Telesat Canada tries to resolve issue of customer refusing to pay contribution levy

An undisclosed customer is refusing to pay $2.6 million in new contribution charges passed on by satellite service provider Telesat Canada. The charge is part of the CRTC’s contribution regime that affects telecom and broadcast carriers using Telesat’s satellite services. Broadcast users, especially, have vigorously opposed the new charges, which require them to now help subsidize local telephone service in high-cost serving areas (RoW, June 11/02). In its second-quarter financial report released July 24, Telesat indicated that the customer is refusing to pay the levy, but the parties are working to come to a resolution on the issue. The company’s 2001 contribution payment totaled $8.3 million. That level has decreased significantly as the rate for 2002 dropped to 1.4 per cent from the 2001 level of 4.5 per cent. The company now estimates 2002 contribution will be approximately $3 million. "The company is pursuing various avenues in order to enforce payment. The CRTC’s Decision 2001-435, which denied Telesat’s application for an exemption of Canadian satellite services from the levy did confirm that Telesat can recover the surcharge from its customers," the company noted in its Q2 report. Paul Bush, Telesat’s VP of corporate development, wouldn’t reveal the identity of the customer. Nor would he say whether this particular client was from the broadcast or telecommunications industry. "We understand that this is a problem. We are in agreement that this contribution levy should not apply. But since attempts to appeal the contribution regime have failed, we have the right to pass the costs onto customers," Bush tells Report on Wireless. "We’re working toward a resolution of this issue with this particular customer." This isn’t the first time Telesat has had a problem collecting the contribution tax from its customers. Last October, Bush told RoW that a branch of the Public Works and Government Services Canada department was refusing to pay its portion of the levy. The Government Telecommunications and Informatics Services (GTIS) branch was refusing to pay based on the contract it had signed with Telesat. Bush confirms that the GTIS isn’t the customer still refusing to pay. Soon after the release of the contribution decision (CRTC 2000-745) in November 2000, Telesat began its fight to gain an exemption from the decision. In February 2001, Telesat and its affiliate company TMI Communications (now Mobile Satellite Ventures) launched a Review & Vary petition of the decision arguing that broadcasting interests shouldn’t be required to pay subsidies to support local telephone service in high-cost serving areas (RoW, March 5/01). The R&V was ultimately denied by the commission (RoW, June 11/01). The unsuccessful R&V led to the filing of an appeal to the federal Cabinet by the Canadian Association of Broadcasters, the Canadian Satellite Users’ Association and satellite TV operator Star Choice Television Network Inc. (RoW, Oct. 15/01). The appeal presented a similar argument, but was also denied (RoW, June 11/02). Bush declined to say whether the customer in question had paid some of the contribution or whether legal action was being contemplated.

Telesat Canada tries to resolve issue of customer refusing to pay contribution levy

News | 08/19/2002 4:00 am EDT

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