Section 16 of the Telecom Act has the ownership and control provisions.
A friend pointed me to the proposed changes that are part of the Budget bill [scroll down to Part 23 of the link]:
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If the government merely wanted to exempt satellite operators, it seems they need only have changed 16(5) to add “satellites” to the list. But the proposed legislation does more as 16(1)(b) expands the definition of who can operate as a “Canadian carrier.” As a result, it expands the definition of who can receive the benefits accorded only to Canadian carriers. What is the purpose of the proposed new 16(1)(b)? Does it foreshadow further contemplated changes?
So what does this all mean? There are a few implications that I think could be interesting.
Hypothetically, the new rules could allow a number of foreign controlled carriers to become CLECs in Canada. Here’s how – an owner of an international submarine cable, an earth station, or a foreign owned satellite could establish a presence in Canada sufficient to make it “subject to the legislative authority of Canada”. This Canadian presence combined with operations as a telecommunications common carrier (via permitted s. 16(5) transmission facilities) would meet the definition of “Canadian carrier” under the Act.
CLECs have to be Canadian carriers but they do not actually need to own or operate any other transmission facilities to operate as a CLECs – rather, they can (as many CLECs do) lease what they need from the ILECs for interconnection and enjoy all of the CLEC benefits, such as bill and keep interconnection and access to Canadian numbering resources.
The proposed change to Section 16(1) would allow any company – foreign or domestic – to set up a Canadian subsidiary, and for the cost of a $200 satellite dish (an “earth station” under Section 16(5)(b)), under the new 16(1)(b), they are eligible to be Canadian carriers.
Was this the intent of the proposed 16(1)(b), or is it an unintended consequence?
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My take would be that this is meant to prevent the purchase of exempt transmission facilities with a view to circumventing the rules. My reading of this is that you are exempt if, and only if, all you own or operate (in the meaning of the Act) are exempt transmission facilities. If you own or operate anything else, the exemptions in 16(5)in my view would not apply. Perhaps I have misapprehended your point about CLECs, but a CLEC, by definition is a carrier (as distinct from a reseller) because it does own or operate a transmission facility. As a result, I think the purpose and effect of this proposed amendment is to restrict the exemption to those who own or operate a satellite and ancillary earth stations “only”.
Ted – my point is that a foreign controlled company currently operating in Canada as a reseller could become a Canadian carrier (and thereby become a CLEC) by simply acquiring a $200 “satellite earth station”. If that is the only transmission facility that they own, then would they not qualify under the proposed legislation?
Mark- that is probably correct although it is unclear to me why a reseller who does not fall under these rules in the first place would want to do that? To me the more realistic scenario, and the one for which this amendment was intended, is to permit a satellite operator, who owns or operates only a satellite transmission facility to be exempt. I think we are saying the same thing in the end.
Today, under current rules, a proposed CLEC need only own or operate a token “transmission facility” (as that term is defined in the Telecom Act) to become a Canadian carrier. As a Canadian carrier, it is eligible to become a CLEC and can conduct business just fine without owning or operating any other transmission facilities (which by definition does not include any exempt transmission apparatus such as switching equipment)as part of that CLEC business. See Telecom Decision CRTC 98-12 where the CRTC turnned down ACC TelEnterprise’s request as a reseller for CLEC status for further interesting debate. The ACC decision may well not have arisen if (a) it owned a $200 earth station; and (b) the proposed legislation noted in your blog was in force.