Helaina Gaspard, Alanna Sharman, Tianna Tischbein

January 27, 2022

This summer, Canada will be auctioning spectrum critical for 5G mobile deployment. Opportunities abound with the fifth-generation technology with improved interoperability, capacity, and speed. Various jurisdictions have rolled out 5G, from Korea to Norway to, in a limited way, Canada. To understand its importance, one need only consider the political contentions and aviation safety delays around  the recent 5G roll-out in the United States. But the details of wireless access don’t just impact security, business competition and, sometimes, geopolitics. Wireless connectivity affects the economic prospects of individuals and communities, and all the socioeconomic indicators that measure quality of life.

The spectrum of electromagnetic frequencies is a public asset with private and public applications. Spectrum permeates everyday life, from the light we see to mobile networks, to x-rays, to the microwave, spectrum in different wavelengths has multiple uses. Given the importance of spectrum, its use for wireless technologies, such as Wi-Fi and mobile networks, it is regulated nationally and internationally to ensure availability and streamlined uses for countries, providers, and consumers.

How spectrum is allocated should then be about more than revenue generation alone, but about achieving the intended outcomes of spectrum, e.g., connectivity for all. Therefore, Canadians should not be indifferent to the efficacy of instruments used to roll-out 5G, and spectrum policy is an important first step.

Spectrum has a direct or indirect role in most areas of industrial development and economic activity. From connectivity to medicine to transport and shipping, spectrum policy – the policies shaping how spectrum is allocated to different users and uses – has implications for economies and people. As a critical resource, policy development associated with spectrum allocation and deployment merits closer attention. Spectrum policy influences how spectrum is allocated and deployed among service providers, which then impacts uses by businesses, consumers, and governments.

The Organisation for Economic Co-operation and Development (OECD), a collection of mostly wealthy countries, released a set of recommendations on broadband connectivity in April 2021 to promote connectivity and improve competitive pricing and access for consumers. Over the next year, the OECD’s Directorate for Science, Technology and Innovation will be studying various aspects of connectivity, including spectrum and its allocation.

In Canada, Innovation, Science and Economic Development (ISED) has released its call for feedback on the policy and licensing approach for the upcoming spectrum auction (concerning the 3800Mhz band, critical for 5G mobile coverage deployment).  With the auction, ISED states that it wants to improve investments in 5G networks and technology, promote competition in wireless service delivery, and foster the timely deployment of connectivity across the country, including harder-to-reach places such as rural communities and the North. Research abounds on improving connectivity from technical and community perspectives, including our own Institute of Fiscal Studies and Democracy (IFSD) research contribution, Assessing the Efficacy of Instruments for the Delivery of Rural Broadband.

The focus on connectivity and spectrum policy are clearly defined, but how do we know if or when spectrum policy can achieve these declared priorities? Have other jurisdictions achieved similar goals or different ones? What results have Canada’s spectrum policies delivered to date? As economies continue their post-COVID-19 recoveries, with environmental challenges to address and new technologies to develop, careful consideration of the spectrum policy underlying connectivity would be broadly beneficial. (Full disclosure: IFSD has been asked by TELUS to study the alignment of spectrum to economic priorities. The views in this note are those of the authors and do not necessarily reflect the views of TELUS).

Several countries have declared the importance and priority of spectrum allocation and connectivity (see Table 1). Tacitly built into countries’ declarations are linkages to economic growth, e.g., competitiveness, and social well-being, e.g., inclusion, participation. Consider, for instance, the G7 countries, plus Korea and Australia. The differences between countries such as Japan and South Korea, which are focused on the next generation of connectivity, and others, focused on broad-based coverage, are stark. While the former are already contemplating future possibilities in use and application, the latter are focused on universal access. Countries such as Canada and Australia recognize linkages between spectrum allocation and economic and social priorities. While there is consensus on the importance of spectrum allocation, how it is leveraged and against which outcomes it will be measured can at best only be inferred. Measures or assessments tend to focus on deployment-related activities, e.g., Japan’s annual surveys of connectivity and implementation, or the requirements for deployment by set dates in various countries, e.g., the United States.

Table 1

Country	Spectrum priorities
Australia	With consideration of spectrum as an economic resource, the goal is to “…make the most of this resource and to reduce interference between users.” (Australian Communications and Media Authority)
Canada	“To maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum resource.” (ISED)
France	A resource, spectrum management is critical for ‘cohabitation’ of users, and management of frequencies. (L’Agence nationale des fréquences)
Germany	Uninterrupted mobile broadband coverage, with the “provision of spectrum in objective, transparent and non-discriminatory proceedings […]” (see Courtesy Translation of the Bundesnetzagentur)
Italy	Efficient use of scarce spectrum resources for transition to new technologies and the development of services. (see Courtesy Translation, L’Autorità per le Garanzie nelle Comunicazioni (AGCOM))
Japan	Committed to efficient and effective use of spectrum allocation to meet the needs of ‘Society 5.0’ and beyond. (Frequency Reorganization Action Plan, Ministry of Internal Affairs and Communications)
Korea	Already working ahead to 6G considerations with government and universities engaged in planning and the study of applications for end-users. (Press release, Ministry of Science and ICT)
United Kingdom	With a broader goal of “making communications work for everyone,” spectrum management includes ensuring sufficiency, clearance, and awards, among other activities. (Ofcom)
United States	“Encouraging the highest and best use of spectrum domestically and internationally,” a competitive framework to support the economy, and “[p]romoting competition, innovation and investment in broadband services and facilities” (Federal Communications Commission (FCC))

 

There are various elements to consider in spectrum policy. Governing access and use, policy can address the tool for allocation, e.g., auction, administrative allocation/comparative selection; the conditions for allocation, e.g., contiguity, amount available; conditions associated with access and deployment, e.g., use-it-or-lose-it, set-asides, etc.; and the goals of the allocation (should they exist).

Canada runs auctions — as do most of its peers — to allocate spectrum. The last spectrum auction in Canada in summer 2021, generated nearly $9B in revenues. This one-time revenue generation is nearly as much as the $8B in expenditures allocated to rural connectivity initiatives through various programs and the Canada Infrastructure Bank, plus the additional $1B announced in Budget 2021 for connectivity initiatives.  Effectively, the Canadian government has a source of funds for connectivity, beyond the Treasury alone.

There is a cost to connectivity. Using data from the Canadian Radio-television and Telecommunications Commission (CRTC), one Canadian vendor estimates it would cost between $6B and $10B dollars to connect the 14 percent of Canadian households without access at 50/10 Mpbs service. In 2018, the Office of the Auditor General cited ISED’s estimated cost to connect all Canadian homes through fibre to be between $40B and $50B, but if a multi-modal approach, i.e., using a mix of technologies for connectivity, including wireless, was leveraged for 50/10 Mpbs service, the cost was $6.5B for the entire country.

Canada’s current spectrum policy is useful in promoting competition among providers, especially in dense urban areas. The approach assumes service demands and user uptake as incentives for providers to purchase and deploy spectrum by building the necessary connectivity infrastructure.

Given the importance of spectrum penetration — directly or indirectly — to Canada’s economic activity and social inclusion, allocation policy would benefit from further analysis to assess its alignment to economic development. This is the case with most jurisdictions. While there are clear lessons on allocation instruments and practices, there is little analysis of the results of the policy for broader social and economic outcomes. This is a relevant missing piece of analysis, given the declared commitments of various jurisdictions to these and broader outcomes.

Beyond connectivity rates, revenues generated from spectrum, deployment practices, and other end-user focused measures, it is unclear what connections or impact spectrum policy has relative to declared priorities. It would be useful to know how allocation can be improved to generate better results for economies and people.  Declared commitments should be assessed. What problem are you trying to solve or result are you trying to generate with your approach to spectrum allocation? Is the approach linked to the problem? How do you know the approach is working? What variables do you consider, or indicators do you measure to determine success? As dependencies and demands for connectivity increase, getting spectrum allocation right at the front end will be a critical success factor.

As Canada prepares for its spectrum auction, consideration should be given to how the allocation will help to achieve declared priorities. The current approach to spectrum allocation with set-asides makes sense in dense urban areas where the incentives for deployment are robust with opportunities for revenues from service delivery. In those harder-to-reach places such as rural communities and the North – noted priorities for the upcoming auction – that commercial business case does not readily exist. If Canada wants to change outcomes in connectivity, it should start with consideration of how spectrum policy links to instruments and incentives (including subsidies) for deployment.

Contributing Writer Helaina Gaspard is Director of Governance and Institutions at the Institute of Fiscal Studies and Democracy (IFSD) at the University of Ottawa.

Alanna Sharman and Tianna Tischbein are analysts at the Institute of Fiscal Studies and Democracy (IFSD) at the University of Ottawa.