News Release

November 30, 2000

OTTAWA-HULL — In a decision released today, the Canadian Radio-television and Telecommunications Commission (CRTC) has changed the way explicit subsidies are collected to support local residential telephone service in Canada's high-cost serving areas. Effective January 1^st, 2001, the CRTC has directed all telecommunications service providers to contribute a percentage of their eligible revenues to a national subsidy fund. This revenue-based approach will replace the current method of collecting a contribution rate exclusively from long distance service providers on a per-minute basis.

Revenues from paging services, terminal equipment and retail Internet service are excluded. Telecommunications service providers with revenues less than $10 million will not be required to pay into the national fund.

"I am confident that this new collection method will overcome many of the concerns industry players have voiced. It is sustainable, technology-neutral and competitively fair to all players," said David Colville, CRTC Vice-Chairman of Telecommunications. "It is fundamental in preserving the basic telephone service objective we have set for Canadians in all parts of the country, including those living in rural and remote areas."

Effective April 1^st, 2001, all telecommunications service providers will contribute a portion of their eligible revenues to the national fund based on an interim charge of 4.5 percent. As a result, basic local telephone service rates may be affected. A final revenue-percentage rate will be determined by mid-2001 and be retroactive to January 1^st, 2001.

Effective January 1^st, 2002, the CRTC will introduce a new way to calculate the subsidy requirement. It will be based on calculating forward looking incremental costs associated with providing service in rural and remote areas.

The independent telephone companies will be exempt from implementing this new regime January 1^st, 2001. The Commission will engage in a process during the 2001 transition year to address the issues needed to be able to include these companies under the revenue-based mechanism in 2002.

Reference document:  Decision CRTC 2000-745
                                  Information:  The new contribution and collection mechanism

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Copies of today’s documents are available through our Internet site ( http://www.crtc.gc.ca ) or by contacting the public examination room of any CRTC office. These documents are available in alternative format upon request.

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