CWTA pitches its case against contribution

The lingering debate over universal service and telecom subsidizes moved to the halls of the Senate earlier this summer with a presentation by the Canadian Wireless Telecommunications Association (CWTA) . Public policy objectives such as universal service are among the issues being examined by the Senate Sub-committee on Communications, which resumes its hearings in the fall. What follows is an edited transcript of the CWTA’s presentation. The CWTA strongly believes that there is a significant distinction that can be drawn between the historical notion of universality and the more current policy objectives of connectedness and e-commerce. Universality is a concept that dates back to the days when telcos were rate of return regulated monopolies. As such, a discussion of universality forces us to look backwards in time by considering such things as telephone company costs, construction programs, obligations to serve and cross-subsidization. On the other hand, the concepts of connectedness and e-commerce allow us to look forward at the communications horizon. As a relative newcomer on the communications scene, the mobile phone industry has a significant role to play in advancing the government’s connectedness and e-commerce objectives. However, the deployment of wireless solutions is not occurring as fast as we would like. The CWTA believes that there are policy and regulatory encumbrances on the wireless telecom industry which hinder the ability to develop and deploy innovative wireless services to connect Canadians. Wireless carriers are subject to the regulatory oversight of both the CRTC and Industry Canada. While most wireless services are conditionally forborne from regulation by the CRTC under the Telecommunications Act, the commission continues to have significant influence over the day-to-day operations of wireless carriers. Similarly, since all wireless carriers require access to radio spectrum, Industry Canada also has significant influence over the operations of wireless carriers. Under the Radiocommunication Act, Industry Canada regulates and controls the allocation of spectrum through, in part, the issuance of licences for the use of spectrum. This dual regulation of the wireless industry can be contrasted against the regulation of the wireline industry that is regulated exclusively by the CRTC and only peripherally impacted by some of Industry Canada’s broad telecom policy initiatives, as interpreted by the CRTC. Moreover, both of these regulatory agencies also administer programs that have a very real impact on the bottom lines of wireless carriers. The licensing regime of Industry Canada determines the fees paid by wireless carriers for the use of the radio spectrum. The CRTC contribution regime is another example. The CWTA recognizes the difficult challenge faced by the CRTC in balancing social objectives (including access to service), against the financial burden placed on carriers paying for social programs like contribution. However, the CWTA is of the view that obligations, like the CRTC contribution regime, serve as a tax that limits the development and deployment of new and innovative networks and services, which in turn limits the technological development and roll out of new services, which in turn affects universality. The industry believes that subsidies, like contribution, should be derived from the Government’s Consolidated Revenue Fund, a fund to which the industry contributed last year approximately $150 million in the form of licence fees alone. Another solution would be to eliminate the subsidy. This could be accomplished by imposing rate rebalancing. Rate rebalancing would involve an estimated average cost of $3.50 per month per local wireline subscriber. The present policies on licence fees, contribution rates, and taxation need to be reconsidered in a holistic manner in the context of ensuring the proper fiscal environment exists to encourage technological development, and service roll out which could encourage wireless access to telecom services, and the Internet across all regions of the country.

CWTA pitches its case against contribution

News | August 21, 2000

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