Federal Cabinet rules against satellite users in fight against contribution regime

Telesat Canada is displeased at a recent federal Cabinet decision turning down an appeal of the contribution regime requiring the satellite operator to pay contribution fees on revenue earned from broadcasters. The decision puts to rest the contentious issue that has dragged on for more than a year, which saw Telesat pass the surcharge on to its broadcasting clients. The Canadian Association of Broadcasters (CAB), the Canadian Satellite Users’ Association, and Star Choice Television Network Inc. launched the appeal last August (RoW, Oct. 15/01). The issue boiled down to whether broadcasters should be required to support local telephone service in high-cost serving areas. The broadcasting community felt that since it is already subject to supporting policies under the Broadcasting Act, it shouldn’t also be forced to pay for telecommunications objectives under the Telecommunications Act. In the original contribution decision (CRTC 2000-745), the CRTC applied the definition of telecommunications services without necessarily making the connection with the Broadcasting Act, explains Bob Power, VP regulatory matters at Telesat. "(It) looked at the broader definition of telecommunications services and decided (it) couldn’t see a clear exception, an exemption for the broadcasters as being justified." In the Cabinet petition, supported by Telesat, "we put that question in front of the federal government, and said ‘this doesn’t look right’, and (it) decided not to address that particular aspect of our petition," he adds. "It’s the third time that we’ve gone to bat for our customers to try and keep this levy from applying to them (…) and come away empty handed." While Telesat has expressed disappointment with the May 31 ruling, wireless companies were satisfied there wasn’t any special exemption made for the country’s sole satellite operator and BCE Inc. subsidiary. Dawn Hunt, VP regulatory and government affairs at Rogers Wireless Communications Inc., is pleased that the federal Cabinet came to the same conclusion as the CRTC did in denying Telesat’s Review and Vary petition last year in Order CRTC 2001-435 (RoW, June 11/01 and March 5/01). "Our position was that we didn’t think it was appropriate that there be any carve-outs and if there was going to be any carve-outs, wireless should be carved out as well," Hunt tells Report on Wireless. "The basis of the CAB (et al.) appeal was ‘let’s take a piece out of the group of companies that have to pay the contribution’, and we didn’t think that was appropriate." The Cabinet decision can be seen as positive news for the wireless industry, though in reality won’t have much of an impact on the contribution levies required by the carriers. "There wasn’t a lot of money coming from (Telesat)," Hunt explains. "So in relation to the bigger contributors, it’s not going to make that much of a difference, particularly this year because the rate is sitting at 1.4 per cent." The 1.4 per cent contribution rate is currently an interim rate for 2002, but the commission is expected to set the final contribution tax by the end of this month or early next month, Hunt adds. However, Hunt is concerned that revised loop cost studies, filed by Bell Canada and Telus Corp., may have a negative impact on contribution in the future. "If accepted on face value as they have filed, it would result in a substantial increase in contribution rates," she notes.

Federal Cabinet rules against satellite users in fight against contribution regime

News | June 11, 2002

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