Key telecommunications laws, regulations and policies

The federal Telecommunications Act is the primary legislation governing telecommunications in Canada. Coming into force on October 25, 1993, this legislation repealed and replaced the telecommunications-related provisions of the Railway Act, as well as federal acts such as the National Telecommunications Power and Procedures Act, and the Telegraphs Act.

The Telecommunications Act outlines the regulatory framework for TSPs and sets out the powers of the CRTC with respect to the administration of the Telecommunications Act. The CRTC itself is established under the Canadian Radio-television and Telecommunications Commission Act.

Below are key features of the Telecommunications Act:

The Canadian telecommunications policy: The Telecommunications Act sets out the objectives of this policy, which includes enhancing the efficiency and competitiveness of Canadian telecommunications, public accessibility to high quality services, the promotion of Canadian ownership and control, innovation, privacy protection, and the social requirements of users. In exercising its powers under the Telecommunications Act, the CRTC must act with a view to implementing these objectives.

In addition to the Telecommunications Act, the following federal legislation and the regulations made thereunder may also impact the provision of communication services and the operation of communication networks in Canada:

The Radiocommunication Act, which sets out the regulatory framework for radiocommunications, equipment and spectrum management in Canada. The Minister of Innovation, Science and Industry, together with the department of the Government of Canada known as Innovation, Science and Economic Development Canada (“ISED”), is responsible for regulation under the Radiocommunication Act. ISED’s policies on spectrum management can be found here.

At the provincial level, legislation exists relating to local matters that fall outside of federal jurisdiction. Examples include legislation concerning matters related to telephone rates and services as applied locally, as well as TSP access to public utility structures. In addition, many Canadian provinces have consumer protection legislation that is applicable to telecommunications contracts.

With the exception of telecommunications services providers (“TSPs”) that engage in certain activities (including the use of radio spectrum, as well as the provision of international telecommunications services‎), TSPs do not require a licence to provide telecommunications services in Canada. However, TSPs must register with the Canadian Radio-television and Telecommunications Commission (the "CRTC").

Additionally, TSPs are subject to rules restricting foreign ownership and control, as outlined below. These restrictions are derived from the telecommunications policy objective to promote Canadian ownership and control of Canadian TSPs.

The majority of legislative authority for modern telecommunications activities in Canada lies with the federal government. A mix of federal legislation, notably the Telecommunications Act and the Radiocommunication Act, govern telecommunications activities under federal jurisdiction. The CRTC serves as the main telecommunications regulator, while the Minister of Innovation, Science and Industry (formerly the Minister of Industry) plays a regulatory role with respect to radio spectrum.

The federal Telecommunications Act is the primary legislation governing telecommunications in Canada. Coming into force on October 25, 1993, this legislation repealed and replaced the telecommunications-related provisions of the Railway Act, as well as federal acts such as the National Telecommunications Power and Procedures Act, and the Telegraphs Act.

The Telecommunications Act outlines the regulatory framework for TSPs and sets out the powers of the CRTC with respect to the administration of the Telecommunications Act. The CRTC itself is established under the Canadian Radio-television and Telecommunications Commission Act.

Below are key features of the Telecommunications Act:

The Canadian telecommunications policy: The Telecommunications Act sets out the objectives of this policy, which includes enhancing the efficiency and competitiveness of Canadian telecommunications, public accessibility to high quality services, the promotion of Canadian ownership and control, innovation, privacy protection, and the social requirements of users. In exercising its powers under the Telecommunications Act, the CRTC must act with a view to implementing these objectives.

In addition to the Telecommunications Act, the following federal legislation and the regulations made thereunder may also impact the provision of communication services and the operation of communication networks in Canada:

The Radiocommunication Act, which sets out the regulatory framework for radiocommunications, equipment and spectrum management in Canada. The Minister of Innovation, Science and Industry, together with the department of the Government of Canada known as Innovation, Science and Economic Development Canada (“ISED”), is responsible for regulation under the Radiocommunication Act. ISED’s policies on spectrum management can be found here.

At the provincial level, legislation exists relating to local matters that fall outside of federal jurisdiction. Examples include legislation concerning matters related to telephone rates and services as applied locally, as well as TSP access to public utility structures. In addition, many Canadian provinces have consumer protection legislation that is applicable to telecommunications contracts.

Canadian Radio-television and Telecommunications Commission

Les Terrasses de la Chaudière Central Building

1 Promenade du Portage

Gatineau, Quebec J8X 4B1

Innovation, Science and Economic Development Canada

C.D. Howe Building

235 Queen Street

Ottawa, Ontario K1A 0H5

Commission for Complaints for Telecom-television Services

P.O. Box 56067 - Minto Place RO

• An independent consumer agency that resolves complaints from individuals and small business retail customers concerning telecommunications and television services. All Canadian telecommunications providers are required to join the Commission for Complaints for Telecom-television Services.

All TSPs that own or operate transmission facilities used to provide telecommunications services are subject to regulation under the Telecommunications Act.

A transmission facility is defined as: "any wire, cable, radio, optical or other electromagnetic system, or any similar technical system, for the transmission of intelligence (signs, signals, writing, images, sounds, or intelligence of any nature) between network termination points".

Telecommunications services include those provided by means of a transmission facility, or any other facility or apparatus that is used or capable of being used for similar purposes.

TSPs that do not own or operate facilities may not be subject to the same regulatory requirements as those that own or operate facilities. For example, resellers that merely use the facilities of other TSPs to resell services to the public (i.e. resellers) are exempt from a significant part of the Telecommunications Act.

However, all non-facilities-based TSPs (including resellers) must register with the CRTC and must meet certain regulatory obligations set out in various CRTC regulatory policies and decisions.

TSPs generally do not require a licence to provide telecommunications services, however, certain activities do require special licences from the CRTC. TSPs carrying international telecommunications traffic, must hold a Basic International Telecommunications (“BITS”) License, issued by the CRTC. Additionally, the construction and operation of international submarine cables requires a licence.

TSPs that use radio equipment and spectrum to offer telecommunications services require separate authorizations from the Minister of Innovation, Science and Industry(formerly the Minister of Industry) under the Radiocommunication Act. Radio-based activities include, but are not limited to, the use of microwave facilities, cellular telephone systems, and the operation of satellites and satellite earth stations.

TSPs must register on one of the CRTC’s registration lists as a BITS Licensee, a Facilities-Based Provider (where the TSP owns or operates a transmission facility used by that provider or another provider to offer telecommunications services to the public for compensation) or a Non-Facilities-Based Provider (where the TSP offers basic telecommunications services to the public including services provided by exempt transmission apparatus). An entity may register on more than one list, provided it meets the obligations associated with each list.

Subject to exceptions, TSPs that own or operate their own facilities must be Canadian-owned and controlled entities that are incorporated, organised or continued under the laws of Canada or a province of Canada.

Under the Telecommunications Act, an entity is Canadian-owned and controlled if:

in the case of a corporation, not less than 80% of the members of the board of directors are individual Canadians;

The term “Canadian” is defined in the regulations made under the Telecommunications Act, and includes corporations of which Canadian shareholders (either individuals or other entities meeting prescribed criteria) beneficially own and control not less than 66.66% of the issued and outstanding voting shares, and which are not otherwise controlled by non-Canadians. In effect, non-Canadians may own up to 33.33% of the voting shares of the parent of the TSP as well as 20% of the voting shares of the TSP itself.

Entities that hold less than 10% of the Canadian market for telecom services (based on revenue) however, are specifically exempt from Canadian ownership and control requirements under the Telecommunications Act.

Canada’s right to impose the above foreign ownership restrictions is consistent with Canada’s Schedule of Specific Commitments to the WTO Agreement on trade in basic telecommunications services.

Agreements and arrangements relating to the interworking of systems between TSPs that own and operate facilities, and the apportionment of rates or revenues between such TSPs are subject to the approval of the CRTC. Pursuant to the Telecommunications Act, the CRTC is authorized to approve arrangements, withhold the approval of arrangements, and amend agreements or arrangements.

Where interconnection cannot be achieved by the mutual consent of the TSP, the CRTC has the power to order a TSP to connect its telecommunications facilities to any other telecommunications facility, and to establish terms and conditions that it deems just and expedient.

The CRTC plays a prominent consumer protection role in the telecommunications space. Key undertakings by the CRTC include the promotion and enforcement of:

Unsolicited Telecommunications Rules, which aim to regulate telemarketing activities. The CRTC is also responsible for maintaining the National Do Not Call List, through which individuals can register their telephone numbers;

In addition, the CRTC has set a “Universal Service Objective”, in order to address gaps in access to broadband internet services. Rural and remote areas in Canada historically lag behind urban areas with respect to access to high quality and affordable telecommunications services. To this end, the CRTC has set broadband internet target speeds of 50 megabits per second (“Mbps”) download and 10 Mbps upload. To assist in meeting this goal, the CRTC established the “Broadband Fund” to fund projects that will build or upgrade broadband internet infrastructure. TSPs may apply to receive funding under this program.

Under the Telecommunications Act, carriers are subject to annual fees if the carrier meets the following conditions:

the carrier was in operation on April 1 of that year, and

If the carrier is part of a group of related telecommunications services providers, the conditions apply to the group on aggregate.

The carriers mentioned above are subject to three applicable fees: the “annual fee”, the “supplementary fee”, and the “annual adjustment”. Fee amounts are based on the particular carrier’s revenue in relation to the revenues of the Canadian industry as a whole and are calculated as a proportion of the yearly cost of the regulatory scheme.

Fees for spectrum and radio licences issued under the Radiocommunication Act are outlined in the Radiocommunication Regulations. Fees are based on the type of station licensed, the type of service used, and in certain cases, the amount of radio frequency spectrum required or assigned, and the location of the operations.

The CRTC has authority to inspect and investigate compliance or non-compliance of the regulatory scheme. Violations of the Telecommunications Act, by an act or omission contrary to a provision or a decision made pursuant to the Telecommunications Act, may trigger civil liability or administrative monetary penalties. In addition, certain contraventions of the Telecommunications Act are considered “offences” and are punishable on summary conviction. The applicable enforcement measure will depend on the nature of the activity. Prosecution of offences punishable on summary conviction may only be commenced with the consent of the CRTC.

The limitation periods for the enforcement of violations vary between two years from the day on which the act or omission occurred, to three years from the day on which the subject-matter of the proceedings became known to the CRTC.

The CRTC and the Minister of Innovation, Science and Industry may also suspend or revoke a licence if they are satisfied that the licence holder has contravened the applicable legislation, regulations or terms of authorisation. Prior to suspension or revocation, the licence holder must first be given written notice and a reasonable opportunity to make representations to the relevant party.