Telesat urges broadcast clients to support its exemption from paying phone subsidies

Telesat Canada’s president and CEO is rallying broadcasters to support its appeal of a telecom ruling on local phone subsidies that could result in higher fees for satellite users. In his annual address to the Canadian Satellite Users Association conference on March 21, Larry Boisvert explained that the CRTC’s new contribution regime for subsidizing the cost of local phone service now applies to Telesat, and that those costs will be passed onto broadcasters and specialty channels, which comprise about half of its customer base (CCR, March 14/00). Boisvert urged Telesat’s broadcast clients to support its exemption from paying phone subsidies. "If you haven’t already been contacted you will be to write letters of support because we as a company cannot afford this 4.5 per cent additional fee on top of all the other fees we pay to Industry Canada, and we would have to pass these fees onto our clients," he said. Telesat filed a review and vary application Feb. 28 asking that the commission exempt it, and its TMI Communications Inc subsidiary, from a new contribution regime that requires all telecom companies to start subsidizing the cost of local phone service – Decision 2000-745. How much Telesat would ultimately pay into the subsidy pool is still unclear. The satellite carrier is estimating a 4.5 per cent surcharge on gross revenues derived from all its satellite capacity, which would amount to about $8.3 million annually. Telesat’s VP of corporate development, Paul Bush, said it’s his understanding that the so-called ‘contribution’ charge would apply to all of its revenues, including those derived from broadcast customers. Don Braden, head of the CSUA, said taxing broadcasters for telecom services would be unfair, if that’s the CRTC plan. Suzanne Blackwell, VP of economic research at the Canadian Cable Television Association (CCTA), noted that the Telecommunications Act doesn’t extend to broadcast undertakings or broadcast services, and as such, they should be exempt. "Otherwise, you end up imposing this contribution regime on services that the commission has specifically said are not part of the Telecommunications Act or are not part of their jurisdiction under that act," she said. She added, "The way that it may very well work is that when Telesat provides a telecommunications facility to broadcasters to provide programming from point A to point B, it looks very much like a tele-communications service so it is caught at that level. But the commission anticipated that there are services that could very well be caught that may need to be exempted from the process and they set that out in the contribution decision." That would be good news for Telesat. Boisvert said no more than 2 or 3 per cent of its network is connected to the public switched network. "Most of our business today is oriented toward closed networks and, of course, the broadcast industry." He added Telesat was surprised that it was among the sectors that must pay the new subsidy, because "we had not been part of the process and we had been told not to be concerned and it was not aimed at us." In fact, Telesat had concerns about the process as early as November 1999 when it filed an intervention as part of the contribution proceeding. At the time, it cautioned the CRTC against extending the subsidy to companies other than long distance telephone carriers. In a July 4, 2000 submission to the same proceeding, sensing that the commission was prepared to widen its contribution net, Telesat asked that satellite carriers be exempted. It attempted to align itself with cable operators, who argued that ‘taxing’ a delivery system predominately used by broadcasters, would result in higher costs for broadcasters. Its July 4 intervention reads: "...consistent with the position advanced by CCTA, Telesat and TMI would argue that, to the extent that any contribution requirements apply to Canadian satellite operators, no contribution requirement should apply to the telecom services satellite operators provide to broadcast customers..."

Telesat urges broadcast clients to support its exemption from paying phone subsidies

News | 03/29/2001 5:00 am EST

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