By Ahmad Hathout
Service providers making under $25 million in revenue will not have to contribute to the National Contribution Fund (NCF) or pay annual telecom fees, the CRTC ruled Wednesday.
The regulator bumped up the threshold from $10 million of previous year’s revenues to $25 million for such fees, striking a balance, it said, between relieving an administrative and financial burden on smaller providers and only slightly increasing – by less than one per cent – the amounts to be paid by the rest of the pool to the NCF, which funds the regulator’s flagship Broadband Fund program.
Because the threshold has been set higher than the inflation-adjusted $17 million since the revenue-based collection regime was created in 2000, the CRTC said there is no need to do an annual review. Instead, it will revisit the threshold on an as-needed basis.
The larger telecoms, which argued that a higher threshold would increase their burden, requested that the commission only raise the level, if it must, to $17 million – the inflation-adjusted rate since the revenue-based collection regime was established in 2000.
But the CRTC said this threshold does not account for the new contribution-eligible revenues that have emerged after the expansion of the basic telecom service to include internet and mobile wireless access.
The CRTC said the new threshold, therefore, will reduce the total number of contributors to the fund by 40 per cent, bringing the number more in-line with what it looked like back in 2000 and improving “administrative efficiency.”
“The Commission is of the view that adopting a minimum revenue threshold of $25 million would be appropriate since it accounts for inflation and changes in the telecommunications industry, while respecting the foundational objectives established in Telecom Decision 2000-745 that contributions should be administratively efficient, proportional, and competitively equitable.”
The regulator noted that a threshold $8-million higher than the one indexed to inflation will mean “regulatory certainty and predictability” because it will not need to do annual inflation-adjusted reviews, which it said would increase administrative complexity on all telecoms.
The threshold change will take effect on January 1 of the year following amendments to the Telecommunications Fees Regulations, expected to be completed this year.
The decision was spawned by an April 2024 application filed by the Independent Telecommunications Providers Association (ITPA) that requested the increased threshold.
“Today, the application of the $10 million [Canadian Telecommunications Services Revenues, or CTSR] mandates contribution payments by an ever-increasing number of small service providers that are a fraction of the size of a provider that would have qualified for exemption in 2000,” the 21-member organization said at the time.
“In addition, small providers are likely making increasingly negligeable payments towards Annual Telecom Fees and the contribution regime, given the effects of inflation and the significant reduction in the contribution rate,” it added.
The association cited a similar move the CRTC made on the broadcasting side, raising the exemption threshold up to $25 million to contribute to CRTC fees.
The ITPA, Rogers, Bell and Telus did not respond to a request for comment in time for publishing.
