Vol. 148, No. 6 — March 12, 2014

Registration

SOR/2014-34 February 28, 2014

RADIOCOMMUNICATION ACT

Regulations Amending the Radiocommunication Regulations

P.C. 2014-164 February 28, 2014

His Excellency the Governor General in Council, on the recommendation of the Minister of Industry, pursuant to section 6 (see footnote a) of the Radiocommunication Act (see footnote b), makes the annexed Regulations Amending the Radiocommunication Regulations.

REGULATIONS AMENDING THE RADIOCOMMUNICATION REGULATIONS

AMENDMENTS

1. (1) The definition “radiocommunication carrier” in section 2 of the Radiocommunication Regulations (see footnote 1) is repealed.

(2) The definitions “person” and “radiocommunication service provider” in section 2 of the Regulations are replaced by the following:

“person” includes a corporation, partnership, trust and joint venture; (personne)

“radiocommunication service provider” means a person who operates radio apparatus used by that person or another person to provide radiocommunication services for compensation; (fournisseur de services radio)

(3) Section 2 of the Regulations is amended by adding the following in alphabetical order:

“joint venture” means an association of two or more persons, if the relationship among those associated persons does not, under the laws in Canada, constitute a corporation, a partnership or a trust, and if all the undivided ownership interests in the assets of the radiocommunication user and radiocommunication service provider or in the voting interests of the radiocommunication user and radiocommunication service provider are or will be owned by all the persons that are so associated; (coentreprise)

2. (1) The portion of subsection 9(1) of the Regulations before paragraph (a) is replaced by the following:

9. (1) The following persons are eligible to be issued radio licences or spectrum licences as radiocommunication users or radiocommunication service providers in all services except the amateur radio service:

(2) Paragraph 9(1)(c) of the Regulations is replaced by the following:

3. Sections 10 and 10.1 of the Regulations are repealed.

4. Section 15 of the Regulations is replaced by the following:

15. Radio apparatus that is set out in and meets a standard set out in the Licence-exempt Radio Apparatus Standards List, October 2013 is exempt from the application of subsection 4(1) of the Act in respect of a radio licence.

5. Section 37 of the Regulations and the heading before it are repealed.

6. (1) Subsection 52(1) of the Regulations is replaced by the following:

52. (1) If the Minister, taking into account the factors referred to in subsection (2), determines that a radio apparatus causes or suffers from interference other than harmful interference or adverse effects of electromagnetic energy, the Minister may, for the purpose of ensuring the orderly development and efficient operation of radio communication in Canada, order the persons in possession or control of the radio apparatus to cease or modify operation of the radio apparatus until it can be operated without causing or being affected by that interference or those adverse effects.

(2) Paragraph 52(2)(a) of the Regulations is replaced by the following:

(3) Paragraph 52(2)(b) of the French version of the Regulations is replaced by the following:

7. The definitions “public cordless telephone services” and “radio licence fee” in section 55 of the Regulations are repealed.

8. Section 56 of the Regulations is replaced by the following:

56. (1) The radio licence fee payable in respect of a radio licence that is issued in respect of radio apparatus installed in a station and that authorizes the use of certain frequencies is

(2) Subject to subsection (3), radio licences expire on March 31 of each year.

(3) Radio licences issued for 30 days or less expire on the day indicated on the licence and are not renewable.

9. Paragraphs 64(a) and (b) of the French version of the Regulations are replaced by the following:

10. Columns II, V and VI of Parts I to VII of Schedule III to the Regulations are repealed.

11. The heading “Renewal fee” of column IV of Parts I to VII of Schedule III to the Regulations is replaced by “Annual fee”.

12. Schedule III to the Regulations is amended by replacing “(Sections 55, 56 and 60)” after the heading “PART I” with “(Sections 56 and 60)”.

13. Schedule III to the Regulations is amended by replacing “(Sections 55, 56, 58, 61 and 65)” after the heading “PART II” with “(Sections 56, 58, 61 and 65)”.

14. Schedule III to the Regulations is amended by replacing “(Sections 55, 56, 62 and 72)” after the heading “PART III” with “(Sections 56, 62 and 72)”.

15. Schedule III to the Regulations is amended by replacing “(Sections 55, 56, 58 and 73)” after the heading “PART VI” with “(Sections 56, 58 and 73)”.

16. Schedule III to the Regulations is amended by replacing “(Sections 55, 56 and 74)” after the heading “PART VII” with “(Sections 56 and 74)”.

COMING INTO FORCE

17. (1) These Regulations, except sections 7, 8 and 10 to 16, come into force on the day on which they are registered.

(2) Sections 7, 8 and 10 to 16 come into force on Apri1 1, 2014.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The ownership and control requirements set out in section 10 of the Radiocommunication Regulations (the Regulations) are inconsistent with those set out in the Telecommunications Act as amended in the Jobs, Growth and Long-Term Prosperity Act. This produces regulatory uncertainty for licensees subject to both pieces of legislation. Even if the Regulations are amended to address this inconsistency, maintaining these requirements in the Regulations creates unnecessary duplication for telecommunications common carriers.

A number of other provisions in the Regulations have become outdated or have been found to be redundant to other regulatory requirements:

Objectives

The amendments increase regulatory certainty, reduce costs for licensees, and align the Regulations with the Government’s goal to reduce regulatory burden on businesses in Canada. Licensees will benefit from

Description

The amendments make the following changes to the Regulations:

Consultation

Public consultations have been completed in the process of establishing the new radio standards specification documents to be added to the Licence-exempt Radio Apparatus Standards List, October 2010 in section 15 of the Regulations. No comments were received during the consultation process.

Given that the remaining amendments are technical and housekeeping in nature, and that they would reduce costs and regulatory burden to Canadians, consultations on them have not been held.

The proposed Regulations were published in the Canada Gazette, Part I, on June 15, 2013, followed by a 30-day comment period. Counsel for the Standing Joint Committee for the Scrutiny of Regulations (SJCSR), in reference to section 52, asked whether the Regulations should identify circumstances under which the Minister will not issue such orders. Industry Canada notes that the factors to be taken into consideration when issuing such an order are set out in subsection 52(2) of the Regulations. Furthermore, section 5 of the Radiocommunication Act allows the Minister to take into account the unique circumstances of individual cases considered relevant “for ensuring the orderly establishment or modification of radio stations and the orderly development and efficient operation of radiocommunication in Canada.” The amended Regulations include a reference to this objective.

No other comments were received.

“One-for-One” Rule

The amendments to the ownership and control requirements in section 10 of the Regulations reduce administrative burden and represent an “OUT” under the “One-for-One” Rule. Other amendments will not have an impact on administrative burden.

Over the past 10 years, Industry Canada has licensed approximately 210 radiocommunication carriers, as defined in the Radiocommunication Regulations. It is expected that a similar number of entities will seek to be licensed as carriers over the next 10 years.

Prior to making these amendments, in order to be eligible to hold a licence as a radiocommunication carrier, corporate applicants (see footnote 2) were required to provide evidence to Industry Canada showing that they met the requirements of paragraph 10(2)(d) of the Regulations, in that they were either

As described below, demonstrating compliance with the above requirements imposes an administrative burden on business applicants seeking to become radiocommunication carriers. Industry Canada’s proposal to repeal these requirements will alleviate this burden, and result in cost savings for the wireless telecommunications industry.

Currently, three entities exceed the 10% market-share threshold and are therefore required to demonstrate that they are eligible under (i) above. These applicants are required to submit extensive documentation that details their corporate ownership structure, shareholdings, financial agreements, and details regarding the officers and directors of the company to Industry Canada for review. Much of this documentation must be prepared specifically for the purpose of meeting Industry Canada’s requirements, and is therefore not standard nor is it available in the public domain. For this reason, and given the complex and detailed nature of this information, applicants devote considerable time and resources to assembling, preparing and reviewing the documents internally prior to submission to Industry Canada as well as to respond to follow-up requests for clarification and/or additional information. The review process itself is time-consuming for both the Department and companies as issues are dealt with in an iterative fashion. A review can take weeks of ongoing dialogue with the company. Further, continued compliance is re-evaluated every five years.

In calculating the administrative costs associated with this requirement, it is assumed that three entities will each be subject to this process twice over the 10-year forecast period based on experience over the past 10 years. Based on client consultation, it is estimated that each time an entity must undergo this process (familiarizing itself with the requirements and producing, reviewing and copying the necessary documentation, as well as responding to issues raised), it will require 80 hours of administrative staff time, 122 hours of management time, and 80 hours of legal staff time.

When standardized hourly rates established by the Treasury Board Secretariat are applied to these time estimates, and after applying a 7% discount rate over a 10-year period, the administrative cost per year (in constant 2012 dollars) for all entities to meet this requirement is estimated to be $7,932.

The remaining 207 carriers must demonstrate eligibility under (ii) above by providing Industry Canada with financial statements showing their revenue from the provision of telecommunication services. Industry Canada then verifies that their share of the Canadian telecommunications market is less than 10%.

In calculating the administrative costs associated with this requirement, it is estimated that 207 carriers will be subject to this process once over the 10-year forecast period and that familiarizing themselves with the requirements and producing, reviewing and copying the necessary documentation will require 1.5 hours of management staff time. This figure has been estimated based on Industry Canada’s experience in working with companies to meet the existing requirements.

When standardized hourly rates established by the Treasury Board Secretariat are applied to these time estimates, and after applying a 7% discount rate over a 10-year period, the administrative cost per year (in constant 2012 dollars) for all entities to meet this requirement is estimated to be $2,612.

Together, the total annualized administrative cost is an “OUT” of approximately $10,000.

Small business lens

The small business lens does not apply to this modification, as there are no costs to small businesses and small businesses would not be disproportionately affected by the amendments.

Rationale

Sections 2, 9 and 10 of the Radiocommunication Regulations

In June 2012, the Telecommunications Act (TA) was amended to exempt telecommunications carriers with a market share of 10% or less from Canadian ownership and control requirements. In order to operate as wireless telecommunications carriers, such entities must be authorized separately under the Radiocommunication Regulations, and in doing so must meet ownership and control requirements. However, with the recent changes to the TA, the requirements set out in the Act are no longer consistent.

Rather than make amendments to the Regulations to realign the ownership and control requirements with those in the TA, they can be eliminated altogether. Since a carrier must comply with the requirements applicable to telecommunications carriers under the TA, ownership and control requirements will be satisfied, where relevant. It is not necessary, therefore, to subject carriers to duplicate eligibility requirements under the Regulations.

Given that the ownership and control requirements are removed from the Regulations, the definition of a radiocommunication carrier is also removed from the definitions in sections 2 and 9. Carriers will now be issued radio and spectrum licences as radiocommunication service providers, subject to any eligibility restrictions imposed by the Minister of Industry.

In order to ensure that all types of entities eligible to operate as telecommunications carriers are also eligible to hold radio and spectrum licences, trusts have been added to the definition of “person” in section 2 and a definition of “joint venture,” similar to the one found in the Telecommunications Act (which was recently expanded), will also be added in section 2.

Amendments to reduce costs

Sections 55 and 56, and Schedule III: Issuance and reinstatement fees do not reflect the cost of licensing spectrum, and charging them is not consistent with Industry Canada’s approach to spectrum management. In addition, they are charged only for radio licences, and not for the alternative licensing mechanism of spectrum licences. Radio licensees will benefit from the elimination of issuance and reinstatement fees by seeing a reduction of approximately $3 million annually in the fees payable for radio apparatus licensed by Industry Canada. Based on an average over the past five fiscal years, issuance fees were applied annually to 15 707 radio licences with revenues averaging $2,437,673. Reinstatement fees over this same period have been applied annually to 12 395 radio licences with revenues averaging $542,424.

Subsection 56(4): Public cordless telephone service is outdated and the technology is no longer in use in Canada. Fees for this service are therefore no longer required.

Amendments to increase clarity and regulatory consistency

Section 64: Industry Canada has identified a discrepancy in the French version of paragraph 64(a) where it should refer to assigned frequencies (as in the English version of that subsection), and a discrepancy in the French version of paragraph 64(b) where the use of the terms “radiofréquence d’émission” appears to be a misprint, as the English version of paragraph 64(b) uses the terms “assigned receive radio frequency(ies)” and the beginning of the French version of paragraph 64(b) correctly refers to “radiofréquences de réception assignées.”

Additional updates

Section 10.1: A review of this section has shown that the distinct eligibility requirements for holders of radio licences issued for earth stations in the fixed satellite service and in the mobile satellite service are no longer required.

Section 15: The Minister of Industry has, in consultation with the public and industry, updated existing standards as well as created new ones to allow Canadians to make use of certain devices, such as radios that are part of the Global Maritime Distress and Safety System, certain types of receivers and certain types of medical devices, without the need to obtain a radio licence. The exemption from the requirement to have a radio licence, provided in section 15, now needs to be updated to reference these newly modified standards.

Section 37: Industry Canada will continue to ensure that Canada fulfills its ongoing obligations as a signatory to the ITU Radio Regulations as it carries out its regulatory activities under the Radiocommunication Act (the Act) by reflecting and imposing relevant obligations through measures such as policies, standards, and procedures regarding spectrum management, licensing and prevention of harmful interference. ITU requirements that are incorporated into the Regulations and licences are enforceable in Canada through the measures provided for in the Act and Regulations.

Section 52: An analysis of this provision, as requested by the SJCSR, shows that it is not necessary to have the authority to issue orders to remedy “interference other than harmful interference” with respect to interference-causing equipment and radio-sensitive equipment. Removal of references to these types of devices from this section will eliminate this unnecessary requirement. In addition, this section will be made consistent with the prohibition provided for in section 53 of the Regulations. The nature of the Minister’s power under section 52 is also being harmonized with the discretionary authority of the Minister to issue orders to remedy harmful interference under paragraph 5(1)(l) of the Radiocommunication Act.

In light of the comments received from the SJCSR during the consultation period, we have added text to subsection 52(1) to parallel section 5 of the Radiocommunication Act which allows the Minister to take into account the unique circumstances of individual cases considered relevant “for ensuring the orderly establishment or modification of radio stations and the orderly development and efficient operation of radiocommunication in Canada.”

Taken together, these amendments will ensure the Regulations better reflect the Government’s goals and priorities by eliminating duplication, reducing costs, and increasing regulatory certainty.

Implementation, enforcement and service standards

These Regulations become effective on the date of registration with the exception of the repeal of the issuance and reinstatement fees in sections 55 and 56 as well as Schedule III of the Regulations, which will become effective on April 1, 2014, to coincide with the beginning of the new licence year. Licences issued or reinstated prior to such date will be subject to issuance and reinstatement fees, as set out in the applicable section of the Regulations. These fees will not be payable for licences issued after March 31, 2014.

Contact

Philip Fleming
Director
Spectrum Regulatory Policy
Spectrum Management Operations Branch
Industry Canada
300 West Georgia Street
Vancouver, British Columbia
V6B 6E1
Telephone: 604-666-1415
Email: Philip.Fleming@ic.gc.ca