ARCHIVED -  Telecom Public Notice CRTC 95-20

Telecom Public Notice

Ottawa, 25 April 1995

Telecom Public Notice CRTC 95-20

TELECOMMUNICATIONS FEES REGULATIONS, 1995

I BACKGROUND

In Proposal to Enact Telecommunications Fees Regulations, Telecom Public Notice CRTC 94-57, 8 December 1994 (Public Notice 94-57), the Commission called for comment on its proposal to make new telecommunications fees regulations, replacing the existing fees regulations, to recover the costs that the Commission determines to be attributable to its responsibilities under the Telecommunications Act (the Act) or any special Act.

In that Public Notice, the Commission noted that the existing regulations provided for the calculation of telecommunications fees according to the costs of the Commission's telecommunications and supporting activities estimated in the Expenditure Plan published in The Estimates of the Government of Canada for the Commission's most recently completed fiscal year. The Commission further noted that, by contrast, the proposed regulations contemplated calculation of the annual fees based on estimated costs for the Commission's current fiscal year. The Commission added that the proposed regulations also provided for the recovery of any supplementary expenditures (approved by Treasury Board) after the Main Estimates are tabled, and would permit the Commission to adjust the annual telecommunications fees to the Commission's actual expenditures on telecommunications activities during the fiscal year. Finally, the Commission noted that any excess fees would be credited to the carriers, while shortfalls would be subject to an additional billing.

In response to Public Notice 94-57, the Commission received comments from the following parties: BCE Mobile Communications Inc. (BCE Mobile); Ontario Telephone Association (OTA); Rogers Cantel Inc. (Cantel); Sprint Canada Inc. (Sprint); Stentor Resource Centre Inc. (Stentor), on behalf of AGT Limited, BC TEL, Bell Canada, The Island Telephone Company Limited, Manitoba Telephone System, Maritime Tel & Tel Limited, The New Brunswick Telephone Company Limited and Newfoundland Telephone Company Limited; Télébec ltée (Télébec); Teleglobe Canada Inc. (Teleglobe); Telesat Canada (Telesat); Thunder Bay Telephone (Thunder Bay), on behalf of itself, Kenora Municipal Telephone and Bruce Municipal Telephone; and Unitel Communications Inc. (Unitel).

All parties commenting on the issue agreed with the Commission's main objectives of basing the fees on current Estimates and, with the exception of Unitel, of adjusting amounts billed at the end of the year.

OTA, Stentor, Télébec, Teleglobe and Thunder Bay disagreed with the Commission's proposal that only Canadian carriers for which tariffs are filed should contribute toward the recovery of the costs of the Commission's telecommunications and supporting activities.

Teleglobe argued that section 68 of the Act makes no distinction between carriers that file tariffs and those that do not file tariffs for the purpose of recovering the Commission's costs; thus, all Canadian carriers should contribute to the recovery of the Commission's costs, whether or not they file tariffs. OTA, Stentor, Télébec and Thunder Bay argued that the Regulations should apply to all parties providing telecommunications services, including those currently exempted from the Act pursuant to section 9, as all such services contribute to the Commission's regulatory activity and thus to its costs. Stentor stated that, because of the Commission's ability to refrain from regulation pursuant to section 34 of the Act, tariff-filing activities may decline, eventually leaving only Stentor members and the independent telephone companies liable to pay fees.

By contrast, BCE Mobile and Cantel agreed with the Commission's proposal that only carriers filing tariffs pay fees. Sprint submitted that, should the Commission decide to forbear with respect to a non-dominant carrier's obligation to file tariffs of rates pursuant to section 25 of the Act, but not with respect to its obligation to file other types of tariffs, that carrier should not be liable to pay fees. In support of its position, Sprint argued that retention of the Terms of Service, for example, does not contribute to regulatory activity and costs.

With respect to the calculation of fees, Unitel submitted that, if a carrier files only a portion of its tariffs with the Commission, fees should be calculated only on revenues realized from that portion of its services that are tariffed, and not from the carrier's total revenues from all telecommunications services. Teleglobe argued that, if the proposed regulations only apply to Canadian carriers that file tariffs, then the revenues derived from a carrier's non-tariffed activities should be exempted from contributing to regulatory fees. Telesat agreed with this position, and recommended that the wording of the regulations should state that fees would only be assessed on revenues derived from tariffed telecommunications activities. Telesat argued that the Commission should use the cumulative monthly financial statements (at calendar year-end) to allow a carrier to separate revenues derived from regulated activities from those derived from unregulated activities.

Cantel disagreed with these submissions, and supported the Commission's proposal to levy fees based on all of a carrier's operating revenues derived from the provision of telecommunications services.

Stentor recommended that a threshold of $5 million in operating revenues, earned from the provision of monopoly and/or competitive services, be attained before fees are charged.

The Commission considers that regulatory costs are primarily attributable to the carriers that file tariffs, since a preponderance of Commission regulation arises in relation to such carriers and the terms and conditions of their tariffs. Further, the Commission is of the view that approaches whereby carriers would be liable to pay fees based only on services for which tariffs are filed, or only when revenues from telecommunications services exceed a certain threshold, would unduly complicate the calculation and payment of fees. Thus, the Commission has not adopted any of the proposals described above and will require that carriers filing tariffs of any kind pay telecommunications fees based on their total revenues from telecommunications services. The Commission notes that the approach taken in this regard is similar to that taken in the previous fees regulations.

In light of the submissions of parties, the Commission has clarified the regulations enacted to specify that liability for payment of fees is to be fixed at 1 April of a given year. Thus, a carrier that, on 1 April, is required to file tariffs in connection with its existing services, must pay fees for the full year, even if later in the year, a decision is issued relieving it of the obligation to file tariffs. The carrier would not be liable to pay fees for the following year (unless, for example, during the year, it had introduced telecommunications services for which it was obliged to file tariffs).

By way of example, the Commission notes that, pursuant to Regulation of Wireless Services, Telecom Decision CRTC 94-15, 12 August 1994, tariffs are not filed by providers of cellular service or public cordless telephone service (PCTS), other than the telephone companies. Accordingly, cellular and PCTS service providers, other than the telephone companies, will not be liable to pay telecommunications fees for the year commencing 1 April 1995.

OTA and Thunder Bay stated that there are some municipal independent companies in Ontario that may not be able to file annual financial statements by the 31 March deadline mentioned in Public Notice 94-57. OTA proposed that the Commission use financial statements from the most recent quarter, or interim financial statements, to calculate the initial payment due by 1 June of each year.

As noted in Public Notice 94-57, the Commission expects carriers to file their most recent annual financial statements on or before 31 March of each year. The Commission will use the carrier's last available financial statements for the purpose of calculating the applicable fees.

Stentor suggested that a 3-year time limit be established for the proposed regulations, and that the Commission re-examine the regulations upon its expiry. Although the Commission has not introduced a specific time limit into the regulations, it may, if warranted, review the regulations within the suggested time-frame.

Having considered the comments received, pursuant to section 68 of the Act, the Commission, with the approval of Treasury Board, has made the Telecommunications Fees Regulations, 1995, SOR/95-157, for the recovery of the costs of its telecommunications and supporting activities. With the exception of the clarification noted above, these regulations are the same as the proposed regulations attached to Public Notice 94-57.

The new regulations were registered with the Clerk of the Privy Council and came into effect on 1 April 1995, and will apply to the 1995-1996 fiscal year. A copy of the regulations, published in the Canada Gazette, Part II, 5 April 1995, is appended to this Public Notice.

Allan J. Darling
Secretary General