By Ahmad Hathout
The CRTC on Wednesday ordered the overhaul of how the Broadband Fund collects money from telecoms.
No longer will companies be required to set aside the previously determined amount of $150 million. Instead, at the end of the year, the regulator will forecast an amount it expects it will need for the next year based on the total amount of approved statement of work budgets up to $150 million, plus a $30 million contingency for “unexpected funding requests,” such as changes in project costs that it occasionally receives.
Under the approach, the CRTC said money for already approved projects will be drawn from existing uncalled contributions – amounts the telecoms must be ready to deliver to the National Contribution Fund (NCF) when requested – “which is expected to reduce the amount of uncalled contributions over time,” the regulator said. Any amount of the contingency that is not used in the allocated year will be returned at the end of the year.
The new approach will take effect for the next year.
The regulator said the change is part of its effort to “reduce regulatory burden on all companies,” and it came in response to a complaint filed by Rogers last summer. The cable giant, like Bell before it, said the money is being inefficiently managed because more of it was being collected than distributed to projects every year. The money is only collected and distributed to recipients once project costs are incurred and approved for reimbursement, and that process is not easily predictable. The result, Rogers argued, was that it had to tie-up millions of dollars in these uncalled contributions, which was creating large liabilities on its balance sheet and restricting its ability to invest in builds.
“This approach addresses concerns about the financial impact that uncalled contributions have on TSPs as they accumulate, while ensuring that funding for the Broadband Fund is maintained,” the CRTC said in the decision. “The changes outlined in this decision will not impact past NCF contributions or previously approved Broadband Fund projects, but will instead take effect going forward for new contributions and projects. With regard to the Broadband Fund, the Commission considers it unlikely that the NCF will require additional contributions this year.”
Despite responding positively to the essence of Rogers’s complaint, the CRTC rejected the cable giant’s two proposals to address it: release half of the uncalled contributions on a one-time basis or stop the NCF from collecting new contributions until existing uncalled money is used.
The CRTC said returning any amount of uncalled contributions could “result in a shortfall of funding to support approved projects” and “could result in approved projects being delayed mid-implementation, pending collection of new contributions to fund any shortfall.”
About stopping the NCF from collected new money until it exhausted reserves, the CRTC said the NCF “could run out of funding to cover all the approved Broadband Fund projects and any future funding needs,” which “could limit the Commission’s ability to approve recipients’ requests for additional funding” and delay project completion.
In any event, “the Commission considers that Rogers’ proposal to align contribution requirements with anticipated annual distribution amounts would be efficient and reduce the accumulation of uncalled contributions in the future,” it acknowledged.
The CRTC noted that while the amounts collected were not intended to match those to be distributed in a year, given the variances in build projects, the discrepancy between the amounts awarded and distributed “has grown as the Broadband Fund has scaled up.”
Rogers’s application was supported by major telecoms and opposed by the Public Interest Advocacy Centre (PIAC).
“The CRTC agreed that the current framework has resulted in growing uncalled contributions and associated burdens for contributors, and the decision appropriately focused on our request to align collections with expected funding needs,” Rogers said in a statement to Cartt.
Bell did not respond to a request for comment.
The regulator is currently undergoing a review of the Broadband Fund. In March, it launched a consultation on creating an indigenous-specific funding stream for the program and is examining whether to make eligible operational costs for builds.
It also outlined its strategic plan in February that puts a focus on reducing administrative burdens, streamlining processes and helping connect rural, remote and indigenous communities by “helping fund infrastructure, making funding more accessible for Indigenous-owned telecommunications companies, and developing a subsidy to help make Internet services more affordable in remote communities.”
The CRTC launched its initial proceeding to broaden the scope of the fund in March 2023.
