Satellite operators warn broadcasters will foot bill for contribution payments

Telesat Canada wants the CRTC to exempt both itself and a subsidiary from new contribution rules that could cost the satellite carrier $8.3 million this year – a telecommunications fee it warns would ultimately be paid for by broadcast licensees. The BCE Inc-owned company, and its TMI Communications affiliate, are among the telecom companies that are now required to pay local phone subsidies under the commission’s new contribution rules – Decision 2000-745. In a Part VII application filed Feb. 28, Telesat asks the regulator for an exemption from the new subsidy pool, saying it is unfair to both itself and its customers. "Broadcasters who lease transponder capacity to distribute their broadcast signals to cable companies across Canada are not making use of the public networks or any of the basic telecommunications services contemplated by section 46.5 of the Act," the application says. "To require such customers to pay new contribution charges (in addition to the costs of existing regulatory obligations embedded in their current rates) produces an inequitable result as between users of the public networks. Broadcasters would be forced to absorb new telecommunications regulatory charges in respect of their use of transponders wholly dedicated to broadcasting operations." Like other appellants, the satellite carriers maintain they are concerned only with the minutia of the ruling, not its fundamental principle that all providers should contribute fairly to ensure affordable universal access. Telesat and TMI argue, however, that by having satellite facilities that cover rural and remote Canada, they are already doing their part. "The companies incur net costs annually of approximately $33 million in order to meet their obligation to extend service to all remote regions including the North," the application states. "This constitutes a significant contribution to providing service in these regions." The application notes that TMI "is the only service provider in Canada that can provide basic communications services to many of the remote areas of the country … is already burdened with a high cost structure that makes the cost of its service to users significantly higher than other alternatives. It does not fulfill any policy objective to increase the costs of TMI’s services." As well, Telesat says it pays about $50,000 annually in contribution, an amount the company estimates will jump to $8.3M for 2001. Even though they contribute to the fund, the satellite carriers point out that they’re not permitted to benefit from it. "This result is even more inequitable when it is recognized that in many remote parts of Canada, especially the North, the terrestrial local carriers who do receive contribution funding could not meet their service obligations without Telesat or TMI providing the essential satellite link to the community," the firms complain. The satellite carriers give three principal reasons for seeking a change in the decision. Telesat is treated unfairly by the ruling, the satellite operator alleges. It incurs costs but cannot recover them. Secondly, the operators say they will be placed at a disadvantage on the international market. Foreign, particularly American, carriers beam signals into southern Canada each day. But they have no terms of service or required spending mandated to them. Higher costs for TV services Another argument is that any increase in satellite costs is passed onto customers, and the majority of Telesat’s customers are specialty channels and other broadcast services, including new digital licensees. "If the Decision remains unvaried, its impact will be to transfer a substantial new cost burden associated with high cost local telephone service primarily on to the broadcasting community of Canada," Telesat and TMI write. The application warns that unless an exemption is granted, "the result will clearly be that millions of dollars each year will be diverted away from the development of new Canadian programming services." Telesat’s R&V is the latest in a series of moves that seek to amend the details of Decision 2000-745. Bell Canada has filed an R&V questioning the method used to assess payments for this year (NL, Dec. 20/00). Fellow ILEC Telus was denied leave to appeal the prohibition on recovery of embedded costs (NL, Feb. 26/01).

Satellite operators warn broadcasters will foot bill for contribution payments

News | March 12, 2001

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