Radio Authorization Fees for Direct Broadcast Satellite (DBS) Facilities

Department of Industry

Department of Industry Act, S.C. 1995, c.1

Introduction

Direct Broadcast Satellite (DBS) facilities will supply the satellite capacity that Canadian broadcasters need to provide Direct-to-Home (DTH) broadcast services.

On November 16, 1996, Industry Canada issued Gazette Notice DGTP-009-96 announcing the release of the paper entitled Call for Applications to Develop and Operate Direct Broadcast Satellite (DBS) Facilities in the 91^o West Longitude Orbital Position to Serve Canadian Broadcasting Needs.

The paper set out the Department's policy to promote the early deployment and operation of Canadian DBS facilities and to initiate a comparative selection and authorization process for these systems.

Besides inviting detailed submissions from prospective satellite facility providers, the paper sought comments on the proposed radio authorization fee for DBS.

Generally, interested parties were invited to comment, by December 16, 1996, on the appropriateness of the proposed annual authorization fee of $67,000 per authorized satellite transponder, payable whether or not the transponder is in actual use. This fee is to be fixed by the Minister under the Department of Industry Act.

The policy paper also states that this is an interim fee regime for DBS that may be adjusted as better information about market-determined valuations becomes available or as other circumstances so warrant.

In response to the Notice, two submissions were received from interested parties. One submission contained comments concerning the proposed fees.

Both respondents fully support the Department's broad policy objectives of facilitating the timely and orderly implementation of DBS/DTH in Canada and of fostering sustainable competition and new innovative services.

One respondent was of the view that the smaller Canadian direct-to-home base over which to recover spectrum costs justifies a lower authorization fee and that facilities that are not in service should not be subject to authorization fees. The respondent also suggested that authorization fees should be fixed for the life of the satellite.

The annual authorization fee for the orbital-spectrum resource will be fixed at

$ 2.1 million and will apply when the satellite is in commercial operation.

The Department is of the view that the fee is only a small percentage of the annual tariffs that the satellite operator will charge clients for the use of the satellite transponders. The fee will not act as a barrier to entry of new DTH/DBS service providers and the fee will provide a reasonable return to the Canadian public for this valuable resource. The radio authorization fees need to reflect the economic value of the orbital position and spectrum utilized and may need to be adjusted if the value of these resources increases.

In view of the general support for this initiative and Industry Canada's efforts directed at market valuation determination of fees to establish a general fee framework, the Department will implement the authorization fee as set out in the following fee schedule.

Fee Schedule

The Minister of Industry, pursuant to section 19 of the Department of Industry Act, hereby fixes the following fees, effective the date of publication of this notice. The fees are applicable to radio authorizations issued by the Minister pursuant to paragraph 5(1)(a) of the Radiocommunication Act to establish a direct broadcast satellite (DBS) service in accordance with the terms of the authorization.

Interpretation

1. For the purpose of this fee schedule,

"direct broadcasting-satellite service" means a radiocommunication service in which signals are transmitted or retransmitted by a space station and are intended for direct reception by the general public;

"orbital-spectrum resource" means the natural resources of the geosationary satellite orbit in the 91^o West longitude orbital position and the radio frequency spectrum in the 12.2-12.7 GHz and 17.3-17.8 GHz frequency bands;

"renewal fee" means the annual fee payable for the renewal of a radio authorization before the radio authorization expires on March 31 of each year.

Annual Radio Authorization Fee

2. The annual radio authorization fee is $2.1 million for the authorized orbital-spectrum resource used to provide direct broadcasting-satellite services in Canada.

Initial Annual Radio Authorization Fee

3. The prorated balance of the then-current fiscal year's authorization for the authorized orbital-spectrum resource used to provide direct broadcasting-satellite services in Canada is due within 15 days of the satellite operator's acceptance in orbit of the satellite from the manufacturer.

Prorated Fees

4. The month that the satellite operator accepts the satellite in orbit from the manufacturer determines the applicable prorated fee.

5. The prorated fee for the authorized orbital-spectrum resource used to provide direct broadcasting-satellite services in Canada is $175,000 for each month until the radio authorization expires on March 31.

Renewal Fee

6. The renewal fee is $2.1 million for the authorized orbital-spectrum resource used to provide direct broadcasting-satellite services in Canada.

General Notes

This is an interim fee regime for DBS. The fees may be adjusted in accordance with market-determined valuations of DBS or as other circumstances so warrant.

John Manley

Minister of Industry