Commission denies Telesat, TMI request to review and vary contribution

The CRTC has rejected a review and vary petition from Telesat Canada and TMI Communications requesting that they be exempt from having to pay into the new national phone subsidy fund. This latest denial (Order CRTC 2001-435) once again demonstrates that when it comes to the new contribution regime, the commission is steadfast in its belief that it should apply equally to all telecommunications services providers. Telesat had asked the CRTC to exempt it, and its TMI subsidiary, from having to pay into the national pool to subsidize local phone service in rural and remote areas. One reason, it argued, is that a significant amount of its satellite capacity goes to serve the same regions served by telcos that can draw from the subsidy fund. Telesat said if its exemption request was denied, then it should be allowed to tap into the subidies. Telesat, supported by the broadcast community, also argued that paying into such a fund was unfair since the majority of its customers are in the television and not the public switched telephone business. As well, the company pointed out that it’s subject to other terms and conditions as part of its licence that should be taken into account, such as providing capacity for public institutions in remote areas. But the CRTC didn’t share Telesat’s view. In its May 31 decision, the commission said that Telesat’s conditions of licence are similar to spectrum licence fees paid by the wireless industry. "The Commission stated in Order CRTC 2001-219 that conditions of licence should not entitle a TSP (a telecommunication service provider) to special treatment and that such obligations are a cost of doing business," the commission write. Nor did the commission bite on Telesat’s assertion that it would have to pass along the additional charge to its broadcast customers. The CRTC concluded that revenue-based charges would not impose unjust discrimination, undue preference or unreasonable advantage contrary to sections 27 (2) and 28 (1) of the Telecommunications Act. Under section 28 (1), "this section applies only when the commission is considering whether a Canadian carrier has conferred an undue preference or has unjustly discriminated in relation to the provision of a telecommunications service that involves the transmission of programs," the CRTC writes. In concluding, "the commission considers that approving the applicants’ application would negate the principles of ratepayer equity, fairness, technological neutrality and competitive equity that the commission sought to achieve with the national revenue-based contribution mechanism." Much of the concerns with the contribution regime, which came into effect in January, should be allayed following the commission’s decision on restructured bands and revised local loop rates in Decision CRTC 2001-238. In that decision, the CRTC lowered the year-two rate under the contribution rules to 1.5 per cent of contribution eligible revenue. Decision 2001-238 should also alleviate some of the independent telcos’ fears that they will be paying too much into the national contribution pool. In their appeal to Cabinet, they ask the Federal Cabinet to change the way telecommunications service revenue is calculated and then charged. Respondents to the Cabinet appeal argued that the independent telcos haven’t even yet come under the new revenue-based model and are still under the old long-distance method. They say the rural telcos won’t become regulated by the new model until next year when the rate is reduced to the 1.5 per cent level.

Commission denies Telesat, TMI request to review and vary contribution

News | June 11, 2001

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