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SECTION III: Supplementary Information

Table 1: Departmental Link to Government of Canada Outcomes


Strategic outcome: Broadcasting and telecommunications industries that contribute to Canada’s cultural, economic and social prosperity
 

Planned spending

Alignment to Government of Canada Outcome Area

2008-09

2009-10

2010-11

Canadian broadcasting $24.6 million $24.6 million $24.6 million A vibrant Canadian culture and heritage
Canadian telecommunications $21.3 million $21.3 million $21.3 million A vibrant Canadian culture and heritage

Table 2: Services received without charge


2008-09

($ millions) Regulation and Supervision of the Canadian Broadcasting Industry Regulation and Monitoring of the Canadian Telecommuni-cations Industry Total
Accommodation provided by Public Works and Government Services Canada (PWGSC)

1.4

1.3

2.7

Contributions covering employer’s share of employees’ insurance premiums and expenditures paid by Treasury Board Secretariat (TBS)

1.3

1.2

2.5

Worker’s compensation coverage provided by Social Development Canada (Note)

-

-

-

Regulation of Broadcasting Spectrum – Industry Canada (IC)

10.0

 

10.0

Total 2008-09: Services received without charge

12.7

2.5

15.2


Note: Amount is less than $0.1M therefore no amount is reflected in the table.

Table 3: Sources of Respendable and Non-Respendable Revenue

Respendable Revenue


($ millions) Forecast Revenue 2007-08 Planned Revenue 2008-09 Planned Revenue 2009-10 Planned Revenue 2010-11
Regulation and Supervision of the Canadian Broadcasting Industry
Broadcasting Licence Fees – Part I

20.6

21.7

21.7

21.7

Regulation and Monitoring of the Canadian Telecommunications Industry
Telecommunications Fees

19.5

18.7

18.7

18.7

Total Respendable Revenue

40.1

40.4

40.4

40.4


Non- Respendable Revenue


($ millions) Forecast Revenue 2007-08 Planned Revenue 2008-09 Planned Revenue 2009-10 Planned Revenue 2010-11
Regulation and Supervision of the Canadian Broadcasting Industry

Broadcasting Licence Fees – Part I (Note 1)
Broadcasting Licence Fees – Part II1

7.4

-

5.5

-

11.1

-

11.6

-

  7.4 5.5 11.1 11.6
Regulation and Monitoring of the Canadian Telecommunications Industry
Telecommunications Fees (Note 1)
6.6 11.2 10.8 5.8
Total Non-Respendable Revenue 14.0 16.7 21.9 17.4
Total Respendable and Non-Respendable Revenue2 54.1 57.1 62.3 57.8

Note 1: In November 2007, Treasury Board approved a two-year increase to the Commission’s budget for fiscal years 2007-08 and 2008-09. The full cost of this resource request, will be recovered from CRTC fee payers, is $8.5M ($4.5M Broadcasting, $4.0M Telecommunications) and $10.4M ($5.5M Broadcasting, $4.9M Telecommunications) for the two fiscal years, respectively. Further details on the approved increase are noted in Broadcasting Circular CRTC 2007-9 and Telecom Circular CRTC 2007-18 dated December 21, 2007 http://www.crtc.gc.ca/archive/ENG/Circulars/2007/c2007-9.htm .

The Commission’s broadcasting and telecommunications fee regulations have a provision whereby the Commission is able to adjust the annual fees (Part I Broadcasting Licence Fees and Telecommunications Fees) to take into account the Commission’s actual expenditures on both Broadcasting and Telecommunications activities during the fiscal year. The adjustments represent the difference between the estimated costs initially billed in a previous fiscal year and the actual costs incurred. The Commission’s actual expenses associated with this resource increase will be recovered as part of the annual billing adjustments for the telecommunications industry in 2008-09 and 2009-10 and for broadcasting licence fee payers in 2009-10 and 2010-11.

Table 4: CRTC fees


Name of Fee

Fee Type

Fee Setting Authority

Reason for Fee Amendment

Effective date of planned change to take effect

Planned Consultation & Review Process
(Note 2 & 3)

Telecommunications Fees (Note 1) Regulatory Service(R) Telecommunications Act (Section 68)
Telecommunications Fees Regulations, 1995
Part VII application to revise Telecom Fee Regulations
(Note 4)
To be determined Full public consultation see section "Explanation of Revenue" for further information. Telecom Decision CRTC 2006-71
Broadcasting Licence Fees (Note 1) Regulatory Service (R)


Right and Privilege (R&P)

Part I licence fee Broadcasting Act (Section 11) Broadcasting Licence Fee Regulations, 1997

Part II licence fee Broadcasting Act (Section 11) Broadcasting Licence Fee Regulations, 1997

 

 

 


Note 5

-

 

 


Note 5

-

 

 


Note 5


Note 1 The Broadcasting Licence Fee Regulations, 1997 and the Telecommunications Fees Regulations, 1995 can be found on the CRTC web site at:
http://www.crtc.gc.ca/eng/LEGAL/LICENCE.HTM (i.e. broadcasting) and
http://www.crtc.gc.ca/eng/LEGAL/TFEES.HTM (i.e. telecommunications)

Note 2 Full public consultations occur with each change to the telecommunications fee regulations or the broadcasting licence fee regulations.

Note 3 The CRTC’s dispute resolution process regarding the assessment of broadcasting licence fees and telecommunications fees is summarized as follows:

  • The first point of contact for fee payers concerning issues related to fee assessment or collection is the Commission’s Assistant Director, Financial Operations and Licence Fee Processing, and the second point of contact is the Director, Finance and Administrative Services. Fee payers may raise their concerns either by telephone conversation, e-mail or letter. To date, the CRTC notes that the majority of fee payers’ concerns have been resolved at the staff level.
  • Where an issue cannot be satisfactorily resolved at the staff level, fee payers are requested to document the nature of their concern in writing and submit it to the CRTC’s Secretary General for formal consideration. Responses to all such letters would be provided by CRTC.

Note 4 Aliant Telecom Inc. and Bell Canada ( 8657-A53-200606692 ) filed an application dated 26 May 2006, pursuant to Part VII of the CRTC Telecommunications Rules of Procedure, requesting that the Commission revise the current regulations regarding telecommunications fees and, in particular, the basis on which telecommunications fees are determined and levied. In Telecom Decision CRTC 2006-71, 6 November 2006, the Commission indicated that it would initiate changes to the Telecom Fees Regulations 1995 (the Fees Regulations) so the telecommunications service providers, including those not required to file tariffs, would pay fees using the same approach that applies under the existing contribution regime. The Commission has initiated government inter-departmental deliberations and commenced the necessary process to draft wording changes to the Fees Regulations.

Note 5 A Federal Court decision rendered on December 14, 2006 declared Part II licence fees to be a tax. On December 4 & 5, 2007, Appeals of the Federal Court decision were heard by the Federal Court of Appeal. A decision is expected to be rendered in early 2008. See section ‘‘Explanation of Revenue’’ for further information.

Explanation of revenue

The CRTC collects fees under the authority of regulations in the Broadcasting Act and Telecommunications Act. For the fiscal year 2008-2009:

  • CRTC Part I broadcasting-licence fees are estimated to be $27.2 million ($21.7 million respendable3 and $5.5 million in non-respendable4 revenue). The broadcasting non-respendable revenue also includes a "true-up" adjustment5 (credit) of $0.5 million.
  • CRTC telecommunications fees are estimated to be $29.9 million ($18.7 million respendable and $11.2 million in non-respendable revenue). The telecommunications non-respendable revenue also includes an estimated "true-up" adjustment of $5.4 million. The actual amount of the true-up will be calculated at the completion of the 2007-2008 fiscal year and reflected in the telecommunications billing for the fiscal year 2008-2009 (Telecom Circular CRTC 2007-18 dated 21 December 2007).

Broadcasting licence fees

Section 11 of the Broadcasting Act gives the Commission the authority to make regulations respecting licence fees. These regulations apply to most licensees, who are required to pay their Part I and Part II licence fees to the Commission annually.

For 2007–2008, the CRTC expects to receive approximately $28 million in revenue from Part I fees and "true-up" adjustments. The Commission did not assess any Part II licence fees during 2007-2008 as a result of the December 2006 Federal Court decision, described below.

Part I licence fees

Part I licence fees are based on the broadcasting regulatory costs—excluding spectrum-management costs—incurred each year by the Commission and other federal departments or agencies, and are equal to the aggregate of:

  • the costs of the Commission’s broadcasting activities
  • the share of the costs of the Commission’s administrative activities that is attributable to its broadcasting activities, and
  • other costs included in the net cost of the Commission’s program attributable to its broadcasting activities, excluding the costs of regulating the broadcasting spectrum.

The CRTC’s estimated broadcasting regulatory costs are set out in its Expenditure Plan published in Part III of the Estimates of the Government of Canada (Part III Report on Plans and Priorities).

There is an annual adjustment (‘true-up’) amount to the Part I fee to adjust estimated costs to actual expenditures. Any excess fees or shortfalls are credited or charged to the licensee in a following year’s invoice.

Part II fees are calculated at 1.365 per cent of licensees’ gross revenues from broadcasting activities in excess of applicable exemptions. The rationale for assessing this fee is three-fold:

  • to earn a fair return for the use of the broadcasting spectrum
  • to recover Industry Canada costs associated with the management of the broadcasting spectrum, and
  • to represent the privilege of holding a broadcasting licence for commercial benefit.

Part II licence fees and legal proceedings

Broadcasters have initiated several legal proceedings in the Federal Court of Canada challenging the legality of Part II licence fees. These claims also seek the return of fees paid pursuant to section 11 of the Broadcasting Licence Fee Regulations, 1997 from 1998 to 2006, plus interest and costs.

In its 14 December 2006 decision, the Federal Court declared that:

  • Part II licence fees are taxes
  • Section 11 of the Broadcasting Licence Fee Regulations, 1997 is ultra vires to the authority conferred on the CRTC by the Broadcasting Act to establish a schedule of fees, and
  • the plaintiffs are not entitled to the return of monies paid pursuant to section 11 of the regulations.

The CRTC suspended Part II fees for nine months to allow the appropriate branch of the government to react and to make any necessary legislative changes.

In January 2007, the plaintiffs appealed the Federal Court’s ruling to refuse their request for repayment of Part II licence fees; the Crown filed its own appeal regarding the Court’s decision to label Part II fees as taxes.

The Federal Court of Appeal heard these appeals on 4 and 5 December 2007, and is expected to render a decision in early 2008.

Telecommunications fees

Section 68 of the Telecommunications Act grants the CRTC authority to create the Telecommunications Fees Regulations.

Each telecommunications company that files tariffs must pay fees based on its operating revenue. For 2007–2008, the CRTC assessed $26.1 million in telecommunications fees, including "true-up" and adjustments.

The CRTC’s annual telecommunications fees are equal to the aggregate of:

  • the cost of the Commission’s telecommunications activities
  • the share of the costs of the administrative activities that are attributable to the Commission’s telecommunications activities, and
  • other costs attributable to the Commission’s telecommunications activities.

The CRTC’s estimated telecommunications regulatory costs are set out in its Expenditure Plan, published in Part III of the Estimates of the Government of Canada (Part III - Report on Plans and Priorities).

There is an annual adjustment (‘true-up’) amount to the telecommunications fees to adjust estimated costs to actual expenditures. Any excess fees or shortfalls are credited or charged to the carriers in the following year’s invoice.

Revision of the Telecommunications Fees Regulations, 1995

In Telecom Decision CRTC 2006-71, the Commission indicated it would revise the fees paid by telecommunications service providers. Under the amended regulation, service providers with annual revenues of less than $10 million will be exempted from paying fees.

The Commission has initiated government inter-departmental deliberations and begun the process of drafting changes to the fees regulations. The proposed regulations will be published in the Canada Gazette at least 60 days before their suggested effective date, and interested parties will be given opportunity to comment.