Telesat, satellite users petition Cabinet to intervene on CRTC phone subsidy decision

Canada’s satellite provider and its broadcasting customers have asked the federal Cabinet to overturn a CRTC telecom decision that indirectly requires broadcasters to subsidize the cost of providing telephone service in rural and remote areas of Canada. Having failed in May to convince the CRTC to vary its November 2000 decision establishing a new telecommunications contribution regime, Telesat Canada, the Canadian Association of Broadcasters (CAB), the Canadian Satellite Users’ Association (CSUA), and direct-to-home (DTH) satellite TV licensee Star Choice Television Network Inc are banking on their political lobbying machines to win a favourable decision. On Aug. 29, the parties filed a petition to the governor-in-council requesting an exemption of "satellite service providers from the application of , in respect to all revenues received for satellite transmission or support services provided to licensed DTH or satellite relay distribution undertakings…" The petition notes that the exemption could be achieved by categorizing all revenues received by satellite service providers for satellite retransmission and support services to licensed DTH or satellite relay distribution undertakings (SRDUs) as "Canadian non-telecommunications service revenues." The petitioners have asked the government for a speedy response, and note there would be no point in referring the matter back to the commission for reconsideration, since it has already rejected the fundamental premise of the petition. Under the Telecommunications Act, Cabinet has a year from the date of a CRTC decision to rescind, vary, or refer it back to the commission for reconsideration. In this case, Cabinet has until the end of May 2002 to consider the commission’s decision denying Telesat’s review and vary (R&V) application – Order CRTC 2001-435. In contrast, under the Broadcasting Act, Cabinet cannot vary a broadcasting decision; it can only rescind it or send it back to the regulator within 90 days from the date of a decision. Furthermore, only licence decisions, and not policy matters, can be appealed to Cabinet under the Broadcasting Act. Cabinet appeals of CRTC broadcasting decisions are more common than appeals involving telecom decisions. The petition surprised some industry observers CCR spoke to partly because the success rate of Cabinet appeals is low. As one CCR source put it, the petitioners may be "burning political capital" with the appeal. Another observer, Ottawa communications lawyer Chris Taylor, notes that there may be two or three Cabinet petitions on the telecom side each year, but that "there isn’t generally a very high success rate. "There were a few in the 1990s where there was success, but I’d say it’s a long shot. But a company like Telesat generally will only do it if they have done their homework first," Taylor told CCR. "Whenever something is extremely important to the company involved and they don’t feel like they have a legal case in the sense that there is no error of law, but they feel that the CRTC made a mistake on the policy side, they will sometimes go to Cabinet," he adds. The petitioners repeat many of the arguments they made in comments filed in the R&V proceeding. They argue that "broadcasters, who already make substantial commitments and investments in support of the cultural objectives of the Broadcasting Act, should not be hampered in their efforts to meet theses objectives by being required to make additional financial commitments to support the social objectives of the Telecommunications Act." They add that the CRTC’s decision in effect is placing precedence on the social goals of the Telecommunications Act rather than the cultural objectives of the Broadcasting Act. "This is no more appropriate as a matter of regulatory policy than a tax on basic telephone service to support Broadcasting Act objectives," the petition states. "The principle underlying this petition is that entities regulated by the CRTC under one statute should not also be required to contribute to the policy objectives of the other statute." The petitioners fear that if no clarification is made on the CRTC policy, the commission could expand the contribution regime to support a wider range of telecommunications social objectives, such as the extension of broadband services throughout Canada. The point is also made that the new charge puts satellite distributors at a disadvantage to cable systems, which do not rely on satellite facilities and are thus not affected by the contribution charge. In Decision CRTC 2000-745, the CRTC changed the contribution regime from a per-minute contribution mechanism to a national contribution collection system based on revenues from all telecommunications service providers, including facilities-based satellite providers such as Telesat, effective January 1, 2001. The CRTC set an interim contribution rate of 4.5% for 2001, which Telesat estimated would ultimately cost it about $8.3 million annually and would be passed on to its customers, including broadcasters (CCR, March 29/01). A final contribution rate for 2001 has yet to be announced. Telcos such as Telus Corp and SaskTel are among the companies who agree with the CRTC decision to deny Telesat’s R&V application, saying the new contribution rules are designed to treat all telecom carriers equally and that no carrier should be given special treatment (CCR, April 11/01). Satellite is defined as a telecom service, and many telecommunications companies note that the CRTC decision is applying an equal tax to all users of satellites.

Telesat, satellite users petition Cabinet to intervene on CRTC phone subsidy decision

Broadcast | September 27, 2001

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