Telecom companies fight Telesat appeal; say phone subsidy should be shared by all

Rogers Wireless Inc and other companies are fighting Telesat Canada’s attempt to become the only Canadian telecom carrier that doesn’t have to pay into a new subsidy fund for local phone service. After having failed to convince the CRTC that it should phase in the new tax for wireless companies, Rogers says it’s unfair that Telesat should ask that it and its TMI Communications Inc subsidiary be exempted from paying into the fund. It notes that the wireless industry asked for even less in its appeal, and was still turned down. "(Our) proposal was a far cry from the complete exemption sought by Telesat in its application," Rogers writes in a March 30 filing responding to Telesat’s application for relief. It goes onto to note that "the percentage-revenue charge must be applied to all basic telecommunications service providers, regardless of the technology that they employ, the type of services that they offer or their ability or willingness to pay." If the regulator grants Telesat’s application for an exemption, Rogers argues that it should exempt wireless carriers as well. The CRTC has so far resisted attempts to alter its landmark decision on local contribution (2000-745), fearing it would jeopardize its underlying principal of applying the new fee equally to all telecommunications carriers (RoW, Feb. 5/01). In a joint application with Bell Canada, Rogers and other wireless companies tried unsuccessfully to convince the commission that raising the amount wireless carriers pay into the fund from $15 million to $200 million in the first year, without a phase-in period, is decidedly unfair, particularly considering its regulatory obligations, including an annual R&D spending requirement equal to two per cent of revenue. But Telesat and TMI, which would pay about $8.3 million annually into the fund, believe they can succeed where the Bell application failed. In final comments filed with the commission April 9, the satellite company argues that its network is used primarily by broadcast licensees who will end up footing the bill for local phone service through higher transponder fees. Several programmers have written to the CRTC to argue against any such increases, saying broadcast licensees shouldn’t have to subsidize the cost of universal telephone service. Telesat also argues that its regulatory obligations are different and more onerous than those imposed on WSPs. For example, it says providing satellite services to all of Canada, under the government’s Connecting Canadians strategy, already costs the company $33 million annually (RoW, March 5/01). It adds that unlike cell phone service, which is offered as a competitive alternative to landlines, satellites often provide the only communications link to remote northern regions. "By contrast, the wireless operators incur little or no losses on service in remote regions … the relative size and impact of any obligation borne by terrestrial wireless operators in respect of remote service is simply not comparable to that borne by satellite operators," Telesat writes. Should the commission deny Telesat’s application, the company asks that it and TMI be allowed to draw from the subsidy fund. Before they can do that, Rogers, Telus and SaskTel say they would need to apply for and receive CLEC status. Telesat disagrees, saying the essential services it provides to the north are included under the commission’s "basic services" definition, and as such, could be eligible for contribution relief. "It would be ironic indeed if one of the consequences of the Commission’s reform of Canada’s universal service fund was to penalize those Canadians most dependent on the system of last resort, i.e. TMI’s MSS services," Telesat writes. It notes that customers living in remote areas already pay a premium to receive satellite service, "and the additional contribution surcharge would have the perverse effect of making this service yet more expensive. However, these customers are unlikely to ever benefit from the subsidy mechanism because they are located in areas too remote for any local telephone service to be implemented."

Telecom companies fight Telesat appeal; say phone subsidy should be shared by all

News | 04/17/2001 4:00 am EDT

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