Canada’s spectrum regulator has introduced a new fee framework for telecom companies, lowering licence costs for some and raising them for others, as the industry’s largest players face industry headwinds.
On March 7, Innovation, Science and Economic Development Canada (ISED) updated the rates that telecom companies pay to license certain cellular mobile spectrum – airwaves used to transmit wireless signals – for the first time in more than two decades. The new fee structure take effect in the 2026-27 financial year.
For some telecoms, particularly small competitors, the new fee framework will lower costs substantially. For others, including Rogers Communications Inc. RCI-B-T and BCE Inc. BCE-T, it will mean a sharp jump in fees in the years to come that some telecoms say will be passed onto consumers.
It’s the latest area of division for the industry, where large players, small competitors and the regulator clash over the best way to balance costs, competition and consumer prices.
The new system will use a three-tier framework, similar to a marginal tax rate system, based on the total amount of spectrum owned by a company. Telecoms will pay a discounted rate for the first tranche, a slightly higher rate for the second and a full rate for the third. Under this new structure, more burden will shift onto larger players.
“Most smaller operators will pay lower spectrum licence fees overall, protecting their ability to grow and compete, particularly in rural and remote areas,” said Cheyenne Daly, a spokesperson for ISED. “Spectrum is a valuable public resource, and licence fees incentivize operators to put it to use and provide a fair return to Canadians.”
The new base rate is about half of what it used to be, but will apply to more categories of spectrum. This means that the cash outlay required will increase rapidly for telecoms in the coming years.
In submissions as part of ISED’s consultation, Rogers calculated that the industry will pay about $265-million in total in its first year under the new framework compared to $228-million under the old model. In a calculation for The Globe and Mail, the company estimated that figure could rise to nearly $500-million in 2035 as new licences become subject to fees.
Many of the companies that made submissions during the consultation suggested these costs remained too high, noting that Canada’s spectrum fees have historically been among the highest in the world. ISED added that it obtained its rates by comparing fees and spectrum valuations in peer jurisdictions.
In submissions, Rogers estimated that in 2026, it will pay 15 per cent more, for a total of $126.5-million. Telus Corp. T-T, Eastlink, Tbaytel and other smaller providers’ costs will decline, while Bell, Xplore Inc., Cogeco Inc. and Terrestar Solutions Inc. costs will increase, Rogers estimates.
Telus said that the higher overall rates for the industry will reduce telecoms’ ability to invest in critical infrastructure, while Rogers, Quebecor Inc., and Eastlink said consumers will bear the cost. Bell said carriers would need to reduce their network budgets elsewhere.
Quebecor Inc. QBR-B-T, which owns Videotron and Freedom Mobile, supported the three-tier model, estimating it will pay fees of about $430,000 starting in 2026.
As Canada’s fourth-largest carrier, Videotron’s Freedom Mobile has added competitive pressure to the market, forcing the incumbents to lower prices.
The framework was supported by rural and regional providers, including SaskTel, Xplore and the Canadian Association of Wireless Internet Service Providers, which said the discount mechanism will mitigate barriers to new market entrants.
Geoff White, the executive director and general counsel of the Public Interest Advocacy Centre, said that the argument that consumers will inevitably pay for increased fees is “a common incumbent threat,” and that those companies instead have the choice to absorb those costs.
One common criticism from across the industry, he said, is that the regulator has been slow to dole out new spectrum and redesignate old licences – a problem that itself limits how well telecoms can serve the public.
In their submissions, companies also raised concerns about whether ISED should be collecting more than it spends to administer the spectrum.
According to its website, ISED spent $148-million to administer spectrum in the 2023-24 fiscal year. In submissions, Rogers estimated those costs will grow to $163-million for the 2026-27 fiscal year, but that the department will collect $100-million above that amount.
In their submissions, several telecoms suggestions ISED take the approach of the U.S. Federal Communications Commission, which only collects enough fees to cover its costs. But in its decision, ISED said the market value of these bands exceeds the costs of their management.
In an e-mail, ISED’s Ms. Daly said that fees are remitted as general revenues to the federal government’s Consolidated Revenue Fund, a central account from which funds are withdrawn to cover public expenditures.