Editorial | A Boost for Canadian Operators

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The Canadian government showed appropriate flexibility and responsiveness in making common-sense updates to its telecommunications satellite licensing policy to enhance the competitiveness of its domestic industry.

After months of consultations with domestic satellite operators and their customers, Industry Canada, the government’s sprawling regulatory authority, adopted reforms that will tighten certain satellite licensing requirements while easing others. In a key example of the former, Industry Canada modified its first-come, first-served licensing policy by empowering itself to move incomplete or defective applications to the back of the queue. In addition, the government will apply fees on a per-megahertz basis to help cover its processing costs while discouraging non-serious applications that tend to clutter up the system.

Industry Canada also took a page from the U.S. Federal Communications Commission rule book in setting progress milestones that licensees will be required to meet in order to retain their frequency and orbital-slot rights. These milestones include the signing of satellite construction contracts and commencement of on-orbit operations. 

Other changes will help level the regulatory playing field between Canadian companies and foreign competitors by easing certain requirements, including one that obligated domestic operators to spend 2 percent of their adjusted gross income on research and development. Also relaxed was a requirement that Canadian-licensed operators cover all of Canada’s vast territory and reserve 50 percent of their capacity for domestic users. Under the new rules, Canadian operators will be relieved of these obligations after six months of a satellite’s operation should domestic demand prove insufficient to fill the available capacity.

Finally, Industry Canada will act as the government representative for companies seeking to deploy satellites outside the sector of the geostationary arc that covers Canadian territory. 

As is the case with any new regulatory regime, there are questions about how the new provisions will be implemented. One could envision, for example, Canadian firms being forced to lease capacity at below market rates to domestic customers. 

Industry Canada must take care to ensure that the reforms are not implemented in ways that might undermine their intent. That said, it all has to start somewhere, and it’s difficult to view Industry Canada’s changes as anything other than a step in the right direction that will give Canadian operators a better opportunity to compete in the global marketplace.