TerreStar challenges CRTC decision that spectrum sale is part of telecom service

TerreStar Solutions Inc. is challenging a CRTC decision which denied the company’s request to deduct spectrum sale and subordination revenues from its Canadian operating revenues when determining its National Contribution Fund allocations. The current revenue-based contribution regime requires companies to contribute a percentage of their Canadian telecommunications services revenue (CTSR) to the fund. In June, the CRTC found that spectrum sale and subordination is a telecommunications service. In a Part 1 review and vary application, posted to the commission website Tuesday, TerreStar argued that there were no previous CRTC decisions or guidance indicating that spectrum sale and subordination revenues are considered incidental services and must be included in the revenue calculations. The company also argued there was no evidence on the record that other telecommunication service providers (TSPs) treat subordination revenues as CTSRs. “What the commission apparently did not consider in its decision was the extent to which revenues for the subordination or sale of spectrum were included in the first place by other TSPs,” TerreStar wrote. “TerreStar is unaware of any surveys or outreach to TSPs by the CRTC in order to determine whether revenues from the sale or subordination of spectrum are included in the total operating revenues submitted in the Annual Telecommunication Survey or contribution filings.” TerreStar, in its original Part 1 application, said it “understood anecdotally” that there is inconsistency among the TSPs regarding how each classify and report spectrum revenues. TerreStar also argued in its review and vary application that operating revenues are meant to capture revenues from daily operations of a business. “Operating revenues do not include revenues from infrequent, unusual or one-time events. In particular, funds received for the sale of assets are not characterized as operating revenues under generally accepted accounting principles,” the company argued. TerreStar noted that Rogers Communications Inc.’s $26 billion deal to acquire Shaw and Quebecor Inc.’s purchase of Freedom Mobile involved the sale and transfer of spectrum which would suggest a payment of $30 million into the fund. It argued that if the fund administrator does not receive the additional payments then that is proof that “the sale of spectrum and other telecommunications assets is not generally being treated as falling within total operating revenues for all carriers.” – Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Phalen Tynes-MacDonald at pcreed@thewirereport.ca.

TerreStar challenges CRTC decision that spectrum sale is part of telecom service

News | August 30, 2023

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TerreStar challenges CRTC decision that spectrum sale is part of telecom service

News | August 30, 2023

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