Consultation on Periodic Adjustments for Radio and Spectrum Licence Fees and Fees Related to Equipment Certification Services

1. Innovation, Science and Economic Development Canada (ISED) seeks comments on the application of the annual fee adjustment by the change in the Consumer Price Index (CPI) for Canada required by the Service Fees Act (SFA), and invites proposals for an alternative periodic adjustment for the fees within the scope of this consultation, taking into account ISED’s policy objectives and the requirements of the SFA.

2. This consultation applies to all radio and spectrum licence fees, as well as all fees related to certification and registration in respect of radio and telecommunications apparatus.

3. In November 2018, through DGSO-001-18, Consultation on Licence Fees for Fixed Point-to-Point Radio Systems, ISED sought comments on the radio licence fee model for fixed point-to-point radio systems. Comments submitted in the context of that consultation regarding the periodic fee adjustment for point-to-point radio licence fees (specifically, Q2) will be considered in this consultation.

4. Examination fees for radio operator and amateur radio operator certificates as well as fees for the assignment of a call sign or prefix in the amateur radio service are outside the scope of this consultation.

5. Under the Department of Industry Act, the Minister of Innovation, Science and Economic Development may fix fees in respect of the rights and privileges provided by radio and spectrum licences. Under that same authority, the Minister may also fix fees in respect of services offered by ISED relating to the certification and registration of radio and telecommunications apparatus. Under the Radiocommunication Act, the Governor-in-Council may make regulations prescribing fees for radio authorizations.

6. The Minister is responsible for developing national policies and goals for spectrum resource use and for ensuring effective management of the radio frequency spectrum.

7. The SFA is federal legislation that was enacted in June 2017 and replaced the User Fees Act. The SFA introduced a number of changes as part of the Government’s initiative to modernize service fees charged by federal departments and agencies to ensure that fees keep pace with the cost of living. The SFA will lead to greater government accountability, increased transparency and an improved stewardship of taxpayer dollars.

8. The SFA requires that federal departments adjust their fees every year by the percentage change over 12 months in Statistics Canada’s April All-Items CPI (April to April CPI) for the previous fiscal year. These annual adjustments must begin in the 2019-2020 fiscal year. For example, during the Government’s 2019-2020 fiscal year, fees will be increased by the 2.2% change in the CPI over the 12 months between April 2017 and April 2018.

9. The annual CPI adjustment required by the SFA would not apply to fees that are adjusted periodically through the operation of other legislation or regulatory instruments. ISED fees for radio licences, spectrum licences and services related to the certification and registration of radio and telecommunications apparatus are currently not adjusted periodically through legislation or regulatory instruments and are therefore subject to the SFA’s default annual adjustment by the change in the CPI.

10. In order to give licensees time to prepare for the first adjustment, ISED has determined that the 2019-2020 CPI adjustment for the fees within the scope of this consultation (“in-scope fees”) will take effect on March 15, 2020. Starting on this date, the CPI adjustment will apply to the fees of all new, renewed and amended licences as well as to services related to certification and registration. As a result, licences that are reissued for a new term effective April 1, 2020, to March 31, 2021, will be subject to the same CPI adjustment.

11. This consultation seeks comments on a periodic fee adjustment to take effect on or after April 1, 2021, in respect of all in-scope fees. Should no new periodic fee adjustment model be chosen, adjustments on or after April 1, 2021, will continue to be based on the change in the CPI, as published by Statistics Canada. Through the implementation of the option chosen following this consultation, the date subsequent adjustments will be applied, known as the “anniversary date,” will be changed from March 15 to April 1 to better align with the licence billing cycle and federal fiscal year.

12. Spectrum is a scarce and valuable public resource. ISED encourages its efficient and optimal use through policies and standards. Radio and spectrum licence fees are one mechanism designed to both promote the effective use of spectrum and earn a fair return for the Canadian public for the privilege of access to this public resource.

13. In developing policies and licensing frameworks, ISED is guided by the policy objectives of the Telecommunications Act, and the Spectrum Policy Framework for Canada (SPFC), which seeks to maximize the economic and social benefits that Canadians derive from the use of the radio frequency spectrum resource.

14. ISED’s spectrum and radio licence fees, as well as fees related to equipment certification and registration services, are subject to the SFA’s default annual adjustment by the April to April CPI for Canada for the previous fiscal year.

15. The CPI for Canada is a widely used economic indicator that represents the weighted average of prices of a basket of consumer goods and services, including services related to communications (such as telephone and Internet access services), and is one way of assessing price changes associated with the cost of living.

16. Using the annual CPI adjustment mandated by the SFA means that fees for ISED’s spectrum and radio licences as well as for equipment certification and registration services will be adjusted each year in line with this index.

17. ISED’s fees within the scope of this consultation have not been adjusted in many years (since 1996 for radio licences, 2004 for most terrestrial spectrum licences, and 2007 for equipment certification and registration) and do not have an adjustment mechanism in place.

18. The SFA provides a clear methodology for applying an annual CPI-based adjustment. This clear methodology means that CPI adjustments will be applied in a predictable manner from year to year.

19. Comments provided as part of the recent consultation DGSO-001-18, Consultation on Licence Fees for Fixed Point-to-Point Radio Systems indicated some support for the use of the CPI as a fee escalator. Respondents found it to be predictable enough for budgeting purposes and for making long-term business decisions (SaskTel, the Canadian Electricity Association (CEA), Corridor Communications Inc. (CCI)), further noting that it is simple, publicly accessible (CEA) and reflective of a fair market price (CCI). Others noted that ISED should also consider a fixed rate similar to typical fluctuations in the CPI (Canwisp, Shaw Communications, Seaside Wireless Communications), such as a 7% increase every five years. TeraGo Networks suggested the CPI be applied every five years.

20. Comments that were not in support of using the CPI indicated that it was important to consider long-term planning (Cogeco Communications), provided views in favour of very low or fixed rates of increase (Cogeco, Ecotel, Rogers Communications Canada), and requested special considerations relative to adjustments for rural regions (Kativik Regional Government).

21. Bell Mobility, TELUS Communications, Xplornet Communications and the Canadian Wireless Telecommunications Association (CWTA) abstained from providing a full response in the context of DGSO-001-18, Consultation on Licence Fees for Fixed Point-to-Point Radio Systems, indicating their preference of replying to this consultation.

22. The SFA provides that mechanisms other than the CPI could be used to adjust fees. As such, ISED is consulting on alternative proposals, with supporting rationale, for a fee adjustment that could apply to all fees within the scope of this consultation. Proposals must be in line with the requirements of the SFA (i.e. fees must be adjusted periodically by operation of an Act of Parliament or by the operation of an instrument made under such an Act (e.g. pursuant to orders or regulations)).

23. Regardless of the fee adjustment model chosen following this consultation, the anniversary date for subsequent adjustments will be changed to April 1 to better align with the licence billing cycle and federal fiscal year.

24. ISED intends that the new anniversary date and the fee adjustment model chosen following this consultation will take effect on April 1, 2021, subject to any amendments that may be required to the Radiocommunication Regulations or amendments to existing, or the creation of new, ministerial fee orders.

25. Should no fee adjustment model apart from that of the SFA be chosen, subsequent adjustments will continue to be based on the April to April CPI as published by Statistics Canada, typically in May, in the previous fiscal year.

26. The implementation of any periodic adjustment in accordance with the SFA for in-scope fees will also be subject to any future regulation and determinations made by the Treasury Board regarding low-materiality fees.

27. After reviewing any input received, the Minister of Innovation, Science and Economic Development will make a final decision on the implementation of a periodic adjustment for fees within the scope of this consultation.

28. All spectrum-related documents referred to in this paper are available on ISED’s Spectrum Management and Telecommunications website.

29. Respondents are asked to provide supporting rationale for their comments. As comments and reply comments will be posted publicly on the departmental website, respondents are asked not to provide confidential or private information in their submissions.

30. Contact information is required for each submission for validation and in the event that further clarification is necessary. Unless otherwise requested by respondents, individuals’ names will be posted with their submissions. Full company, association and organization contact information will be posted.

31. By providing your name, email address and/or telephone number, you are consenting to ISED’s use of your contact information solely within the context of this consultation.

32. Respondents are asked to review the Terms and Conditions, including the Privacy Notice, published on ISED’s website. Under the Privacy Act, you have the right of access to, and correction of, your personal information. Should you have any concerns about your personal information, you may contact the ISED Privacy Coordinator. Contact information is located within the Privacy Notice, under Privacy Inquiry.

33. Due to the anticipated interest in this consultation, respondents are requested to limit their responses to 500 words.

34. All submissions should cite the Canada Gazette, Part I, the publication date, the title and the notice reference number (DGSO-001-19). Parties should submit their comments no later than April 15, 2019, to ensure consideration.

35. There are three ways to submit comments:

• By using the comment box in this consultation and acknowledging the Terms and Conditions, including the Privacy Notice, on the departmental website.
• By emailing: ic.spectrumregulatory-reglementationduspectre.ic@canada.ca. Microsoft Word or Adobe PDF attachments are acceptable.
• By sending a printed letter to:
  
  Director, Broadcast, Coordination and Planning
  Spectrum Management Operations Branch
  Innovation, Science and Economic Development Canada
  235 Queen Street, 6th floor
  Ottawa ON K1A 0H5

36. Soon after the close of the comment period, comments received will be posted on ISED’s Spectrum Management and Telecommunications website. ISED reserves the right to edit or remove comments that contain personal information (other than the individual’s name) or offensive content, or that are irrelevant to the subject matter of the present consultation.

37. ISED will also provide interested parties with the opportunity to reply to comments from other parties. Reply comments will be accepted no later than 15 days after initial comments are posted. Following the initial comment period, ISED may, at its discretion, request additional information if needed to clarify significant positions or new proposals. In such a case, the reply comment deadline may be extended. Reply comments will also be posted on the Spectrum Management and Telecommunications website.