Wednesday, February 11, 2015

600 MHz Band Auction – What’s in it for me besides disrupting my TV service?

Hard to see what’s in it for the Canadian consumer in the latest repurposing exercise of the upper UHF band.

An Editorial from your Average Joe

More efficient use of our spectrum? OK, I guess.

Allow new mobile carriers to appear? Maybe.
Better, faster connection speeds for mobile devices? Not so sure but ... OK.

Whichever way you slice it, it’s somewhat hard to see what the regular Canadian consumer will get out of the upcoming Industry Canada spectrum auction that targets the upper band of the current UHF (ultra-high frequency) over-the-air (OTA) TV spectrum. Industry Canada is investigating contracting and compressing the allotment of spectrum for OTA channels in order to auction the said spectrum to mobile carriers.

How deep will the cuts go? There were various scenarios proposed in Industry Canada’s consultation, and the OTA TV spectrum could lose spectrum equivalent to anywhere from 7 to 24 channels as seen in the graphic below.

So what’s motivating this consultation and what’s in it for the average Canadian? Let’s go over some of the points and see the facts.

We’re currently running out of spectrum and need to act now!

Well, not really. Canada completed its digital transition of OTA TV less than four years ago and used the opportunity to give up several blocks of spectrum, including the whole lower VHF band and the (then) upper UHF band which was channels 52 and higher. Most of the upper band was sold off to mobile carriers for about 68 MHz of spectrum divided into seven licence blocks in 14 service areas, for a total of 98 licences. As part of the transition, OTA TV broadcasters changed frequencies to accommodate this change as part of their analog-to-digital equipment upgrade.
Despite the increase in demand for wireless devices, no, we haven’t run out of spectrum within the span of less than four years and unless we’re planning for a population surge, we probably have enough to cover us for several more to come. Proponents for spectrum auctions in the USA had originally predicted a spectrum shortage of apocalyptic proportions in 2013, two years ago, which of course never happened (below).


On top of that, in North America market growth is beginning to slow as almost everyone is already mobile-device enabled, including the next generation of consumers (currently under the age of 18).

Everyone out there appears to have a tablet or smartphone, including the up and coming younger generation - and that's probably why we're starting to see sales and demand beginning to plateau in North America.

Also don’t forget as time progresses, analog mobile networks are being shut down and re-purposed as well as technological advances are making mobile protocols more efficient when it comes to crunching and compressing data. 

But wouldn’t more spectrum mean more players in the mobile industry for Canadians to choose from?
Perhaps. But reality is there are already major companies that have cornered the mobile market in Canada. As the recent Target retreat from Canada has shown us, it is very hard for a new player (even a well-established foreign one with deep pockets) to get in on a market already dominated by established giants. Verizon already balked at expansion into Canada during the last auction, so the chance they would re-think a venture north this time is highly doubtful.

Verizon probably avoided a similar fate as Target by staying out of Canadian mobile market during the first auctions. It’s hard to believe another auction would make them change their minds.

Wouldn’t smaller, home-grown carriers pop up in the mobile market with more spectrum available?
At first: perhaps. In fact, to encourage diversity, the CRTC and Industry Canada would actually only allow new carriers to buy the newly available spectrum. However the reality is that in the market, the big fish eat the little fish. If the Bell – Astral merger proves anything, it is that even the CRTC can’t stop the big from getting bigger. There is nothing saying that within 5 years the Rogers and Bell of the market would start buying out the smaller carriers, and the spectrum that they own along with it.

The Bell buyout of Astral is proof that the biggest fish will always eat the smallest fish, eventually.

Well then at least for a few years wouldn’t having more players in the market lower process?

Does having more gas station lower the price of gas? Guess what – mobile service is essentially viewed as a commodity. Most carriers know the price point of the market and don’t really lower the prices for plans when you compare apples to apples. Instead, they rely on promos to bring you in (great price for the first 6 months of a longer contract) or give you discounts only if you bundle with other services they offer. In the end, more carriers may give Canadians more choices but it is highly doubtful that the prices or plan options will be significantly better than what we have now.

Nobody watches OTA TV so who cares if we cut its spectrum?
That “nobody” is actually 1 in 8 Canadians who have an antenna hooked up to at least one TV in their home and up to 14% of residents depending on which province you look at. With most Canadian TV stations now using state-of-the art digital broadcasting, it’s possible the demand for OTA TV may actually increase in coming years, as the CRTC pointed recently in an announcement last month. You can read their entire policy on OTA here, and it doesn’t seem like it’s going to disappear any time soon.

CRTC chairman Jean-Pierre Blais was quoted in his Jan 29th speech as saying:  “The next few years could yield renewed interest for OTA broadcasting, especially in urban areas” Source

The OTA TV spectrum is under-utilized so we can cut it without affecting OTA TV service, right?
This is partly true. In rural areas serviced by only a handful of stations, this may be the case. In urban areas with neighbouring communities and especially in US border areas there can be over 20 OTA channels broadcasting; and compressing the OTA TV spectrum could result in service issues for Canadians using it as their TV source.

TV broadcasts are required to respect certain coverage zones to avoid interfering with other neighbouring channels, either local or out-of-market. By compressing the spectrum, more channels will be tightly packed next to each other causing what is called “adjacent” or “Co-channel” interference.  What this means is that viewers in certain areas could see signal degradation or even the loss of certain channels, especially in areas where viewers are dealing with a strong local channel and a weaker, more distant channel sharing the same or adjacent frequency.
Despite the FCC and Industry Canada’s best efforts to try to ensure that neighbouring stations won’t interfere, even stations operating on a reduced coverage footprint could still interfere with each other during favorable atmospheric conditions such as tropospheric ducting (when warm, moist air allows signals to propagate well beyond their defined contours). During these types of events, OTA users may experience loss of service as the spectrum becomes over-burdened with local and neighbouring broadcasts.

In the end, OTA users won’t be affected by the changes so why all the fuss?
Maybe not in some markets, but very probably in the markets where OTA TV is the most popular. Besides the increased interference mentioned above, some people used to catching out-of-market stations (like Canadians near the US border) may require more complex setups, or even lose those channels altogether if local channels allocation are shifted in such a way that they essentially block out the weaker out-of-market signals.

Also, there is talk of a return of some OTA channels back into the VHF-LO spectrum (channels 2 thru 6), which requires larger antennas. New OTA users who have currently purchased smaller, more compact antennas may need to change their equipment if stations migrate back towards lower VHF. Apart from the cost, these antennas are more unsightly when mounted outside.

VHF-Lo antennas are synonymous with the large, hulking dipoles as per the antenna (top). The current spectrum allocation of VHF-Hi and UHF allows for antennas the size of a BBQ grill like the ChannelMaster CM4228HD (bottom).

Isn’t the USA moving forward with the “UHF repack auctions” and doesn’t Canada have to follow suit?
In the US, TV broadcasters are much better organized and are able to ensure that OTA TV service will not be severely downgraded. Entities like the NAB (National Association of Broadcasters) are a unified front that ensures the viability of broadcast television in relation to any proposed changes by the FCC. It’s hard to know right now how deep the repack will be, or if it even ends up happening at all.

Also, the auction is an incentive auction, where broadcasters call the shots on if they want to sell their spectrum or not. You can read more about the FCC repack, various scenarios and incentive auctions here.  

Don’t we need these frequencies to allow expansion of internet and mobile services in rural areas?

Well, not really. This can also be done using television whitespaces which allow OTA TV and new data services to coexist in the same spectrum band.

So what should we do now?
Auctioning off a small portion of the UHF spectrum could make some sense, but not right now. Not after the last auction occurred only three years ago and was part of a transition that turned the OTA TV landscape upside down.

Today, it’s hard to see what the benefit for regular Canadians is despite what Industry Canada claims. Oh, and about those last auctions (700MHz): they raised over 5.27 billion dollars for the Canadian government. All that cash was put in a “Consolidated Revenue Fund and reinvested in priorities that matter to Canadians.”  

Yeah. Gotcha.

(Details are here by the way)

So in summary, if you love your current OTA setup, it’s time to speak up to Industry Canada before the February 26th 2015 deadline.

You can email them with your concerns and opinions at and specify which option your believe is in the best interest of Canadians; or simply tell them to leave the 600MHz band alone.

In the end, if the response is staggering enough, it cannot be ignored. During the CRTC's TalkTV exercise, we encouraged you to post your comments about keeping OTA in Canada and the response was staggering - over 95% of respondents were in favour of maintaining OTA broadcasts, a number so large it couldn't be ignored and left the CRTC no choice but to build its policy around the wishes of the public. 
The same can be done now. Make your voice heard. Remember, Industry Canada works for you. Let them know what you think.