Fixed Point-to-Point Fee Reform

Summary#

This is a proposed change, published in the Canada Gazette on December 26, 2020, that would update fees and some licence rules for certain fixed radio links. Innovation, Science and Economic Development (ISED) wants to move from a capacity-based fee system to a consumption-based fee system for fixed point‑to‑point radio links, introduce shorter licence options, and remove obsolete fee rules. If made, the changes are planned to come into force on April 1, 2021.

What it does#

• Changes the fee approach for fixed point‑to‑point radio links from charging by capacity to charging by the amount of spectrum assigned (MHz).
• Applies different base rates depending on where links are located: urban, rural, or remote areas (rural base rates are lower; remote base rates are lower still). The proposal notes reductions of about 20% for rural and 50% for remote compared with urban base rates in some bands.
• Sets specific monthly and annual base rates by frequency band (examples in the proposal range from higher rates for low frequencies down to $0.04 monthly per MHz for the highest bands).
• Creates a new named service, the fixed point‑to‑point service, so the fee rules apply correctly to those links.
• Clarifies that links used by active repeaters are included in the new fee model.
• Adds flexible licence lengths: licences shorter than one year can be issued for any period between 30 days and 11 months (temporary licences) or as renewable licences that expire on March 31. Fees for shorter licences are charged on a monthly basis.
• Removes several obsolete fee provisions from the Radiocommunication Regulations and updates drafting language.
• This is a proposal (not yet law); ISED invited comments for 30 days after the Gazette publication.

Who's affected#

• Licensees that operate fixed point‑to‑point radio links. ISED estimates about 815 licensees would be affected and they hold roughly 18,700 in‑scope licences.
• Industries likely to notice changes include telecommunications carriers and internet backhaul providers, broadcasters, energy utilities, resource extraction companies, transportation operators, municipalities and other public bodies.
• Small businesses: 256 small licensees are in scope; ISED estimates most small businesses (about 199) would benefit, while around 57 might see fee increases unless they update equipment.
• The federal government and departmental licensees (for example, some equipment used by public safety or defence) are also affected because licence fees are collected into public revenue.

Why it matters#

• The new fee model aims to reward efficient use of spectrum. Operators that run modern, spectrally efficient equipment would generally pay less. That can encourage upgrades and investment.
• Lower fees in rural and remote areas are intended to make it cheaper to build or expand backhaul links there, which could help improve internet and mobile connectivity outside cities.
• Some users who run older, inefficient systems could pay more under the new rules unless they replace equipment. ISED expects about 165 licensees to face net fee increases while about 650 would see decreases.
• The changes would reduce federal fee revenue (ISED estimates a present‑value revenue loss of about $218,129,255) and require a modest implementation cost (about $338,480 in present value).
• This is a proposed regulatory amendment; it was subject to consultation and was scheduled to take effect on April 1, 2021 only if adopted.