MANAGEMENT’S DISCUSSION AND ANALYSIS Combined, these limits can enable effective foreign control of up to 46.7 % . The chief executive officer and 80 % of the members of the Board of Directors of the operating licensee must be resident Canadians. There are no restrictions on the number of non-voting shares that may be held by non-Canadians at either the holding-company or licensee- company level. Neither the Canadian carrier nor its parent may be otherwise controlled in fact by non-Canadians. Subject to appeal to the federal Cabinet, the CRTC has the jurisdiction to determine as a question of fact whether a given licensee is controlled by non- Canadians. Pursuant to the Telecommunications Act and associated regulations, the same rules also apply to Canadian telecommunications carriers such as Wireless, except that there is no requirement that the chief executive officer be a resident Canadian. We believe we are in compliance with the foregoing foreign ownership and control requirements. On June 29, 2012, Bill C-38 amending the Telecommunications Act passed into law. The amendments exempt telecommunications companies with less than 10 % of total Canadian telecommunications market measured by revenue from foreign investment restrictions. Companies that are successful in growing their market shares in excess of 10 % of total Canadian telecommunications market revenues other than by way of merger or acquisitions will continue to be exempt from the restrictions. In March 2011, Industry Canada released its decisions about the renewal process for cellular and PCS licences that began expiring at that time. Key things to note: In March 2012, Industry Canada released its policy and technical framework for the auction of spectrum in the 700 MHz and 2500–2690 MHz spectrum bands. Key things to note: 68 ROGERS COMMUNICATIONS INC. 2013 ANNUAL REPORT In March 2013, Industry Canada released Revised Frameworks for Mandatory Roaming and Antenna Tower and Site Sharing , concluding a consultation initiated in 2012. It sets out the current rules for roaming and tower and site sharing. Its key terms are: Key things to note about 2500–2690 MHz spectrum policy: In October 2013, Industry Canada released its consultation paper, seeking comments on licencing considerations related to auction format, rules and processes, as well as on conditions of licence for spectrum in the 2500–2690 MHz band. The final policy was released on January 10, 2014. The auction was initially set to begin on November 19, 2013. In June 2013, Industry Canada moved the application deadline to September 17, 2013, and the auction start to January 14, 2014. In March 2013, Industry Canada released Licensing Framework for Mobile Broadband Services (MBS) – 700 MHz Band . Key things to note: GLYPH<129> To encourage rural deployments, single carriers who win two paired blocks, or two carriers who share their two paired blocks, are required to use their 700 MHz spectrum to provide coverage to 90 % of their HSPA+ territory within five years and 97 % within seven years. Industry Canada will use Tier 2 licence areas for the 700Mhz auction. These are 14 large service areas covering all of Canada, and are generally the same size as individual provinces. GLYPH<129> Industry Canada confirmed that, for the most part, the policy and technical framework to auction spectrum in the 700 MHz band are the same as proposed in its March 14, 2012 consultation document. GLYPH<129> The auction will use a combinatorial clock auction (CCA) format, where bids are made for packages of spectrum licences, rather than the simultaneous multiple round auction (SMRA) format used in the past, where bids are made on individual licences. GLYPH<129> Associated entities can apply to bid separately and to have the auction cap applied individually. These bidders must demonstrate that they “intend to separately and actively provide services” within a given licence area for the duration of the spectrum caps (five years after licensing). Industry Canada has determined that no registered bidders were associated with each other. GLYPH<129> Industry Canada adopted a spectrum cap (not an auction cap like in the 700 MHz auction). No carrier participating in the auction may possess more than 40 MHz of 2500–2690 MHz spectrum. Rogers is grandfathered with respect to our holdings in those situations where we already hold more than 40 MHz of this spectrum. We will not be required to return spectrum. GLYPH<129> There is no special roll-out requirement for 2500–2690 MHz spectrum. A general roll-out rule will be determined in the policy. GLYPH<129> The auction is set to commence on April 15, 2015. GLYPH<129> The 2500MHz auction will use Tier 3 licence areas. GLYPH<129> All holders of spectrum licences, radio licences and broadcasting certificates must share towers and antenna sites, where technically feasible, at commercial rates. GLYPH<129> All licensees were permitted to request roaming from other licensees at commercial rates. GLYPH<129> The timeframe for negotiating agreements is 60 days, after which arbitration according to Industry Canada arbitration rules will begin. GLYPH<129> The roaming capabilities must provide connectivity for digital voice and data services regardless of the spectrum band or underlying technology used. GLYPH<129> Industry Canada adopted an auction cap for the 700 MHZ (not a set- aside like in the 2008 Advanced Wireless Services (AWS) spectrum auction). There are four blocks of spectrum that are considered “prime”. Large domestic wireless carriers are restricted to a single block of prime spectrum each, while all other carriers are restricted to two blocks. Rogers, Bell and Telus are considered large carriers nationally. SaskTel is considered a large carrier in Saskatchewan, and MTS is considered a large carrier in Manitoba. GLYPH<129> A determination regarding existing research and development conditions of licence was not released at that time and will be released separately. A decision has not been made to date, and until such a time, the current conditions of licence remain in effect. GLYPH<129> The previously existing annual fee of $0.0351 per MHz per population of the licenced area will continue to apply to all cellular and PCS licences, including those initially assigned by auction. The Minister of Industry Canada may review and amend the fees during the licence term after further consultation with licensees. GLYPH<129> At the end of the current licence term, new cellular and PCS licences with a 20-year term will be issued to licensees that are in compliance with all licence conditions. WIRELESS Consultation on the Renewal of Cellular and Personal Communications S ervices (PC S ) S pectrum Licences Consultation on a Policy and Technical Framework for the 700Mhz and 2500-2690Mhz Band and Aspects Related to Commercial Mobile S pectrum Roaming and Tower S haring Policy