism as to the technical feasibility of the US bandplan. There have been many challenges both technical and legal to the proposal. The National Association of Broadcasters (NAB) are currently suing the FCC and the outcome of the proceedings may not be complete until mid-2015. Qualcomm recently issued a document publicly criticizing the FCC proposal on technical grounds. 6Harmonics believes Industry Canada should not move too quickly or prematurely, should continue with status quo until US situation clarifies. If successful, we will retain the option to follow suit. If unsuccessful, we will have avoided a serious problem and avoided much wasted time, investment and expense. Undue risks should not be taken with such an important natural resource as the UHF-TV spectrum. The position of 6Harmonics is that the UHF band should not be auctioned and the status quo should be maintained, at least at the present time. a) If the US proceeds with repacking their TV Broadcast stations, we believe it would make sense for Canada to first and foremost coordinate our broadcast stations with the US to ensure the most spectrally efficient arrangement of the UHF band for both countries. @2015 6Harmonics Inc. All Rights Reserved 2
b) Portions of the UHF band that become free as a result should be made available for existing services such as RRBS Services or TVWS systems such as those used for Super wi-fi. c) If the government considers auctioning spectrum a portion of the UHF band because revenue generation is a priority, 6Harmonics recommends that Industry Canada consider the use of an Open Spectrum Access Database (OSAD) approach instead. Establishing a real time spectrum exchange to allow true Open Spectrum Access is the next logical step beyond spectrum auctions. This would be a world first and would clearly demonstrate Canada s leadership in the wireless arena. The value of the resulting recurring revenue stream could easily be equal to and even surpass that of a traditional auction. Furthermore, such an approach would promote superior spectrum efficiency and utilization and also allow the Canadian government to retain far more flexibility over the spectrum. The revenue stream would continue to increase over time as the spectrum becomes more heavily used. As new technologies emerge, the Canadian government could quickly free up portions of the UHF band, and make them available to these new systems through the database. Similarly, as techologies wane and become obsolete, manipulation of the database would allow portions of spectrum to be removed from their use and repurposed. (for more information on the OSAD concept please refer to Appendix A). Answers to Specific Questions from Industry Canada: Question 1: Industry Canada is seeking comments on the overall proposal of repurposing the band to include commercial broadband and the initial step of participating in a joint repacking process with the United States. 6Harmonics seriously questions whether the United States repacking of the UHF band is feasible, both technically and strategically. If it turns out to be successful, then of course Canada should take corresponding actions to ensure the most spectrally efficient arrangement for both countries. However, with so much uncertainty as to whether the US approach will be successful or not, and the high likelihood that it will be either abandoned altogether or significantly modified at the very least, we do not believe it is in the best interest of Canada to proceed to auction any portion of the band at this time. We deeply believe TV spectrum is a strategic resource and too important a public resource to dedicate long-term to any specific entity or purpose. In the meantime, as noted above, we believe this spectrum should be made available to RRBS and TVWS systems. If so desired, a portion of this band could be made available for higher power systems through Open Access Exchange to generate revenue for the government and provide excellent spectrum efficiency and flexibility for everyone, while ensuring an open playing field with a low barrier to entry. In this way, Canada will be well positioned for both short term and long term. @2015 6Harmonics Inc. All Right Reserved 3
Question 2: Industry Canada is seeking comments on the future spectrum requirements for OTA TV broadcasting, taking into consideration the overall changes to the broadcasting industry, and noting that the CRTC Let s Talk TV hearing recently closed. 6Harmonics believes that the TV Broadcast spectrum and stations are strategic to Canada and need to be maintained and protected. There are still millions of Canadians who use OTA TV as their primary means of watching television, both in cities and in rural communities. They continue to rely on these services to receive affordable TV programming, especially families and individuals in the lower income bracket who cannot afford to subscribe to premium cable or satellite services. This has especially increased with the availability of high quality OTA HDTV in recent years which has led to many families cancelling their other subscriptions in favor of OTA HDTV. During the recent CRTC Let s Talk TV hearing, a number of broadcasters proposed being allowed to shut down certain OTA transmitters. However, the CRTC denied their request, asserting the need to maintain Canada s OTA broadcast services. Question 3: Industry Canada is seeking comments on the Department s proposal to: - Adopt the U.S. 600 MHz band plan frame work; and - Commit to repurpose the same amount of spectrum as the United States, as determined in the FCC s incentive auction. As noted above, there is a high degree of risk that the US incentive auction plans will prove to be unsuccessful, either technically or strategically or both. Until there is solid proof that the US has been successful, Canada should maintain the status quo, and continue to monitor the US situation. This approach means that no immediate decision need be made as to whether to adopt the US band plan framework nor whether to repurpose the same amount of some different amount of spectrum as determined in the FCC s incentive auction. Furthermore, during this interim period 6Harmonics recommends that IC consider whether the use of an OSAD exchange approach might be a more prudent path to take. Question 4: Industry Canada is seeking comments on the size of the proposed guard band between the TV broadcasting and mobile service. - Is the mobile service appropriately protected by the proposed guard band? - Is the TV broadcasting service appropriately protected by the proposed guard band? - If additional protection measures are needed, what alternatives (such as increasing the size of the guard band, adding a pass band/notch filter at the TV receiver port, etc.) could be used and what alternatives would be practical to deploy? As noted above, the feasibility of the current FCC 600 MHz repacking plan is still in doubt and it may take years to determine if it is truly successful or not. It is being openly @2015 6Harmonics Inc. All Right Reserved 4
questioned by a number of parties, even Qualcomm (seehttp://apps.fcc.gov/ecfs/document/view?id=60001034022). 6Harmonics recommends prudence and caution by Industry Canada, and that we wait until we have assurance that significant problems will not materialize. In the meantime, 6Harmonics supports continued implementation of TVWS super-wifi and RRBS systems in the band which have already been proven in practice. Questions 5, 6 and 7: No comments Question 8: Industry Canada is seeking comments on the proposed transition policy for RRBS 6Harmonics believes the lack of widespread broadband access for rural Canada is an impediment to economic development in those regions. We have been actively working with the MRC s of several regions of rural Quebec and high quality, affordable, broadband access has been singled out as a major concern by many regions. We believe that RRBS is a great initiative and should be protected and encouraged. The relatively small uptake of RRBS licenses has primarily been due to a lack of mass produced, low cost equipment. Prior to the commencement of these proceeding we were in the process of finalizing our GWS3000 and GWS4000 TVWS products for operation under the RRBS rules as defined per RSS-196, which would have made high performance, low cost equipment available. We therefore believe it is in the best interest of Canada and its rural communities to protect and preserve the RRBS rules, and to allow future expansion and investment of these networks. If Industry Canada were to proceed with an Open Spectrum Access Model, the RRBS systems could naturally migrate into this model. Question 9: Industry Canada is seeking comments on the proposal to update the Canadian Table of Frequency Allocations by adding co-primary allocations to fixed and mobile services in the 512-608 MHz and 614-698 MHz ranges 6Harmonics supports updating the CTFA to add co-primary allocations for fixed and mobile services in these frequency ranges. @2015 6Harmonics Inc. All Right Reserved 5
Appendix: Auction vs Open Spectrum Access: The wireless spectrum auction was first introduced in 1989 in New Zealand and was quickly adopted in the US and Canada and has since emerged as the primary method of allocating spectrum in most countries. In the United States, since 1994 there have been over 87 spectrum auctions which have generated upwards of $60 Billion dollars. In Canada, the most recent and lucrative auction at 700 MHz raised a staggering $5.2 Billion. Let us ask however, what is the true social and economic value of the spectrum and could the Canadian government have generated more revenue had we used a real time spectrum exchanged with true open access? If we assume that the awardees of the auction will enjoy the economic benefit of their licenses for a period of 50 years, what size annuity would a lump sum payment of $5.2 billion represent per Canadian citizen? Assuming the cost of capital remains at historical lows, let us assume a short term borrowing rate of 1% for the federal government and that inflation remains at approximately the same level of 1% so that the real cost of capital is essentially zero. Over a 50 year period the equivalent annuity of a $5.2 Billion lump sum payment is approximately $104 million per year, or $8.7 million per month. Given Canada has a population of 33 million, this represents an annuity of $0.26/month/pop. If industry Canada were to make available 10 channels such that 10 licenses per coverage area are available, the necessary revenue per license per pop would need to be a relatively small $0.026 per month/pop/license. Would business, big and small, be willing to enter the market at a rate which exceeds $0.026 per month/pop/license? For a mid-sized rural town of 5000 residents, a license covering the entire city would cost approximately $131/month. A small operator would need only to sign a handful of customers to cover the cost of the license and as a result the barrier to entry at this price level would be very small. As more companies enter the market and demand for licenses increases, the cost would likely exceed the $0.026 per month/pop/license and the government would generate more revenue from the Open Access model than from an auction. Furthermore, for many small rural Wireless Internet Service providers they currently have to resort to using relatively poor quality spectrum in the 2.4 GHz or 3.65 GHz bands while the UHF band remains relatively idle. For a modest fee these operators could now enjoy premium spectrum, with relatively low levels of interference and enjoy much better coverage and service quality for their clients. This would ensure that small companies who have a small investment threshold are able to provide services to rural and remote communities to reduce the digital divide. For a city similar to Ottawa, if we assume that the city has an area of 500 km 2, and that it were divided into approximately 100 overlapping zones with an approximate area of 5km 2 each, with 10 licenses per zone, what would the revenue per license need to be? Given Ottawa has a population of approximately 1 million residents, on average there would be approximately 10000 residents per zone. The average cost per license would need to be about $262/month to ensure the yields of the Open Spectrum Access exchange were higher than an auction. This seems very reasonable given the potential revenue that could be @2015 6Harmonics Inc. All Right Reserved 6
generated from 10000 residents even with a very modest penetration rate. With a penetration rate of 1% and a monthly subscription of $50, the potential revenue for a zone would be $5000/month. The cost of the spectrum would represent approximately 5% of revenue and would decrease as market penetration increases. As market penetration increases, so would the value of the spectrum and the free market competition would drive the prices of licenses above the $0.026 per month/pop/license. In Summary the benefits of the Open Access model seem to be many and all the technological capabilities to enable a real time Open Access Spectrum exchanges are now ready. The FCC TVWS standard with a database access model has demonstrated that a real time network, where base stations acquire a channel list from a database is practical and implementable. Furthermore, the advances in radio technology over the last 10 years have enabled wideband, multi-carrier transmitters and receivers which can rapidly be configured to different channels, or different bandwidths and can even use non-contiguous channels which would ensure full utilization of the available spectrum. The benefits of implementing the Open Spectrum Access Database (OSAD) exchange are very significant and include: - Very low barrier to entry for new wireless operators in both rural and urban markets - Would allow new small players to enjoy premium quality licensed spectrum and deploy services in rural markets. - Canada would be at the leading edge of a new wireless policy and deployment model, which would generate considerable R&D and exportable know how in Canada as other countries eventually develop similar models. - The potential revenue for the Canadian Government could be larger than that of an auction and social benefit is tremendous. - The Canadian Government retains full and timely control and ownership of the 600 MHz spectrum, a very strategic national resource, and can adjust the licenses as technology and needs change. This would further aid Canadian companies to become first adopters and movers in new technological areas and increase our global competitiveness. - There is little risk for Industry Canada to explore this option and test the market. Given the complexity of the incentive auction which is being proposed in the US, it may take many years for all the issues to be resolved and to gain full alignment between the broadcast industry, private sector and public. During this period Industry Canada would have enough time to implement a pilot of the OSAD exchange in a few large markets and demonstrate global leadership in wireless policy and maximize the economic benefit of Canada s UHF spectrum. If the trials are successful, Canadian companies would be uniquely positioned to export the know how and products to other countries wishing to implement similar systems. - This OSAD would maximize government revenue, increase competitiveness, and ensure widespread market role out of innovative wireless technologies. This will enforce fairness, avoid monopoly and diminish digital discrimination in Canada. @2015 6Harmonics Inc. All Right Reserved 7