CRTC approves final 2021 rates, interim 2022 rates, for for high-cost serving areas

The CRTC approved the 2021 subsidy amounts for telecom providers operating in high-cost serving areas (HCSA), set at 0.44 per cent, and the approved, on an interim basis a 2022 contribution collection revenue-percent charge of 0.46 per cent. The changes will come into effect as of Jan. 1st, the commission noted in its Wednesday decision. In the 1990s the commission “opened up various telecommunications markets to competition, including the local telephone market,” the commission said in its decision. As a result, it also established a subsidy regime to collect funds from telecommunications companies to subsidize residential local telephone service. In 2000, the commission introduced a national revenue-based contribution collection mechanism and a methodology to calculate subsidies for HCSAs. Telecommunications service providers (TSPs), or groups of related, making more than $10 million in Canadian telecommunications service revenue pay into the National Contribution Fund (NCF) and then subsidies are given to ILECs who are also TSPs “for providing residential local telephone service in regulated high-cost serving areas.” Then in a series of decisions from 2014 to 2018 the commission also decided that national video relay service (VRS) would be implemented, with funding being provided through the NCF. It instituted a $30 million funding cap per year to cover VRS’ administrative and service costs. The commission also determined it would establish the Broadband Fund -- introduced within the NCF and administered by the Central Fund Administrator (CFA) -- with contribution-eligible revenue expanded to include retail internet access and paging service revenues in the calculation of the revenue-percent charge. Finally, the CRTC began phasing-out of the local service subsidy from 2019 to 2021, through semi-annual reductions with “each ILEC’s transition subsidy amount calculated based on its total 2018 subsidy amount.” It set, on an interim basis, the transition subsidy payments for Northwestel Inc. from Nov. 2020 to Dec. 31 2021. “Each year, the Commission finalizes the subsidy payments to the ILECs for providing residential local telephone service in regulated HCSAs. The Commission establishes a final revenue-percent charge to ensure that the amount of money collected is sufficient to meet subsidy, VRS, and broadband requirements,” the commission noted in its decision. In 2020 the final contribution collection revenue-percent charge was set to 0.44 per cent, with the same rates implemented for 2021 in the interim. “As per the fourth quarter Central Fund Report, provided by the CFA... the total 2018 subsidy paid to the ILECs was $77.3 million. On the basis of the semi-annual subsidy reductions during the transition period… the transition subsidy payments made to the ILECs will total $16.6 million in 2021,” the commission wrote in its decision. Last year, the commission approved $27.3 million in 2021 funding for the Canadian Administrator of VRS (CAV), Inc. and $125 million to be available for the Broadband Fund in 2021. It also calculated that the Canadian Telecommunications Contribution Consortium Inc.’s (CTCC) and CFA administrative and operational costs would be approximately $1 million for 2021. “In light of the above, the commission estimates the total 2021 national subsidy, VRS, and broadband requirement to be $169.9 million,” it wrote in its decision. “The revenue-percent charge is calculated using the ratio of the national subsidy, VRS, and broadband requirement to the estimated total contribution-eligible revenues of all TSPs that are required to contribute, which as of 2020 includes their retail Internet access and paging service revenues.” The commission also directed the CFA to distribute the monthly transition subsidy phase-out amounts to the ILECs effective, with the exception of Northwestel’s transition subsidy payments, which will remain interim. -- Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Paul Park at ppark@thewirereport.ca

CRTC approves final 2021 rates, interim 2022 rates, for for high-cost serving areas

News | November 18, 2021

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CRTC approves final 2021 rates, interim 2022 rates, for for high-cost serving areas

News | November 18, 2021

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