Satellite users take contribution regime decision to federal Cabinet

A loose association of satellite and broadcasting interests is hoping that the federal Cabinet will overturn the CRTC’s new contribution regime that has broadcasters indirectly subsidizing local telephone service in rural and remote regions of Canada. On Aug. 29, the Canadian Association of Broadcasters, the Canadian Satellite Users’ Association and Star Choice Television Network Inc. – with Telesat Canada’s backing – filed a petition to the governor-in-council requesting that all broadcasting-related revenue be exempted as non-telecommunications services revenue. An attempt by Telesat – with the support of broadcasters – to be exempted from the decision was denied earlier this year (RoW, June 11/01). Under the current contribution regime, all telecommunications service providers are required to pay 4.5 per cent of applicable revenue to a national contribution pool that is used to subsidize the cost of local service in rural Canada. Telesat, which is a licensed telecom carrier, is required to pay into that pool despite the fact that half of its revenue comes from broadcasters. In its filing, the group asks Cabinet to exempt "satellite service providers from the application of , in respect to all revenue received for satellite transmission or support services provided to licensed DTH or satellite relay distribution undertakings …" Previous attempts to overturn contribution have been deniedPrior attempts to overturn or change the contribution decision have all failed. The Bell Wireless Alliance companies, with support from Microcell Telecommunications Inc. and Rogers Wireless Communications Inc. had already asked the CRTC to vary the decision. They wanted the commission to take into account the spectrum licence fees that wireless carriers already pay to the government and to lower the rate for the first year (RoW, April 3/01 and Jan. 8/01). Additionally, a subsequent appeal to the Federal Court of Appeal by Telus Corp. failed. The petitioners state that making broadcasters pay for the subsidization of local telephone service doesn’t make sense. "This is no more appropriate as a matter of regulatory policy than a tax on basic telephone service to support Broadcasting Act objectives," the group writes. Most customers have agreed to pay higher fees Paul Bush, Telesat’s VP of corporate development, notes that the vast majority of its customers, including broadcasters and direct-to-home satellite TV companies, have agreed to pay the higher costs. "The bulk of our customers, as much as they’re angry at this whole levy, have stepped up," he says. "As much as it’s painful for groups like the direct-to-home service providers – we’re talking in the range of $4 million for Star Choice and Bell ExpressVu – this is huge money." The wireless industry is also feeling the pinch from the decision as it now has to pay about $200 million into the contribution pot annually, compared to the $12-$15 million it paid under the old regime (RoW, Dec. 11/00). For example, Rogers Wireless estimates that it will have to pay more than $65 million in contribution compared to the $2 to $3 million-range under the old regime. However, Bush tells Report on Wireless that one of its government customers, the Government Telecommunications and Informatics Services branch, has refused to pay the higher bills. "They’re taking the position that as the Government of Canada, they’ve got a bunch of standard terms and conditions and they’re not paying," he says. "From our standpoint, this is something that clearly we did not think that the CRTC would levy on us, so we took it for granted that a government agency would be obligated to pay." For more information on Telus Corp.’s failed appeal to the Federal Court of Appeal, refer to the Feb. 26/01 issue of RoW affiliate publication, Network Letter.

Satellite users take contribution regime decision to federal Cabinet

News | 10/15/2001 4:00 am EDT

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