Telesat clarifies position on staying in Canada if satellite auctions adopted

Telesat says it has no intention of pulling its Ottawa headquarters and research division out of Canada if the government introduces auctions for satellite orbital slots. In an interview with Tech Media Reports, the president and CEO of world’s fourth-largest communications satellite operator did warn, however, that using foreign-controlled frequencies to serve the Canadian market is still a possibility if more onerous regulations are implemented. “We want to be clear. We really weren’t trying to threaten that we would physically move from here. If we were threatening anything it was that we could register our slots in the future through another jurisdiction, and that would be a shame for Canada,” says Dan Goldberg. Such a move would eliminate the need for a company to pay millions of dollars in licensing fees to the Canadian government. “Traditionally we’ve obtained our orbital rights through the Canadian government, but there’s really nothing that prevents us and a lot of our competitors availing themselves of jurisdictions that have fewer requirements,” he adds. “That’s what we were trying to say in our comments – not that we would physically leave Canada that if you make it such a pain in the ass, so burdensome to obtain our orbital locations through you, Canada, we will do what our competitors do. We will go to a jurisdiction that just is a lot lighter from a regulatory touch perspective.” Goldberg was responding to a June 24 TMR article that suggested the 40-year-old Ottawa company may move to a country with more hospitable regulations if Canada adopts a proposal to use auctions to assign future satellite orbital slots. The article quoted from Telesat’s June 15 intervention to Industry Canada’s Consultation Paper on Revisions to the Framework for Spectrum Auctions in Canada, which is considering a number of changes to its spectrum auction framework, including the possibility of auctioning satellite orbital slots. The full text from the Telesat brief states: “While Telesat supports fair competition and ‘open skies’, we are greatly concerned that regulatory provisions in Canada, such as the high cost of satellite licences, place Canadian-licensed operators at a disadvantage relative to foreign-licensed operators for whom our domestic market is fully open. Auctioning of satellite spectrum would greatly exacerbate this situation. Satellite operators, including Telesat, would re-evaluate the use of much less-attractive (auctioned) Canadian orbital spectrum in favour of spectrum licensed by other administrations without auctions. Of course, this would eliminate the possibility of Canada achieving social benefits as part of its licensing process. Furthermore, in the absence of the use of Canadian spectrum, the logic for an operator to locate its key functions and employment in Canada is greatly diminished. In short, auctioning of satellite spectrum would be contrary to the national interest.” Telesat argues that it is already at a competitive disadvantage because foreign satellite operators are free to serve the Canadian market without onerous regulatory obligations. The company says it takes too long to get approval for Canadian licences, which then end up costing 10 times more than what their US competitors pay. Telesat says it paid in excess of $6.7 million for 10 Canadian satellites in 2009, while a US operator with a comparable amount of satellites would pay $1.27 or about 20% of Telesat’s licence fees. “We compete head-to-head with US operators, even in Canada, and we’re already at a competitive disadvantage because they’re much larger which means they have larger economies of scale,” says Goldberg. “They’re paying regulatory fees that are a fraction of ours and they’re free to come in and compete with us at this lower cost structure which we think is perverse.” Some of Telesat’s orbital positions come through the US, Brazil and the Isle of Man – jurisdictions Goldberg describes as having lower regulatory fees and less administrative requirements. He also points out that no other developed country uses spectrum auctions. Under Canadian law or regulations, there is nothing to prevent Telesat from moving its operations out of the country and using foreign-controlled orbital slots to serve Canada. But Goldberg insists such a move isn’t in the cards. “We already have a regulatory regime that is more burdensome than virtually every other developed country. We should be peeling it back, we shouldn’t be further distancing ourselves in terms of onerous regulatory frameworks.”

Telesat clarifies position on staying in Canada if satellite auctions adopted

News | July 23, 2009

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