SUPREME
COURT OF CANADA
Citation: Bell
Canada v. Bell Aliant Regional Communications, 2009 SCC 40, [2009] 2
S.C.R. 764
|
Date: 20090918
Docket: 32607, 32611
|
Between:
Bell
Canada
Appellant
v.
Bell
Aliant Regional Communications, Limited Partnership, Consumers’
Association
of Canada, National Anti‑Poverty Organization, Public Interest
Advocacy
Centre, MTS Allstream Inc., Société en commandite Télébec and
TELUS
Communications Inc.
Respondents
‑
and ‑
Canadian
Radio‑television and Telecommunications Commission
Intervener
and between:
TELUS
Communications Inc.
Appellant
v.
Bell
Canada, Arch Disability Law Centre, Bell Aliant Regional Communications,
Limited
Partnership, Canadian Radio‑television and Telecommunications
Commission,
Consumers’ Association of Canada, National Anti‑Poverty Organization,
Public
Interest Advocacy Centre, MTS Allstream Inc., Saskatchewan
Telecommunications
and Société en commandite Télébec
Respondents
and between:
Consumers’
Association of Canada and National Anti‑Poverty Organization
Appellants
v.
Canadian
Radio‑television and Telecommunications Commission,
Bell
Aliant Regional Communications, Limited Partnership, Bell Canada,
Arch
Disability Law Centre, MTS Allstream Inc., TELUS Communications Inc.
and
TELUS Communications (Québec) Inc.
Respondents
Coram: McLachlin
C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and
Cromwell JJ.
Reasons
for Judgment:
(paras. 1 to
78)
|
Abella J. (McLachlin C.J. and Binnie,
LeBel, Deschamps, Fish, Charron, Rothstein and Cromwell JJ. concurring)
|
Bell Canada v. Bell Aliant Regional Communications, 2009 SCC
40, [2009] 2 S.C.R. 764
Bell Canada Appellant
v.
Bell Aliant
Regional Communications, Limited Partnership,
Consumers’
Association of Canada, National Anti‑Poverty
Organization,
Public Interest Advocacy Centre, MTS
Allstream
Inc., Société en commandite Télébec and TELUS
Communications Inc. Respondents
and
Canadian
Radio‑television and Telecommunications
Commission Intervener
‑ and ‑
TELUS Communications Inc. Appellant
v.
Bell Canada,
Arch Disability Law Centre, Bell Aliant
Regional
Communications, Limited Partnership, Canadian
Radio‑television
and Telecommunications Commission,
Consumers’
Association of Canada, National Anti‑Poverty
Organization,
Public Interest Advocacy Centre, MTS
Allstream
Inc., Saskatchewan Telecommunications and
Société en commandite Télébec Respondents
‑ and ‑
Consumers’
Association of Canada and National Anti‑Poverty
Organization Appellants
v.
Canadian
Radio‑television and Telecommunications
Commission,
Bell Aliant Regional Communications, Limited
Partnership,
Bell Canada, Arch Disability Law Centre,
MTS Allstream
Inc., TELUS Communications Inc. and TELUS
Communications (Québec) Inc. Respondents
Indexed as: Bell Canada v. Bell Aliant Regional
Communications
Neutral citation: 2009 SCC 40.
File Nos.: 32607, 32611.
2009: March 26; 2009: September 18.
Present: McLachlin C.J. and Binnie, LeBel,
Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.
on appeal from the federal court of
appeal
Communications law — Telephone — Regulation of rates charged by
telecommunications carriers — Canadian Radio‑television and
Telecommunications Commission ordering carriers to create deferral accounts —
Accounts being collected from urban residential telephone service revenues to
enhance competition — CRTC directing that accounts be disposed of to increase
accessibility of telecommunications services for persons with disabilities and
to expand broadband coverage — Remaining amounts, if any, being distributed to
subscribers — Whether Telecommunications Act authorizes CRTC to direct
disposition of deferral account funds as it did — Telecommunications Act, S.C.
1993, c. 38, ss. 7 , 47 .
Administrative law — Appeals — Standard of review — Canadian Radio‑television
and Telecommunications Commission — Standard of review applicable to CRTC’s
decision to direct disposition of deferral accounts — Telecommunications Act,
S.C. 1993, c. 38, ss. 7 , 47 , 52(1) .
In May 2002, the Canadian Radio‑television and Telecommunications
Commission (“CRTC”), in the exercise of its rate-setting authority, established
a formula to regulate the maximum prices to be charged for certain services
offered by incumbent local exchange carriers, including for residential
telephone services in mainly urban non-high cost serving areas (the “Price Caps
Decision”). Under the formula established by the Price Caps Decision, any
increase in the price charged for these services in a given year was limited to
an inflationary cap, less a productivity offset to reflect the low degree of
competition in that particular market. The CRTC ordered the carriers to
establish deferral accounts as separate accounting entries in their ledgers to
record funds representing the difference between the rates actually charged and
those as otherwise determined by the formula. At the time, the CRTC did not
direct how the deferral account funds were to be used.
In December 2003, Bell Canada sought approval from the CRTC to use the
balance in its deferral account to expand high-speed broadband internet
services in remote and rural communities. The CRTC invited submissions and
conducted a public process to determine the appropriate disposition of the
deferral accounts. In February 2006, it decided that each deferral account
should be used to improve accessibility for individuals with disabilities and
for broadband expansion. Any unexpended funds were to be distributed to
certain current residential subscribers through a one-time credit or via
prospective rate reductions. This was known as the “Deferral Accounts
Decision”.
Bell Canada appealed the order of one-time credits, while the Consumers’
Association of Canada and the National Anti‑Poverty Organization appealed
the direction that the funds be used for broadband expansion. The Federal
Court of Appeal dismissed the appeals, finding that the Price Caps Decision
regime always contemplated that the disposition of the deferral accounts would
be subject to the CRTC’s directions and that the CRTC was at all times acting
within its mandate. TELUS Communications Inc. joined Bell Canada as an
appellant in this Court.
Held: The appeals should be dismissed.
The CRTC’s creation and use of the deferral accounts for broadband expansion and
consumer credits was authorized by the provisions of the Telecommunications
Act which lays out the basic legislative framework of the Canadian
telecommunications industry. In particular, s. 7 of the Act sets out certain
broad telecommunications policy objectives and s. 47 (a) directs the CRTC
to implement them when exercising its statutory authority, balancing the
interests of consumers, carriers and competitors. A central responsibility of
the CRTC is to determine and approve just and reasonable rates to be charged
for telecommunications services. Pursuing policy objectives through the
exercise of its rate-setting power is precisely what s. 47 requires the CRTC to
do in setting just and reasonable rates. [1] [28] [36]
The issues raised in these appeals go to the very heart of the CRTC’s
specialized expertise. The core of the quarrel in effect is with the
methodology for setting rates and the allocation of certain proceeds derived
from those rates, a polycentric exercise with which the CRTC is statutorily
charged and which it is uniquely qualified to undertake. The standard of
review is therefore reasonableness. [38]
In ordering subscriber credits and approving the use of funds for
broadband expansion, the CRTC acted reasonably and in accordance with the
policy objectives of the Telecommunications Act . In
the Price Caps Decision, the CRTC indicated that the amounts in the deferral
accounts would help achieve the CRTC’s objectives. When the CRTC approved the
rates derived from the Price Caps Decision, the portion of the revenues that
went into the deferral accounts remained subject to the CRTC’s further
directions. The deferral accounts, and the fact that they were encumbered by
the possibility of the CRTC’s future directions, were therefore an integral
part of the rate-setting exercise. The allocation of deferral account funds to
consumers was neither a variation of a final rate nor, strictly speaking, a
rebate. From the Price Caps Decision onwards, it was understood that the
disposition of the deferral account funds might include an eventual credit to
subscribers once the CRTC determined the appropriate allocation. [64‑65]
[77]
There was no inappropriate cross-subsidization between
residential telephone services and broadband expansion. The Telecommunications
Act contemplates a comprehensive national telecommunications framework.
The policy objectives that the CRTC is always obliged to consider demonstrate
that it need not limit itself to considering solely the service at issue in
determining whether rates are just and reasonable. It properly treated the
statutory objectives as guiding principles in the exercise of its rate‑setting
authority, and came to a reasonable conclusion. [73] [75] [77]
Cases Cited
Referred to: Telecom
Decision CRTC 2002‑34, May 30, 2002; Telecom Decision CRTC 2005‑69,
December 16, 2005; Telecom Decision CRTC 2003‑15, March 18, 2003; Telecom
Decision CRTC 2003‑18, March 18, 2003; Telecom Decision CRTC 2006-9,
February 16, 2006; Telecom Decision CRTC 2008‑1, January 17, 2008; Council
of Canadians with Disabilities v. VIA Rail Canada Inc., 2007 SCC 15, [2007]
1 S.C.R. 650; Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R.
190; Canada (Citizenship and Immigration) v. Khosa, 2009 SCC 12, [2009]
1 S.C.R. 339; Northwestern Utilities Ltd. v. City of Edmonton, [1929]
S.C.R. 186; ATCO Gas and Pipelines Ltd. v. Alberta (Energy and Utilities
Board), 2006 SCC 4, [2006] 1 S.C.R. 140; Re General Increase in Freight
Rates (1954), 76 C.R.T.C. 12; Canadian National Railways Co. v. Bell
Telephone Co. of Canada, [1939] 1 S.C.R. 308; Telecom Decision CRTC 97‑9,
May 1, 1997; Telecom Decision CRTC 94‑19, September 16, 1994; Edmonton
(City) v. 360Networks Canada Ltd., 2007 FCA 106, [2007] 4 F.C.R. 747, leave
to appeal refused, [2007] 3 S.C.R. vii; Barrie Public Utilities v. Canadian
Cable Television Assn., 2003 SCC 28, [2003] 1 S.C.R. 476; Telecom Decision
CRTC 93‑9, July 23, 1993; Bell Canada v. Canada (Canadian Radio‑television
and Telecommunications Commission), [1989] 1 S.C.R. 1722; EPCOR
Generation Inc. v. Energy and Utilities Board, 2003 ABCA 374, 346 A.R. 281;
Reference Re Section 101 of the Public Utilities Act (1998), 164 Nfld.
& P.E.I.R. 60.
Statutes and Regulations Cited
Railway Act, R.S.C. 1985, c. R-3, s. 340(1).
Telecommunications Act, S.C. 1993, c. 38, ss. 7 , 24 , 25(1) , 27 , 32 (g), 35(1) ,
37(1) , 42(1) , 46.5(1) , 47 , 52(1) .
Authors Cited
Ryan, Michael H. Canadian
Telecommunications Law and Regulation. Scarborough: Carswell, 1993
(loose-leaf updated 2008, release 2).
APPEALS from a judgment of the Federal Court of Appeal
(Richard C.J. and Noël and Sharlow JJ.A.), 2008 FCA 91, 375 N.R. 124, 80 Admin.
L.R. (4th) 159, [2008] F.C.J. No. 397 (QL), 2008 CarswellNat 544,
affirming a decision of the Canadian Radio‑television and
Telecommunications Commission, 2006 LNCRTCE 9 (QL), 2006 CarswellNat 6317.
Appeals dismissed.
Neil Finkelstein, Catherine
Beagan Flood and Rahat Godil, for the appellant/respondent Bell
Canada.
Michael H. Ryan, John E.
Lowe, Stephen R. Schmidt and Sonya A. Morgan, for
the appellant/respondent TELUS Communications Inc. and the respondent TELUS
Communications (Québec) Inc.
Richard P. Stephenson,
Danny Kastner and Michael Janigan, for the appellants/respondents
the Consumers’ Association of Canada and the National Anti‑Poverty
Organization and the respondent the Public Interest Advocacy Centre.
Michael Koch and Dina F.
Graser, for the respondent MTS Allstream Inc.
John B. Laskin
and Afshan Ali, for the respondent/intervener the Canadian Radio‑television
and Telecommunications Commission.
No one appeared for the respondents Société en commandite Télébec, Arch
Disability Law Centre, Bell Aliant Regional Communications, Limited
Partnership, and Saskatchewan Telecommunications.
The judgment of the Court was delivered by
[1]
Abella J. — The Telecommunications Act, S.C. 1993, c. 38 , sets out
certain broad telecommunications policy objectives. It directs the Canadian
Radio-television and Telecommunications Commission (“CRTC”) to implement them
in the exercise of its statutory authority, balancing the interests of consumers,
carriers and competitors in the context of the Canadian telecommunications
industry. The issue in these appeals is whether this authority was properly
exercised.
[2]
While distinct questions arise in each of the appeals before us,
the common problem is whether the CRTC, in the exercise of its rate-setting
authority, appropriately directed the allocation of funds to various purposes.
In the Bell Canada and TELUS Communications Inc. appeal, the challenged purpose
is the distribution of funds to customers, while in the Consumers’ Association
of Canada and National Anti-Poverty Organization appeal, the impugned
allocation was directed at the expansion of broadband infrastructure. For the
reasons that follow, in my view the CRTC’s allocations were reasonable based on
the Canadian telecommunications policy objectives that it is obliged to
consider in the exercise of all of its powers, including its authority to
approve just and reasonable rates.
Background
[3]
The CRTC issued its landmark “Price Caps Decision”
in May 2002. Exercising its rate-setting authority, the CRTC established a
formula to regulate the maximum prices charged for certain services offered by
incumbent local exchange carriers (“ILECs”), who are primarily well-established
telecommunications carriers.
[4]
As part of its decision, the CRTC ordered the affected carriers
to create separate accounting entries in their ledgers. These were called
“deferral accounts”. The funds contained in these deferral accounts were
derived from residential telephone service revenues in non‑high cost
serving areas (“non‑HCSAs”), which are mainly urban. Under the formula
established by the Price Caps Decision, any increase in the price charged for
these services in a given year was limited to an inflationary cap, less a
productivity offset to reflect the low degree of competition in that particular
market.
[5]
More specifically, the effect of the inflationary cap was to bar
carriers from increasing their prices at a rate greater than inflation. The
productivity offset, on the other hand, put downward pressure on the rates to
be charged. While market forces would normally serve to encourage carriers to
reduce both their costs and their prices, the low level of competition in the
non-HCSA market led the CRTC to conclude that an offsetting factor was
necessary as a proxy for the effect of competition.
[6]
Given the countervailing factors at work in the Price Caps
Decision formula, there was the potential for a decrease in the price of
residential services in these areas if inflation fell below a certain level.
Rather than mandating such a decrease, however, the CRTC concluded that lower
prices, and therefore the prospect of lower revenues, would constitute a
barrier to the entry of new carriers into this particular telecommunications
market. It therefore ordered that amounts representing the difference between
the rates actually charged, not including the decrease mandated by the
Price Caps Decision formula, and the rates as otherwise determined
through the formula, were to be collected from subscribers and recorded in
deferral accounts held by each carrier. These accounts were to be reviewed
annually by the CRTC. The intent of the Price Caps Decision was, therefore,
that prices for these services would remain at a level sufficient to encourage
market entry, while at the same time maintaining the pressure on the incumbent
carriers to reduce their costs.
[7]
The principal objectives the CRTC intended the Price Caps
Decision to achieve were the following:
a) to render reliable and affordable services of high quality,
accessible to both urban and rural area customers;
b) to balance the interests of the three main stakeholders in
telecommunications markets, i.e., customers, competitors and incumbent
telephone companies;
c) to foster facilities‑based competition in Canadian
telecommunications markets;
d) to provide incumbents with incentives to increase efficiencies
and to be more innovative; and
e) to adopt regulatory approaches that impose the
minimum regulatory burden compatible with the achievement of the previous four
objectives. [para. 99]
[8]
The CRTC discussed the future use of the deferral account funds
as follows:
The Commission anticipates that an adjustment to the deferral account
would be made whenever the Commission approves rate reductions for residential
local services that are proposed by the ILECs as a result of competitive
pressures. The Commission also anticipates that the deferral account would be
drawn down to mitigate rate increases for residential service that could result
from the approval of exogenous factors or when inflation exceeds productivity.
Other draw downs could occur, for example, through subscriber rebates or the
funding of initiatives that would benefit residential customers in other ways.
[Emphasis added; para. 412.]
At the time, it
did not specifically direct how the deferral account funds were to be used,
leaving the issue subject to further submissions. While some participants
objected to the creation of the deferral accounts, no one appealed the Price
Caps Decision (Bell Canada v. Canadian Radio-television and
Telecommunications Commission, 2008 FCA 91, 80 Admin. L.R. (4th) 159, at
para. 14).
[9]
The Price Caps Decision was to apply to services offered by Bell
Canada, TELUS, and other affected carriers for the four-year period from June
1, 2002 to May 31, 2006. In a decision in 2005, the CRTC extended this price
regulation regime for another year to May 31, 2007.
The CRTC allowed some draw-downs of the deferral accounts following the Price
Caps Decision that are not at issue in these appeals.
[10]
In March 2003, in two separate decisions, the CRTC approved the
rates for Bell Canada and TELUS. In the Bell
Canada decision, the CRTC appeared to contemplate the continued operation of
the deferral accounts established in the Price Caps Decision. It ordered, for
example, that certain tax savings be allocated to the deferral accounts:
The Commission, in Decision 2002‑34, established a deferral account
in conjunction with the application of a basket constraint equal to the rate of
inflation less a productivity offset to all revenues from residential services
in non‑HCSAs. The Commission considers that AT&T Canada’s proposal to
allocate the Ontario GRT and the Quebec TGE tax savings associated with all
capped services to the price cap deferral account is inconsistent with that
determination. The Commission finds that Bell Canada’s proposal to include
the Ontario GRT and Quebec TGE tax savings associated with the residential
local services in non‑HCSAs basket in the price cap deferral account is
consistent with that determination. [Emphasis added; para. 32.]
[11]
On December 2, 2003, Bell Canada sought the approval of the CRTC
to use the balance in its deferral account to expand high‑speed broadband
internet service to remote and rural communities. In response, on March 24,
2004, the CRTC issued a public notice requesting submissions on the appropriate
disposition of the deferral accounts. Pursuant to
this notice, the CRTC conducted a public process whereby proposals were invited
for the disposition of the affected carriers’ deferral accounts. The review
was extensive and proposals were received from numerous parties.
[12]
This led to the release of the “Deferral Accounts Decision” on
February 16, 2006. In this
decision, the CRTC directed how the funds in the deferral accounts were to be
used. These directions form the foundation of these appeals.
[13]
After considering the various policy objectives outlined in the
applicable statute, the Telecommunications Act , and the purposes set out
in the Price Caps Decision, the CRTC concluded that all funds in the deferral
accounts should be targeted for disposal by a designated date in 2006:
The attachment
to this Decision provides preliminary estimates of the deferral account
balances as of the end of the fourth year of the current price cap period in
2006. The Commission notes that the deferral account balances are expected
to be very large for some ILECs. It also notes the concern that allowing funds
to continue to accumulate in the accounts would create inefficiencies and
uncertainties.
.
. .
Accordingly,
the Commission considers it appropriate not only to provide directions on the
disposition of all the funds that will have accumulated in the ILECs’ deferral
accounts by the end of the fourth year of the price cap period in 2006, but also
to provide directions to address amounts recurring beyond this period in order
to prevent further accumulation of funds in the deferral accounts. The
Commission will provide directions and guidelines for disposing of these
amounts later in this Decision. [Emphasis added; paras. 58 and 60.]
[14]
The CRTC further decided that the deferral accounts should be
disbursed primarily for two purposes. As a priority, at least 5 percent of the
accounts was to be used for improving accessibility to telecommunications services
for individuals with disabilities. The other 95 percent was to be used for
broadband expansion in rural and remote communities. Proposals were invited on
how the deferral account funds should be applied. If the proposal as approved
was for less than the balance of its deferral account, an affected carrier was
to distribute the remaining amount to consumers.
[15]
In summary, therefore, the CRTC decided that the affected
carriers should focus on broadband expansion and accessibility improvement. It
also decided that if these two objectives could be fulfilled for an amount less
than the full deferral account balances, credits to subscribers would be
ordered out of the remainder. It should be noted that customers were not to be
compensated in proportion to what they had paid through these credits because
of the potential administrative complexity of identifying these individuals and
quantifying their respective shares. Instead, the credits were to be provided
to certain current subscribers. Prospective rate reductions could also be used
to eliminate recurring amounts in the accounts.
[16]
At the time, the balance in the deferral accounts established
under the Price Caps Decision was considerable. Bell Canada’s account was
estimated to contain approximately $480.5 million, while the TELUS account was
estimated at about $170 million.
[17]
It is helpful to set out how the CRTC explained its decision on
the allocation of the deferral account funds. Referencing the importance of
telecommunications in connecting Canada’s “vast geography and relatively
dispersed population”, it stressed that Canada had fallen behind in the
adoption of broadband services (paras. 73-74). It contrasted the wide
availability of broadband service in urban areas with the less developed
network in rural and remote communities. Further, it noted that the objectives
outlined in the Price Caps Decision and in the Telecommunications Act at
s. 7 (b) provided for improving the quality of telecommunications
services in those communities, and that their social and economic development
would be favoured by an expansion of the national broadband network. In its
view, this initiative would also provide a helpful complement to the efforts of
both levels of government to expand broadband coverage. It therefore concluded
that broadband expansion was an appropriate use of a part of the deferral
account funds (paras. 73-80).
[18]
The CRTC also explained that while customer credits would be
consistent with the objectives set out in s. 7 of the Telecommunications Act
and with the Price Caps Decision, these disbursements should not be given
priority because broadband expansion and accessibility services provided
greater long-term benefits. Nevertheless, credits effectively balanced the
interests of the “three main stakeholders in the telecommunications markets”
(para. 115), namely customers, competitors and carriers. It concluded that
credits did not contradict the purpose of the deferral accounts, and contrasted
one‑time credits with a reduction of rates. In its view, credits, unlike
rate reductions, did not have a sustained negative impact on competition in
these markets, which was the concern the deferral accounts were set up to
address (paras. 112-16).
[19]
A dissenting Commissioner expressed concerns over the disposition
of the deferral account funds. In her view, the CRTC had no mandate to direct
the expansion of broadband networks across the country. The CRTC’s policy had
generally been to ensure the provision of a basic level of service, not
services like broadband, and she therefore considered the CRTC’s reliance on
the objectives of the Telecommunications Act to be inappropriate.
[20]
On January 17, 2008, the CRTC issued another decision dealing
with the carriers’ proposals to use their deferral account balances for the
purposes set out in the Deferral Accounts Decision.
Some carriers’ plans were approved in part, with the result that only a portion
of their deferral account balances was allocated to those projects.
Consequently, the CRTC required them to submit, by March 25, 2008, a plan for
crediting the balance in their deferral accounts to residential subscribers in
non-HCSAs.
[21]
Bell Canada, as well as the Consumers’ Association of Canada and
the National Anti-Poverty Organization, appealed the CRTC’s Deferral Accounts
Decision to the Federal Court of Appeal. The Deferral Accounts Decision was
stayed by Richard C.J. in the Federal Court of Appeal on January 25, 2008. The
decision requiring further submissions on plans to distribute the deferral
account balances was also stayed by Sharlow J.A. pending the filing of an
application for leave to appeal to this Court on April 23, 2008. Both stay
orders were extended by this Court on September 25, 2008. The stay orders do
not apply to the funds allocated for the improvement of accessibility for
individuals with disabilities.
[22]
In a careful judgment by Sharlow J.A., the court unanimously
dismissed the appeals (2008 FCA 91, 80 Admin. L.R. (4th) 159), concluding that
the Price Caps Decision regime always contemplated the future disposition of
the deferral account funds as the CRTC would direct, and that the CRTC acted within
its broad mandate to pursue its regulatory objectives. For the reasons that
follow, I agree with the conclusions reached by Sharlow J.A.
Analysis
[23]
The parties have staked out diametrically opposite positions on
how the balance of the deferral account funds should be allocated.
[24]
Bell Canada argued that the CRTC had no statutory authority to
order what it claimed amounted to retrospective “rebates” to consumers. In its
view, the distributions ordered by the CRTC were in substance a variation of
rates that had been declared final. TELUS joined Bell Canada in this Court,
and argued that the CRTC’s order for “rebates” constituted an unjust confiscation
of property.
[25]
In response, the CRTC contended that its broad mandate to set
rates under the Telecommunications Act includes establishing and
ordering the disposal of funds from deferral accounts. Because the deferral
account funds had always been subject to the possibility of disbursement to
customers, there was therefore no variation of a final rate or any
impermissible confiscation.
[26]
The Consumers’ Association of Canada was the only party to oppose
the allocation of 5 percent of the deferral account balances to improving
accessibility, but abandoned this argument during the hearing before the
Federal Court of Appeal. Together with the National Anti-Poverty Organization,
it argued before this Court that the rest of the deferral account balances
should be distributed to customers in full, and that the CRTC had no authority
to allow the use of the funds for broadband expansion.
[27]
These arguments bring us directly to the statutory scheme at
issue.
[28]
The Telecommunications Act lays out the basic legislative
framework of the Canadian telecommunications industry. In addition to setting
out numerous specific powers, the statute’s guiding objectives are set out in
s. 7 . Pursuant to s. 47 (a), the CRTC must consider these objectives in
the exercise of all of its powers. These provisions state:
7. It is hereby affirmed that telecommunications performs an
essential role in the maintenance of Canada’s identity and sovereignty and that
the Canadian telecommunications policy has as its objectives
(a) to
facilitate the orderly development throughout Canada of a telecommunications
system that serves to safeguard, enrich and strengthen the social and economic
fabric of Canada and its regions;
(b) to
render reliable and affordable telecommunications services of high quality
accessible to Canadians in both urban and rural areas in all regions of Canada;
(c) to
enhance the efficiency and competitiveness, at the national and international
levels, of Canadian telecommunications;
(d) to
promote the ownership and control of Canadian carriers by Canadians;
(e) to
promote the use of Canadian transmission facilities for telecommunications
within Canada and between Canada and points outside Canada;
(f) to
foster increased reliance on market forces for the provision of
telecommunications services and to ensure that regulation, where required, is
efficient and effective;
(g) to
stimulate research and development in Canada in the field of telecommunications
and to encourage innovation in the provision of telecommunications services;
(h) to
respond to the economic and social requirements of users of telecommunications
services; and
(i) to
contribute to the protection of the privacy of persons.
.
. .
47. The Commission shall exercise its powers and
perform its duties under this Act and any special Act
(a) with a view to implementing the Canadian
telecommunications policy objectives and ensuring that Canadian carriers
provide telecommunications services and charge rates in accordance with section
27 ;
The CRTC relied
on these two provisions in arguing that it was required to take into account a
broad spectrum of considerations in the exercise of its rate‑setting
powers, and that the Deferral Accounts Decision was simply an extension of this
approach.
[29]
The Telecommunications Act grants the CRTC the general
power to set and regulate rates for telecommunications services in Canada. All
tariffs imposed by carriers, including rates for services, must be submitted to
it for approval, and it may decide any matter with respect to rates in the
telecommunications services industry, as the following provisions show:
24. The offering and provision of any
telecommunications service by a Canadian carrier are subject to any conditions
imposed by the Commission or included in a tariff approved by the
Commission.
25. (1) No Canadian carrier shall provide a
telecommunications service except in accordance with a tariff filed with and
approved by the Commission that specifies the rate or the maximum or
minimum rate, or both, to be charged for the service.
.
. .
32. The Commission may, for the purposes of this Part,
.
. .
(g) in the absence of any applicable provision in this Part,
determine any matter and make any order relating to the rates, tariffs or
telecommunications services of Canadian carriers.
[30]
The guiding rule of rate-setting under the Telecommunications
Act is that the rates be “just and reasonable”, a longstanding regulatory
principle. To determine whether rates meet this standard, the CRTC has a wide
discretion which is protected by a privative clause:
27. (1) Every rate charged by a Canadian carrier for a telecommunications
service shall be just and reasonable.
.
. .
(3) The Commission may determine in any case, as a question of
fact, whether a Canadian carrier has complied with section 25, this section or
section 29, or with any decision made under section 24 , 25 , 29 , 34 or 40 .
.
. .
(5) In determining whether a rate is just and reasonable, the
Commission may adopt any method or technique that it considers appropriate,
whether based on a carrier’s return on its rate base or otherwise.
.
. .
52. (1) The Commission may, in exercising its
powers and performing its duties under this Act or any special Act, determine
any question of law or of fact, and its determination on a question of fact is
binding and conclusive.
[31]
In addition to the power under s. 27(5) to adopt “any method or
technique that it considers appropriate” for determining whether a rate is just
and reasonable, the CRTC also has the authority under s. 37(1) to order a
carrier to adopt “any accounting method or system of accounts” in view of the
proper administration of the Telecommunications Act . Section 37(1)
states:
37.
(1) The Commission may require a Canadian carrier
(a) to adopt any method of identifying the costs of
providing telecommunications services and to adopt any accounting method or
system of accounts for the purposes of the administration of this
Act;
[32]
The CRTC has other broad powers which, while not at issue in this
case, nevertheless further demonstrate the comprehensive regulatory powers
Parliament intended to grant. These include the ability to order a Canadian
carrier to provide any service in certain circumstances (s. 35(1) ); to require
communications facilities to be provided or constructed (s. 42(1) ); and to
establish any sort of fund for the purpose of supporting access to basic
telecommunications services (s. 46.5(1) ).
[33]
This statutory overview assists in dealing with the preliminary
issue of the applicable standard of review. Although the Federal Court of
Appeal accepted the parties’ position that the applicable standard of review
was correctness, Sharlow J.A. acknowledged that the standard of review could be
more deferential in light of this Court’s decision in Council of Canadians
with Disabilities v. VIA Rail Canada Inc., 2007 SCC 15, [2007] 1 S.C.R.
650, at paras. 98-100. This was an invitation, it seems to me, to clarify what
the appropriate standard is.
[34]
Bell Canada and TELUS concede that the CRTC had the authority to
approve disbursements from the deferral accounts for initiatives to improve
broadband expansion and accessibility to telecommunications services for
persons with disabilities, and that they actually sought such approval. In
their view, however, this authority did not extend to what they characterized
as retrospective “rebates”. Similarly, in the Consumers’ appeal the crux of
the complaint is with whether the CRTC could direct that the funds be disbursed
in certain ways, not with whether it had the authority to direct how the funds
ought to be spent generally.
[35]
This means that for the Bell Canada and TELUS appeal, the
dispute is over the CRTC’s authority and discretion under the Telecommunications
Act in connection with ordering credits to customers from the deferral
accounts. In the Consumers’ appeal, it is over its authority and discretion in
ordering that funds from the deferral accounts be used for the expansion of
broadband services.
[36]
A central responsibility of the CRTC is to determine and approve
just and reasonable rates to be charged for telecommunications services.
Together with its rate-setting power, the CRTC has the ability to impose any
condition on the provision of a service, adopt any method to
determine whether a rate is just and reasonable and require a carrier to adopt any
accounting method. It is obliged to exercise all of its powers and duties with
a view to implementing the Canadian telecommunications policy objectives set
out in s. 7 .
[37]
The CRTC’s authority to establish the deferral accounts is found
through a combined reading of ss. 27 and 37(1) . The authority to establish
these accounts necessarily includes the disposition of the funds they contain,
a disposition which represents the final step in a process set in motion by the
Price Caps Decision. It is self-evident that the CRTC has considerable
expertise with respect to this type of question. This observation is reflected
in its extensive statutory powers in this regard and in the strong privative
clause in s. 52(1) protecting its determinations on questions of fact from
appeal, including whether a carrier has adopted a just and reasonable rate.
[38]
In my view, therefore, the issues raised in these appeals go to
the very heart of the CRTC’s specialized expertise. In the appeals before us,
the core of the quarrel in effect is with the methodology for setting rates and
the allocation of certain proceeds derived from those rates, a polycentric
exercise with which the CRTC is statutorily charged and which it is uniquely
qualified to undertake. This argues for a more deferential standard of review,
which leads us to consider whether the CRTC was reasonable in directing how the
funds from the deferral accounts were to be used. (See Dunsmuir v. New
Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, at para. 54; Canada
(Citizenship and Immigration) v. Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339,
at para. 25; and VIA Rail Canada, at paras. 88-100.)
[39]
This brings us to the nature of the CRTC’s rate-setting power in
the context of this case. The predecessor statute for telecommunications
rate-setting, the Railway Act, R.S.C. 1985, c. R-3, also stipulated that
rates be “just and reasonable” (s. 340(1)). Traditionally, those rates were
based on a balancing between a fair rate for the consumer and a fair return on
the carrier’s investment. (See, e.g., Northwestern Utilities Ltd. v. City
of Edmonton, [1929] S.C.R. 186, at pp. 192-93, and ATCO Gas and
Pipelines Ltd. v. Alberta (Energy and Utilities Board), 2006 SCC 4, [2006]
1 S.C.R. 140, at para. 65.)
[40]
Even before the expansive language now found in the Telecommunications
Act , regulatory agencies had enjoyed considerable discretion in determining
the factors to be considered and the methodology that could be adopted for
assessing whether rates were just and reasonable. For instance, in dismissing
a leave application in Re General Increase in Freight Rates (1954), 76
C.R.T.C. 12 (S.C.C.), Taschereau J. wrote:
[I]f the Board is bound to grant a relief which is just to the public and
secures to the railways a fair return, it is not bound to accept for the
determination of the rates to be charged, the sole method proposed by the
applicant. The obligation to act is a question of law, but the choice of
the method to be adopted is a question of discretion with which, under the
statute, no Court of law may interfere. [Emphasis added; p. 13.]
In making this
determination, he relied on Duff C.J.’s judgment in Canadian National
Railways Co. v. Bell Telephone Co. of Canada, [1939] S.C.R. 308, for the
following proposition in the particular statutory context of that case:
The law dictates neither the order to be made in a given case nor the
considerations by which the Board is to be guided in arriving at the conclusion
that an order, or what order, is necessary or proper in a given case. True, it
is the duty of all public bodies and others invested with statutory powers to
act reasonably in the execution of them, but the policy of the statue [sic]
is that, subject to the appeal to the Governor in Council under section 52, in
exercising an administrative discretion entrusted to it, the Board itself is to
be the final arbiter as to the order to be made. [p. 315]
(See also
Michael H. Ryan, Canadian Telecommunications Law and Regulation
(loose-leaf), at §612.)
[41]
The CRTC’s already broad discretion in determining whether rates
are just and reasonable has been further enhanced by the inclusion of s. 27(5)
in the Telecommunications Act permitting the CRTC to adopt “any method”,
language which was absent from the Railway Act.
[42]
Even more significantly, the Railway Act contained nothing
analogous to the statutory direction under s. 47 that the CRTC must exercise
its rate-setting powers with a view to implementing the Canadian
telecommunications objectives set out in s. 7 . These statutory additions are
significant. Coupled with its rate-setting power, and its ability to use any
method for arriving at a just and reasonable rate, these provisions contradict
the restrictive interpretation of the CRTC’s authority proposed by various
parties in these appeals.
[43]
This was highlighted by Sharlow J.A. when she stated:
Because of the combined operation of section 47 and section 7 of the Telecommunications
Act . . ., the CRTC’s rating jurisdiction is not limited to considerations
that have traditionally been considered relevant to ensuring a fair price for consumers
and a fair rate of return to the provider of telecommunication services.
Section 47 of the Telecommunications Act expressly requires the CRTC to
consider, as well, the policy objectives listed in section 7 of the Telecommunications
Act . What that means, in my view, is that in rating decisions under the Telecommunications
Act , the CRTC is entitled to consider any or all of the policy objectives
listed in section 7 . [para. 35]
[44]
It is true that the CRTC had previously used a “rate base rate of
return” method, based on a combination of a rate of return for investors in
telecommunications carriers and a rate base calculated using the carriers’
assets. This resulted in rates charged for the carrier’s services that would,
on the one hand, provide a fair return for the capital invested in the carrier,
and, on the other, be fair to the customers of the carrier.
[45]
However, these expansive provisions mean that the rate base rate
of return approach is not necessarily the only basis for setting a just and
reasonable rate. Furthermore, based on ss. 7 , 27(5) and 47 , the CRTC is not
required to confine itself to balancing only the interests of subscribers and
carriers with respect to a particular service. In the Price Caps Decision, for
example, the CRTC chose to focus on maximum prices for services, rather than on
the rate base rate of return approach. It did so, in part, to foster
competition in certain markets, a goal untethered to the direct relationship
between the carrier and subscriber in the traditional rate base rate of return
approach. A similar pricing approach was adopted by the CRTC in a decision
preceding the Price Caps Decision.
[46]
The CRTC has interpreted these provisions broadly and identified
them as responsive to the evolved industry context in which it operates. In
its “Review of Regulatory Framework” decision,
it wrote:
The Act . .
. provides the tools necessary to allow the Commission to alter the traditional
manner in which it regulates (i.e., to depart from rate base rate of return
regulation).
.
. .
In brief,
telecommunications today transcends traditional boundaries and simple
definition. It is an industry, a market and a means of doing business that
encompasses a constantly evolving range of voice, data and video products and
services. . . .
In this context, the Commission notes that the Act contemplates the
evolution of basic service by setting out as an objective the provision of
reliable and affordable telecommunications, rather than merely affordable
telephone service. [Emphasis added; pp. 6 and 10.]
[47]
In Edmonton (City) v. 360Networks Canada Ltd., 2007 FCA
106, [2007] 4 F.C.R. 747, leave to appeal refused, [2007] 3 S.C.R. vii, the
Federal Court of Appeal drew similar conclusions, observing that the Telecommunications
Act should be interpreted by reference to the policy objectives, and that
s. 7 justified in part the view that the “Act should be interpreted as creating
a comprehensive regulatory scheme” (para. 46). A duty to take a more
comprehensive approach was also noted by Ryan, who observed:
Because of the importance of the telecommunications
industry to the country as a whole, rate‑making issues may sometimes
assume a dimension that gives them a significance that extends beyond the
immediate interests of the carrier, its shareholders and its customers, and
engages the interests of the public at large. It is also part of the duty of
the regulator to take these more far‑reaching interests into account.
[§604]
[48]
This leads inevitably, it seems to me, to the conclusion that the
CRTC may set rates that are just and reasonable for the purposes of the Telecommunications
Act through a diverse range of methods, taking into account a variety of
different constituencies and interests referred to in s. 7 , not simply those it
had previously considered when it was operating under the more restrictive
provisions of the Railway Act. This observation will also be apposite
later in these reasons when the question of “final rates” is discussed in
connection with the Bell Canada appeal.
[49]
I see nothing in this conclusion which contradicts the ratio in Barrie
Public Utilities v. Canadian Cable Television Assn., 2003 SCC 28, [2003] 1
S.C.R. 476. In that case, the issue was whether the CRTC could make an order
granting cable companies access to certain utilities’ power poles. In that
decision, the CRTC had relied on the Canadian telecommunications policy
objectives to inform its interpretation of the relevant provisions. In deciding
that the language of the Telecommunications Act did not give the CRTC
the power to grant access to the power poles, Gonthier J. for the majority
concluded that the CRTC had inappropriately interpreted the Canadian
telecommunications policy objectives in s. 7 as power‑conferring (para.
42).
[50]
The circumstances of Barrie Public Utilities are entirely
distinct from those at issue before us. Here, we are dealing with the CRTC
setting rates that were required to be just and reasonable, an authority fully
supported by unambiguous statutory language. In so doing, the CRTC was
exercising a broad authority, which, according to s. 47 , it was required to do
“with a view to implementing the Canadian telecommunications policy
objectives”. The policy considerations in s. 7 were factors that the CRTC was
required to, and did, take into account.
[51]
Nor does this Court’s decision in ATCO preclude the
pursuit of public interest objectives through rate-setting. In that case,
Bastarache J. for the majority, took a strict approach to the Alberta Energy
and Utilities Board’s powers under the applicable statute. The issue was
whether the Board had the authority to order the distribution of proceeds by a
regulated company to its subscribers from an asset sale it had approved. It
was argued that because the Board had the authority to make “further orders”
and impose conditions “in the public interest” on any order, it therefore had
the ability to order the disposition of the sale proceeds.
[52]
In holding that the Board had no such authority, Bastarache J.
relied in part on the conclusion that the Board’s statutory power to make
orders or impose conditions in the public interest was insufficiently precise
to grant the ability to distribute sale proceeds to ratepayers (para. 46). The
ability of the Board to approve an asset sale, and its authority to make any
order it wished in the public interest, were necessarily limited by the context
of the relevant provisions (paras. 46-48 and 50). It was obliged too to adopt
a rate base rate of return method to determine rates, pursuant to its governing
statute (paras. 65-66).
[53]
Unlike ATCO, in the case before us, the CRTC’s
rate-setting authority and its ability to establish deferral accounts for this
purpose are at the very core of its competence. The CRTC is statutorily
authorized to adopt any method of determining just and reasonable
rates. Furthermore, it is required to consider the statutory objectives in the
exercise of its authority, in contrast to the permissive, free-floating
direction to consider the public interest that existed in ATCO. The Telecommunications
Act displaces many of the traditional restrictions on rate-setting
described in ATCO, thereby granting the CRTC the ability to balance the
interests of carriers, consumers and competitors in the broader context of the
Canadian telecommunications industry (Review of Regulatory Framework decision,
at pp. 6 and 10).
[54]
The fact that deferral accounts are at issue does nothing to
change this framework. No party objected to the CRTC’s authority to establish
the deferral accounts themselves. These accounts are accepted regulatory
tools, available as a part of the Commission’s rate-setting powers. As the
CRTC has noted, deferral accounts “enabl[e] a regulator to defer consideration
of a particular item of expense or revenue that is incapable of being forecast
with certainty for the test year”. They have
traditionally protected against future eventualities, particularly the
difference between forecasted and actual costs and revenues, allowing a
regulator to shift costs and expenses from one regulatory period to another.
While the CRTC’s creation and use of the deferral accounts for broadband
expansion and consumer credits may have been innovative, it was fully supported
by the provisions of the Telecommunications Act .
[55]
In my view, it follows from the CRTC’s broad discretion to
determine just and reasonable rates under s. 27 , its power to order a carrier
to adopt any accounting method under s. 37, and its statutory mandate under s.
47 to implement the wide-ranging Canadian telecommunications policy objectives
set out in s. 7 , that the Telecommunications Act provides the CRTC with
considerable scope in establishing and approving the use to be made of deferral
accounts. They were created in accordance both with the CRTC’s rate-setting
authority and with the goal that all rates charged by carriers were and would
remain just and reasonable.
[56]
A deferral account would not serve its purpose if the CRTC did
not also have the power to order the disposition of the funds contained in it.
In my view, the CRTC had the authority to order the disposition of the accounts
in the exercise of its rate‑setting power, provided that this exercise
was reasonable.
[57]
I therefore agree with the following observation by Sharlow J.A.:
The Price Caps Decision required Bell Canada to
credit a portion of its final rates to a deferral account, which the CRTC had
clearly indicated would be disposed of in due course as the CRTC would direct.
There is no dispute that the CRTC is entitled to use the device of a mandatory
deferral account to impose a contingent obligation on a telecommunication
service provider to make expenditures that the CRTC may direct in the future. It
necessarily follows that the CRTC is entitled to make an order crystallizing
that obligation and directing a particular expenditure, provided the
expenditure can reasonably be justified by one or more of the policy objectives
listed in section 7 of the Telecommunications Act . [Emphasis added;
para. 52.]
[58]
This general analytical framework brings us to the more specific
questions in these appeals. In the first appeal, Bell Canada relied on
Gonthier J.’s decision Bell Canada v. Canada (Canadian Radio‑television
and Telecommunications Commission), [1989] 1 S.C.R. 1722 (“Bell Canada
(1989)”), to argue that “final” rates cannot be changed and that the funds
in the deferral accounts could not, therefore, be distributed as “rebates” to
customers.
[59]
In Bell Canada (1989), the CRTC approved a series of
interim rates. It subsequently reviewed them in light of Bell Canada’s changed
financial situation, and ordered the carrier to credit what it considered to be
excess revenues to its current subscribers. Arguing against the CRTC’s
authority to do so, Bell Canada contended that the CRTC could not order a
one-time credit with respect to revenues earned from rates approved by the
CRTC, whether the rate order was an interim one or not. Gonthier J. observed
that while the Railway Act contemplated a positive approval scheme that
only allowed for prospective, not retroactive or retrospective rate‑setting,
the one-time credit at issue was nevertheless permissible because the original
rates were interim and therefore inherently subject to change.
[60]
In the current case, Bell Canada argued that the rates had been
made final, and that the disposition of the deferral accounts for one-time
credits was therefore impermissible. More specifically, it argued that the
CRTC’s order of one-time credits from the deferral accounts amounted to retrospective
rate-setting as the term was used in Bell Canada (1989), at p. 1749,
namely, that their “purpose is to remedy the imposition of rates
approved in the past and found in the final analysis to be excessive”.
[61]
In my view, because this case concerns encumbered revenues in
deferral accounts (referred to by Sharlow J.A. as contingent obligations or
liabilities), we are not dealing with the variation of final rates. As Sharlow
J.A. pointed out, Bell Canada (1989) is inapplicable because it was
known from the outset in the case before us that Bell Canada would be obliged
to use the balance of its deferral account in accordance with the CRTC’s
subsequent direction (para. 53).
[62]
It would, with respect, be an oversimplification to consider
that Bell Canada (1989) applies to bar the provision of credits to
consumers in this case. Bell Canada (1989) was decided under the Railway
Act, a statutory scheme that, significantly, did not include any of the
considerations or mandates set out in ss. 7 , 27(5) and 47 of the Telecommunications
Act . Nor did it involve the disposition of funds contained in deferral
accounts.
[63]
In my view, the credits ordered out of the deferral accounts in
the case before us are neither retroactive nor retrospective. They do not vary
the original rate as approved, which included the deferral accounts, nor do
they seek to remedy a deficiency in the rate order through later measures,
since these credits or reductions were contemplated as a possible disposition
of the deferral account balances from the beginning. These funds can properly
be characterized as encumbered revenues, because the rates always
remained subject to the deferral accounts mechanism established in the Price
Caps Decision. The use of deferral accounts therefore precludes a finding of
retroactivity or retrospectivity. Furthermore, using deferral accounts to
account for the difference between forecast and actual costs and revenues has
traditionally been held not to constitute retroactive rate-setting (EPCOR
Generation Inc. v. Energy and Utilities Board, 2003 ABCA 374, 346 A.R. 281,
at para. 12, and Reference Re Section 101 of the Public Utilities Act
(1998), 164 Nfld. & P.E.I.R. 60 (Nfld. C.A.), at paras. 97-98 and 175).
[64]
The Deferral Accounts Decision was the culmination of a process
undertaken in the Price Caps Decision. In the Price Caps Decision, the CRTC
indicated that the amounts in the deferral accounts were to be used in a manner
contributing to achieving the CRTC’s objectives (paras. 409 and 412). In the
Deferral Accounts Decision, the CRTC summarized its earlier findings that draw‑downs
could occur for various purposes, including through subscriber credits (para.
6). When the CRTC approved the rates derived from the Price Caps Decision, the
portion of the revenues that went into the deferral accounts remained
encumbered. The deferral accounts, and the encumbrance to which the funds
recorded in them were subject, were therefore an integral part of the rate-setting
exercise ensuring that the rates approved were just and reasonable. It follows
that nothing in the Deferral Accounts Decision changed either the Price Caps
Decision or any other prior CRTC decision on this point. The CRTC’s later
allocation of deferral account balances for various purposes, therefore,
including customer credits, was not a variation of a final rate order.
[65]
The allocation of deferral account funds to consumers was not,
strictly speaking, a “rebate” in any event. Instead, as in Bell Canada
(1989), these allocations were one‑time disbursements or rate
reductions the carriers were required to make out of the deferral accounts to
their current subscribers. The possibility of one-time credits was
present from the inception of the rate-setting exercise. From the Price Caps
Decision onwards, it was understood that the disposition of the deferral
account funds might include an eventual credit to subscribers once the CRTC
determined the appropriate allocation. It was precisely because the rate-setting
mechanism approved by the CRTC included accumulation in and disposition from
the deferral accounts pursuant to further CRTC orders, that the rates were and
continued to be just and reasonable.
[66]
Therefore, rather than viewing Bell Canada (1989) as
setting a strict rule that subscriber credits can never be ordered out of
revenues derived from final rates, it is important to remember Gonthier J.’s
concern that the financial stability of regulated utilities could be undermined
if rates were open to indiscriminate variation (p. 1760). Nothing in the
Deferral Accounts Decision undermined the financial stability of the affected
carriers. The amounts at issue were always treated differently for accounting
purposes, and the regulated carriers were aware of the fact that the portion of
their revenues going into the deferral accounts remained encumbered. In fact,
the Price Caps Decision formula would have allowed for lower rates than
the ones ultimately set, were it not for the creation of the deferral
accounts. Those lower rates could conceivably have been considered sufficient
to maintain the financial stability of the carriers and were increased only in
an effort to encourage market entry by new competitors.
[67]
TELUS argued additionally that the Deferral Accounts Decision
constituted a confiscation of its property. This is an argument I have
difficulty accepting. The funds in the accounts never belonged unequivocally
to the carriers, and always consisted of encumbered revenues. Had the CRTC intended
that these revenues be used for any purposes the affected carriers wanted, it
could simply have approved the rates as just and reasonable and ordered the
balance of the deferral accounts turned over to them. It chose not to do so.
[68]
It is also worth noting that in approving Bell Canada’s rates,
the CRTC ordered it to allocate certain tax savings to the deferral accounts.
Neither the CRTC, nor Bell Canada, could possibly have expected that the
company would be able to keep that portion of its rate revenue representing a
past liability for taxes that it was in fact not currently liable to pay or
defer.
[69]
For the above reasons, I would dismiss the Bell Canada and TELUS
appeal.
[70]
The premise underlying the Consumers’ Association of Canada
appeal is that the disposition of some deferral account funds for broadband
expansion highlighted the fact that the rates charged by carriers were, in a
certain sense, not just and reasonable. Consumers can only succeed if it can
demonstrate that the CRTC’s decision was unreasonable.
[71]
At its core, Consumers’ primary argument was that the Deferral
Accounts Decision effectively forced users of a certain service (residential
subscribers in certain areas) to subsidize users of another service (the future
users of broadband services) once the expansion of broadband infrastructure was
completed. In its view, this was an indication that the rates charged to
residential users were not in fact just and reasonable, and that therefore the
balance in the deferral accounts, excluding the disbursements for accessibility
services, should be distributed to customers.
[72]
As previously noted, the deferral accounts were created and
disbursed pursuant to the CRTC’s power to approve just and reasonable rates,
and were an integral part of such rates. Far from rendering these rates
inappropriate, the deferral accounts ensured that the rates were just
and reasonable. And the policy objectives in s. 7 , which the CRTC is always
obliged to consider, demonstrate that the CRTC need not limit itself to
considering solely the service at issue in determining whether rates are just
and reasonable. The statute contemplates a comprehensive national
telecommunications framework. It does not require the CRTC to atomize
individual services. It is for the CRTC to determine a tolerable level of
cross-subsidization.
[73]
Nor does the traditional approach to telecommunications
regulation support Consumers’ argument. Long‑distance telephone users
have long subsidized local telephone users (Price Caps Decision, at para. 2).
Therefore, while rates for individual services covered by the Telecommunications
Act may be evaluated on a just and reasonable basis, rates are not necessarily
rendered unreasonable or unjust simply because there is some
cross-subsidization between services. (See Ryan, at §604, for the proposition
that the CRTC can determine the appropriate extent of cross-subsidization for a
given telecommunications carrier.)
[74]
In my view, the CRTC properly considered the objectives set out
in s. 7 when it ordered expenditures for the expansion of broadband
infrastructure and consumer credits. In doing so, it treated the statutory
objectives as guiding principles in the exercise of its rate‑setting
authority. Pursuing policy objectives through the exercise of its rate-setting
power is precisely what s. 47 requires the CRTC to do in setting just and
reasonable rates.
[75]
In deciding to allocate the deferral account funds to improving
accessibility services and broadband expansion in rural and remote areas, the
CRTC had in mind its statutorily mandated objectives of facilitating “the
orderly development throughout Canada of a telecommunications system that
serves to . . . strengthen the social and economic fabric of Canada” under s.
7 (a); rendering “reliable and affordable telecommunications services . .
. to Canadians in both urban and rural areas” under s. 7 (b); and
responding “to the economic and social requirements of users of
telecommunications services” pursuant to s. 7 (h).
[76]
The CRTC heard from several parties, considered its statutorily
mandated objectives in exercising its powers, and decided on an appropriate
course of action. Under the circumstances, I have no hesitation in holding
that the CRTC made a reasonable decision in ordering broadband expansion.
[77]
I would therefore conclude that the CRTC did exactly what it was
mandated to do under the Telecommunications Act . It had the statutory
authority to set just and reasonable rates, to establish the deferral accounts,
and to direct the disposition of the funds in those accounts. It was obliged
to do so in accordance with the telecommunications policy objectives set out in
the legislation and, as a result, to balance and consider a wide variety of
objectives and interests. It did so in these appeals in a reasonable way, both
in ordering subscriber credits and in approving the use of the funds for
broadband expansion.
[78]
I would dismiss the appeals. At the request of all parties,
there will be no order for costs.
Appeals dismissed.
Solicitors for the appellant/respondent Bell Canada: Blake,
Cassels & Graydon, Toronto.
Solicitors for the appellant/respondent TELUS Communications Inc. and
the respondent TELUS Communications (Québec) Inc.: Burnet, Duckworth
& Palmer, Calgary.
Solicitors for the appellants/respondents the Consumers’ Association
of Canada and the National Anti‑Poverty Organization and the respondent
the Public Interest Advocacy Centre: Paliare, Roland, Rosenberg,
Rothstein, Toronto.
Solicitors for the respondent MTS Allstream Inc.: Goodmans,
Toronto.
Solicitors for the respondent/intervener the Canadian Radio‑television
and Telecommunications Commission: Torys, Toronto.
Telecom Decision CRTC 2002‑34, May 30, 2002 (online:
www.crtc.gc.ca/eng/archive/2002/dt2002-34.htm).
.
Telecom Decision CRTC 2005‑69, December 16, 2005 (online:
www.crtc.gc.ca/eng/archive/2005/dt2005-69.htm).
Telecom Decision CRTC 2003‑15, March 18, 2003 (online:
www.crtc.gc.ca/eng/archive/2003/dt2003-15.htm) and Telecom Decision CRTC 2003‑18,
March 18, 2003 (online: www.crtc.gc.ca/eng/archive/2003/dt2003‑18.htm).
Telecom Public Notice CRTC 2004‑1.
Telecom Decision CRTC 2006-9 (online:
www.crtc.gc.ca/eng/archive/2006/dt2006‑9.htm).
Telecom Decision CRTC 2008‑1 (online:
www.crtc.gc.ca/eng/archive/2008/dt2008‑1.htm).
Telecom Decision CRTC 97‑9, May 1, 1997 (online:
www.crtc.gc.ca/eng/archive/1997/DT97‑9.htm).
Telecom Decision CRTC 94‑19, September 16, 1994 (online:
www.crtc.gc.ca/eng/archive/1994/DT94‑19.htm).
Telecom Decision CRTC 93-9, July 23, 1993 (online:
www.crtc.gc.ca/eng/archive/1993/DT93‑9.htm).
Telecom Decision CRTC 2003‑15, at para. 32.