By Ahmad Hathout
If the CRTC raises the revenue threshold for contributions to the regulator’s administration of telecom matters, it will effectively concentrate the burden on fewer providers, which is the opposite of what it has been trying to do with changes to broadcasting fees that an application to raise the threshold is partially relying upon, Bell argues.
The Independent Telecommunications Providers Association filed a Part 1 application in late April calling for the increase in the revenue threshold from $10 million to $25 million to contribute to the CRTC’s administration of the telecom regime, with an annual index to inflation. The small provider rep said this is justified on the bases that more smaller telecoms now are feeling the pinch of inflation, that waiving such a “negligible” contribution would have a “disproportionate benefit to their operations,” and because the CRTC has similarly raised to $25 million the threshold to contribute to the broadcasting regime.
But in an intervention dated May 30 asking the CRTC to toss out the application, Bell argues that the broadcasting fee changes instituted in March have no parallel for the telecommunications side.
Bell argues the CRTC increased the threshold for broadcasting fees because the commission will now regulate a broader pool of broadcasters in the form of online platforms, which were exempt prior to the passing of the Online Streaming Act. While the changes mean traditional broadcasters will pay less overall, the point is that contributions will be spread more equitably – easing the burden on a smaller number of broadcasters.
By contrast Bell argues there is “no evidence of a significant increase in the potential fee payers” on the telecom side, which means increasing the threshold will result in a concentration of the share of the fees, which it argues is against the 2023 Policy Direction.
“It [ITPA] is proposing relief for its members to the detriment of other larger TSPs in a manner that would require these larger TSPs to absorb the fees paid collectively by all TSPs that make between $10 million and $25 million, thereby increasing the revenue percentage charge that these larger TSPs must contribute,” Bell said in its intervention.
Bell also argued that the ITPA’s own argument that the amounts some of its members pay is “negligible” serves to show that there is no justification to make such a change and risk making the process inefficient.
Quebecor argued similarly. It said in its submission that the ITPA “speaks out of both sides of its mouth” by arguing simultaneously that some members pay small amounts toward telecom fees while also claiming that eliminating those amounts would provide “disproportionate” benefit.
The Montreal-based company also argued that members of the ITPA have benefited from the CRTC’s broadband funds – into which they pay via those fees – to modernize their networks and deploy fibre.
“Many of these members are suppliers with solid financial foundations who are perfectly able to contribute to the objectives of the contribution fund,” Quebecor said. “There is no valid reason why they should not also participate in its financing, however modest the amount paid.”
For Telus, the application is allegedly an attempt to have ITPA members reap from the fund without sowing into it, and concentrating the collection of fees with fewer players would be counter to the 2023 Policy Direction, which requires the CRTC to prevent regulatory asymmetry.
The CRTC should therefore reject the application, according to Telus.
The Vancouver-based telecom argued that when the CRTC set the contribution threshold in 2000, it was ensuring administrative efficiency by sufficiently broadening the base to a degree that it wasn’t collecting negligible amounts. It argues that the ITPA’s inflation argument doesn’t sufficiently show administrative inefficiency.
If the CRTC finds otherwise, it must ensure a change to the threshold is done to ensure efficiency and proportionality, Telus said, adding any increase should be capped to no more than $17 million, which is its estimated inflation-adjusted value of $10 million from the year 2000 to 2024. However, it said it should abolish the notion of retroactivity to ensure that efficiency and predictability.
The preference for Telus, however, is that the CRTC wait for the conclusion of the Broadband Fund proceeding, which may result in an increase in funds needed to be collected and therefore larger amounts required from ITPA members.
Rogers argued in its own submission to dismiss the application that all telecommunications providers benefit from the service provided by the CRTC, and so “the burden should be supported by the industry and not just a handful of players.
“The subsidies and fees collected under the Contribution Regime and Telecommunications Fees Regulation support important activities that benefit all Canadians and telecommunications providers in Canada,” Rogers said, adding the $750-million Broadband Fund and Video Relay Service are two important programs that benefit a broad swath of Canadians.
The cable giant also argued that if telecommunications services were compared against all other items against which inflation is determined, the 2023 adjustment would be $15.7 million, roughly $10 million less than the $25 million threshold the ITPA hopes for. But, Rogers continued, if telecom services are compared against itself from 2000 to 2023, the threshold would be $9.9 million in 2023 because communications services have “resisted the increases seen in other areas of the economy.”
Thus, while Rogers argues that the application should be rejected because there’s no evidence for its need, it said any change considered should be between $9.9 million and $15.7 million.
The Canadian Communication Systems Alliance (CCSA) and the Competitive Network Operators of Canada (CNOC), which represents independent internet service providers, support the ITPA’s application.
CNOC said the commission has expanded the regime to intake internet access revenues and significantly reduced the contribution rate but hasn’t adjusted the threshold.
“Consequently, the current threshold captures an increasing number of smaller service providers, requiring them to pay into the National Contribution Fund (NCF) despite generating revenues that are but a fraction of those earned by providers that would have qualified for the exemption in 2000,” CNOC said in its submission.
CNOC said small and regional providers face challenges competing against the national carriers, so providing regulatory relief by raising the threshold to $25 million “will help sustain and encourage the competitive presence of small and regional providers in these markets,” including building out into hard-to-serve rural areas. It added that this threshold should be adjusted annually with inflation.
“This aligns with the government’s and CRTC’s policy objectives of fostering greater wholesale and facilities-based competition and enhancing the quality and affordability of telecommunications services for all Canadians,” CNOC said, adding the $25 million is a similar threshold present in other jurisdictions, including in Australia.
