CRTC directs funds in deferral accounts to expand rural broadband and services for Canadians with disabilities19 February 2006
The Canadian Radio-television and Telecommunications Commission (CRTC) today announced how funds from the deferral accounts of incumbent local exchange carriers (ILECs)(1) will be used.
Up to $650 million from the accounts will support initiatives to expand broadband services to rural and remote communities and improve accessibility of telecommunications services for persons with disabilities. The amount will be finalized shortly after the ILECs file updated deferral account schedules, which are due by May 15, 2006.
"Canada is a world leader in broadband access and today's decision builds on this enviable record. It serves to ensure that reliable, affordable, high- quality telecommunications services are extended to Canadians who would not otherwise be served, and is in the broadest interest of all consumers" said CRTC Chairman, Charles Dalfen.
ILECs will be required to consult with provincial governments on proposed broadband initiatives prior to submitting their proposals to the Commission. This will ensure that their plans consider existing government initiatives and priorities.
They will also be required to consult and work with the appropriate advocacy organizations for persons with disabilities.
Detailed proposals relating to these initiatives must be submitted by the ILECs with the Commission by June 30, 2006.
In coming to its decision, the Commission held extensive consultations with the public and members of the industry on the best way to make use of the funds. It received over 50 proposals from 16 parties.
In 2002, in order to avoid an adverse impact on local competition, the Commission required each ILEC to create a deferral account in conjunction with the price cap regime. ILECs were requested to place into those accounts amounts equal to the revenue reductions that would otherwise have resulted from an application of the price cap formula.
Additional information on this decision and the deferral account is available in the backgrounder that follows this news release. The decision (Telecom Decision CRTC 2006-9) in full is available on-line at www.crtc.gc.ca.
The CRTC
The CRTC is an independent, public authority which was established to sustain and promote Canadian culture and achieve key social and economic objectives by regulating and supervising Canadian broadcasting and telecommunications in the public interest. As an expert tribunal it takes into account the wants and needs of Canadian citizens, industries and various interest groups. The CRTC is governed by the Broadcasting Act and the Telecommunications Act and reports to Parliament through the Minister of Canadian Heritage.
Reference documents:
Telecom Public Notice 2004-1
http://www.crtc.gc.ca/archive/ENG/Notices/2004/pt2004-1.htm
Telecom Decision CRTC 2006-9
http://www.crtc.gc.ca/eng/whatsnew.htm
Information - Backgrounder on the Deferral Accounts Decision
http://www.crtc.gc.ca/eng/whatsnew.htm
(1) Bell Canada; MTS Allstream Inc.; Saskatchewan Telecommunications;
TELUS Communications Inc.; Aliant Telecom Inc.; Société en commandite
Télébec; and the former TELUS Communications (Québec) Inc., now TELUS
Communications Inc.
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INFORMATION
February 16, 2006
Backgrounder on the Deferral Accounts Decision
About the Deferral Account
In 2002, the Commission set out its price cap framework. This included rules governing the rates charged to residential and business consumers as well as to competitor companies by the major local telephone companies. One of the elements of the price regulation regime is the deferral account.
Price cap regulation places a ceiling on prices a company can charge its customers. At the same time, in order to avoid an adverse impact on local competition, the Commission required each ILEC to create a deferral account in conjunction with the price cap regime. ILECs were requested to place into those accounts amounts equal to the revenue reductions that would otherwise have resulted from an application of the price cap formula.
Approximately 50% of the funds in the deferral accounts to date have been used to reduce rates for competitor services. In March 2004, the Commission initiated a proceeding to address the outstanding amounts in the deferral accounts and received more than 50 proposals regarding the use of funds in the accounts.
The Commission determined that the funds in the deferral accounts should be deployed in accordance with Canadian telecommunications policy.
In assessing the various proposals, the Commission placed emphasis on the principle of competitive neutrality and on proposals that primarily provided benefits to residential subscribers in order to achieve an overall balance among stakeholders.
The funds in the deferral accounts are to be used for the expansion of broadband services and initiatives to improve accessibility to telecommunications services for persons with disabilities.
Guidelines for Broadband Expansion Proposals
Investments in broadband expansion will be guided by various policy considerations, such as:
- expansion of broadband services to communities where:
(1) broadband service is not available from any service provider
and is not part of their existing commitments or planned roll
out, and
(2) the community has not received funding, or approval for
funding, from any government broadband expansion programs;
- deployment based on least cost technology; and
- "backbone" facilities made available to competitive broadband service
providers at a minimal rate.
In addition, ILECs will be required to consult with provincial government agencies responsible for broadband initiatives before submitting their proposals, to ensure that their expansion plans take into account identified provincial priorities.
Guidelines for Accessibility to Telecommunications Services
ILECs will be required to allocate a minimum of five percent of the accumulated balance in their deferral accounts to fund programs to improve accessibility to telecommunications services for persons with disabilities.
They will also be required to consult and work with the appropriate advocacy organizations for persons with disabilities prior to submitting their proposals for approval.
Updating Balances and Submitting Proposals
Based on the preliminary estimates of the deferral account balances in this decision, it is estimated that the deferral account accumulated balances for all of the ILECs in total will be approximately $650 million, subject to change based on outstanding proceedings.
By May 15, 2006, ILECs will be required to file their updated deferral account balances and their proposed rate reductions to eliminate the recurring amount in its deferral account.
The Commission also directs each ILEC to file, by June 30, 2006, its initiatives to dispose of the funds that will have accumulated in its deferral account.
Reference document: News release - CRTC directs funds in deferral
accounts to expand rural broadband and services for
Canadians with disabilities
For further information: Media Relations: (819) 997-9403, Fax: (819) 997-4245, MediaRelations@crtc.gc.ca; General Inquiries: (819) 997-0313, TDD: (819) 994-0423, Fax: (819) 994-0218, Toll-free No. 1-877-249-2782, TDD - Toll-free No. 1-877-909-2782
Source: newswire
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