Commission Letter Addressed to Saskatchewan Telecommunications

Ottawa, 25 October 2018

Our references:  1011-NOC2017-0092


Bill Beckman
Senior Director – Regulatory Affairs
Saskatchewan Telecommunications
2121 Saskatchewan Drive
Regina, SK, Canada, S4P 3Y2

Dear Sir:

Subject: Telecom Regulatory Policy CRTC 2018-213, Phase-out of the local service subsidy regime - Request for clarification of subsidy phase-out payments

By letter dated 24 September 2018, Saskatchewan Telecommunications (SaskTel) requested a clarification of the subsidy phase-out payments identified in Telecom Regulatory Policy 2018-213 with respect to when the first subsidy reduction would occur.

SaskTel noted that the Commission was clear that the process of phasing-out subsidy would begin in 2019 and be completed at the end of December 2021, pursuant to its determination that there be a three-year transition period with semi-annual reductions.
However, SaskTel submitted that the date on which the first reduction in subsidy would occur was not sufficiently clear. In SaskTel’s view, Telecom Regulatory Policy 2018-213 should be interpreted as the first subsidy reduction occurring on 1 July 2019. SaskTel considered that the references to the 1 January 2019 start date were intended to refer to the amount of subsidy to be paid at the beginning of the three-year transition period, and not to the first semi-annual reduction.

SaskTel submitted that the Commission instructing the Central Fund Administrator how to implement the subsidy phase-out in the 2018 revenue-percent charge decision would not provide sufficient notice noting that, over the past four years, the revenue-percent charge decisions had been issued in late November or early December and a first reduction occurring on 1 January 2019 would mean only one month’s notice of the change.

Commission response

Paragraph 51 of Telecom Regulatory Policy 2018-213 states “Regarding how the subsidy should be phased out, the Commission considers that starting with the total amount of subsidy paid during 2018 and reducing this amount as of 1 January 2019 at regular intervals during the transition period would simplify the phase-out process”. (emphasis added) The regulatory policy indicates that the subsidy reductions will begin on 1 January 2019, with reductions occurring semi-annually and subsidy reaching zero on 1 January 2022.

As noted in Telecom Regulatory Policy 2018-213, the Commission acknowledges that the decision to phase-out subsidy could have an impact on the ILECs and their financial plans, which is why, in that regulatory policy, it implemented a three-year transition period. Further, Telecom Regulatory Policy 2018-213 was published on 26 July 2018, which is six months prior to the 1 January 2019 start date the Commission identified for the transition period.
Accordingly, the Commission considers that no further clarification of Telecom Regulatory Policy 2018-213 is necessary.

Yours sincerely,

Original signed by

Claude Doucet
Secretary General
Canadian Radio-television and Telecommunications Commission

c.c.:     Kim Wardle, CRTC,
Julie Cook, CRTC,
Robert Thompson, CRTC,

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