Decision on Telecommunications and Radio Equipment Service Fees of the Certification and Engineering Bureau

1. Through the release of this document, Innovation, Science and Economic Development Canada (ISED), on behalf of the Minister of Innovation, Science and Industry (the Minister) announces decisions (the Decision) resulting from the consultation process undertaken in Canada Gazette Notice SMSE-022-22, Consultation on Telecommunications and Radio Equipment Service Fees of the Certification and Engineering Bureau (the Consultation). The Consultation addressed the fee framework related to the certification of radio equipment and the registration of telecommunications equipment.

2. Comments and/or reply comments were received from:

• Rogers Communications Canada Inc. (Rogers)
• Saskatchewan Telecommunications Holding Corporation (SaskTel)

3. This Decision applies to fees for the certification of radio equipment and the registration of telecommunications equipment in Canada and to the related approval and review processes. ISED sought comments on its proposal to modernize fees related to administering the regulatory approvals for radio and telecommunications equipment as described in the document titled TRC‑49, Telecommunications and Radio Equipment Service Fees of the Certification and Engineering Bureau (TRC-49). In line with the guidance introduced through the Service Fees Act (SFA), ISED proposed revised fees that will permit cost recovery of the radio and telecommunications equipment program. In association with its proposed fees, ISED also recommended revising its Spectrum and Telecommunications Service Standards in an effort to better reflect the expectations of its stakeholders. As a result of the changes within this proposal, a revised TRC-49 will be published.

4. The Minister, through the Department of Industry Act, the Radiocommunication Act and the Radiocommunication Regulations, with due regard to the objectives of the Telecommunications Act, is responsible for managing a fair and equitable telecommunication and radio equipment marketplace in Canada. As such, the Minister is responsible for developing goals and national policies for ensuring the effective management of the registration of telecommunications equipment and the certification of radio equipment.

5. The Minister is provided with the authority to fix the fees under the Department of Industry Act (DIA).

6. The radiocommunication industry will continue its ongoing transformation with the deployment and evolution of 5th generation (5G) networks. Such technological advancements are expected to support innovative and data intensive applications within most industries while fostering progress throughout the Canadian economy.

7. Through Canada’s Innovation and Skills Plan and its focus on skills, research, technology and commercialization, program simplification, and investment and scale, the Government of Canada is committed to promoting innovation-led growth across all sectors of the Canadian economy. Telecommunications and radio equipment is widely used by all economic sectors and is integral to Canada’s telecommunications infrastructure.

8. The Service Fees Act  requires, among other things, that federal departments and agencies adjust their fees periodically. In alignment with the SFA, and following an in-depth review of its costs, ISED proposed to modernize fees related to the equipment certification and registration programs. The exercise to adjust fees will permit ISED to accomplish its goals of promoting innovation within the radio and telecommunications sector by ensuring that its equipment program is appropriately funded to be able to adapt and modernize alongside rapid evolution of technology. By ensuring that ISED’s equipment program is able to sustain its excellence in administering radio equipment certifications and telecommunications equipment registration, stakeholders including Canadian consumers, manufacturers, service providers, and innovators are able to trust that the Canadian marketplace for radio and telecommunication is fair and equitable and adopts the latest technology.

9. As set out in the Spectrum Policy Framework for Canada and its enabling guidelines, ISED aims to maximize the economic and social benefit that Canadians derive from the use of the radio frequency spectrum resource and the introduction of new and innovative radio technologies. In light of the challenges of a rapidly changing technological environment, ISED has committed to ensuring that Canada has a world-class telecommunications infrastructure, and that Canadian consumers, businesses and public institutions continue to benefit from advanced wired and wireless telecommunications services and devices.

10. In May 2019, the Government of Canada released Canada’s Digital Charter: Trust in a digital world (the Digital Charter). The Digital Charter lists universal access as the first of ten principles that will lay the foundation for a made-in-Canada digital approach, and guide policy thinking and actions towards establishing an innovative, people-centred and inclusive digital and data economy built on trust. Universal access is the principle that all Canadians will have an equal opportunity to participate in the digital world and have the necessary tools to do so, including access, connectivity, literacy and skills. Access to the latest and most innovative telecommunications and radio equipment will play a key role in supporting universal access in the most remote areas of the country.

11. The Government of Canada is also committed to promoting the delivery of broadband services to rural and remote areas across the country. In 2019, High-Speed Access for All: Canada’s Connectivity Strategy was launched, and a national connectivity target was announced that aims to make speeds of at least 50 megabits per second (Mbps) download and 10 Mbps upload available to all Canadian homes and businesses by 2030. As part of this commitment, ISED considers Canada’s varied geographic and topographical challenges, where no single technology is appropriate in all circumstances. As expressed in the High-Speed Access for All:  Canada’s Connectivity Strategy, the Government of Canada will leverage the use of different technologies so that connectivity projects can provide access at the target speeds and above to rural and remote Canadians as soon as possible and in a sustainable manner that is suited to the local context.

12. The evolving equipment ecosystem landscape has introduced an unprecedented increase in the volume of applications submitted, especially for the certification of radio equipment. In addition, devices today are much more complex than those in use when ISED’s current fee regime was established in 2007. This fee regime no longer reflects the effort required by ISED to conduct certification and registration activities and therefore requires a complete review.

13. The majority of equipment certifications are conducted by private certification bodies (CBs) that submit applications through ISED’s e-filing service for approval by ISED.  As part of that process, ISED adds registered telecommunications equipment to the Telecommunications apparatus register (TAR), and adds certified radio equipment to the Radio equipment list (REL), which are lists maintained and published by ISED. Dual applications, relating to products having both radio and telecommunications elements, are registered in both the TAR and the REL. ISED charges fees for:

• technical expertise provided to external clients
• assessment of radio equipment for the purpose of certification
• registration in the TAR
• listing in the REL

14. In addition, ISED is responsible for managing the compliance of radio and telecommunications equipment in Canada with all applicable technical standards. This includes market surveillance activities on higher‑risk products and equipment. Given the proliferation and increasing complexity of applications related to the listing of radio equipment, ISED must conduct detailed technical reviews of radio equipment, even when private CBs are issuing certifications. Consequently, ISED has had to invest in cutting-edge measurement technologies. These efforts were not contemplated when fees were set in 2007, when the listing of radio equipment details was considered to be a clerical service. Further, ISED has had to expand core program activities to include greater market surveillance, including audits of radio and telecommunications devices in the Canadian marketplace, to ensure that adherence to technological standards is maintained.

15. These changes have left ISED unable to recover the overall cost of the program through the associated fees that it charges. At present, ISED’s revenue for the program only recovers 8% of the cost, with further decreases in cost recovery forecasted.

16. The goal of this fee modernization exercise is to bring the program into cost recovery, to better reflect the value of ISED’s regulatory functions, and to provide the equipment manufacturing industry with updated service standards for these regulatory processes.

17. The Treasury Board Secretariat (TBS) Guidelines on Costing (archived) was used to calculate the proposed costs, which included both indirect and direct costs, and resource allocations associated with the delivery of the program. The Guide to Establishing the Level of a Cost‑Based User Fee or Regulatory Charge was used to determine each fee.

18. Retaining the current fee structure for telecommunications and radio equipment registration and listing services would result in Canadian taxpayers continuing to shoulder an increasing portion of the cost for a program that mainly benefits large commercial enterprises, located mostly outside Canada (92% of clients are foreign manufacturers). Adjusting these fees can relieve taxpayers of this burden by ensuring that the costs of the program are covered by the entities that benefit from the service.

19. The impact of updating fees for the program will not introduce significant impediments for equipment manufacturers due to the relatively low cost of these fees compared to the benefit of accessing the Canadian marketplace. Therefore, reductions to the equipment ecosystem supply chain are not anticipated.

20. The paragraphs below provide details about the decisions applicable to the modifications to telecommunications and radio equipment fees. Specifically, ISED proposed to introduce the following two new fees:

Equipment registration fees (new 3.3 in TRC-49)

This $750 fee is associated with completing the approval process related to submissions for radio equipment certification and/or telecommunications equipment registration.

Equipment registration amendment fees (new 3.4 in TRC-49)

This $375 fee is for the approval process for requests to amend existing radio equipment certifications and/or existing telecommunications equipment registrations.

21. In addition to the new fees above, ISED proposed to amend the following two fees from the existing TRC-49:

Assessment fee (existing 3.1 from TRC-49)

The assessment fee relates to the costs of completing the approval process involved in ISED directly certifying that radio equipment complies with the appropriate technical requirements, specifications or standards.

ISED issues a technical acceptance certificate (TAC) for each model within the application, though this fee is to be applied once. ISED proposed to rename this fee the “Wireless equipment certification fee” and to increase the fee from $1,200 to $4,000.

Technical expertise fee (existing 3.2 from TRC-49)

The fee relates to the reassessment of radio equipment certifications performed directly at ISED.

ISED proposed to rename this fee the “Wireless equipment recertification fee” and amend the fee from $150 per person, per hour (or part thereof) to $160 per person, per hour (or part thereof), (minimum application of two hours).

22. With the new equipment registration fee introduced above, ISED proposed to repeal the following two fees:

Listing fees (3.3 from TRC-49)

The $50 listing fee is for the administration required in recording equipment in the Radio Equipment List (REL). This fee applies to each product model listed.

Registration fees (3.4 from TRC-49)

As part of the declaration of conformity (DoC) process, all telecommunications equipment must be registered with ISED and recorded in the Telecommunications Apparatus Register. The registration fee of $750 is for the development and maintenance cost of the telecommunications equipment program and the administration required in recording the equipment in the TAR.

Summary of comments

23. Comments on the above-described proposals were received from Rogers and SaskTel. While no comments were submitted concerning a specific fee proposal, general support for the recovery of costs related to the telecommunications and radio equipment program was provided by each commenter.

24. Rogers commented that ISED should extend the principle of cost-recovery for governmental and regulatory services to all fees related to Canadian telecommunications, including spectrum fees.

25. SaskTel submitted that ISED’s proposal to keep program costs and revenues ‘generally fee neutral overall’ is logical. However, it submitted that ISED should examine its operational costs prior to any fee adjustments to recover deficits in administering the telecommunications and radio equipment program, suggesting that “processes used and costs incurred by ISED to deliver certification need to be examined with a more critical eye before increasing the rates charged.” Further, SaskTel also submitted that there was insufficient evidence presented to explain the amount of the proposed fee increases and the costs incurred by ISED to warrant such increases, particularly when a majority of the certification work is done before an application is received by ISED.

Discussion

26. ISED notes the suggestion from Rogers to consider cost-recovery for other areas within the spectrum and telecommunications sector falls outside the scope of this Consultation.

27. Detailed explanations for each aspect of ISED’s fee proposal were set out in the Consultation.

28. Prior to proposing the new fees, and as indicated in paragraph 7 of the Consultation, ISED conducted an in-depth review of its costs in accordance with the SFA. A rigorous costing exercise was undertaken by ISED in accordance with applicable TBS guidance and in consultation with ISED’s Chief Financial Officer. Adherence to the Guide to Establishing the Level of a Cost‑Based User Fee or Regulatory Charge is required in order for a department to proceed with the creation of a fee proposal.

29. Although the majority of radio equipment certifications are performed by certification bodies, ISED still performs a number of activities related to the telecommunications and radio equipment program. As referenced in paragraph 28 of the Consultation, ISED also notes that it is responsible for both direct and indirect activities that extend beyond the certification and registration of equipment, including:

1. establishing new technical standards and setting requirements for radio, telecommunications, and interference-causing equipment
2. establishing new administrative procedures to guide domestic and foreign clients in the equipment compliance process
3. amending existing standards and procedures to adapt to changing technologies and market transformation
4. establishing mutual recognition agreements with foreign regulators
5. recognizing domestic and foreign conformity assessment bodies for testing radio and telecommunications equipment (i.e. third party testing laboratories) and for the certification of radio equipment (i.e. third party certification bodies “CBs”)
6. providing a market surveillance program, which:
   1. manages the continued compliance of certified radio equipment, registered telecommunications equipment, and self-declared interference-causing equipment
   2. monitors the Canadian marketplace for the presence of non-compliant products, such as non‑certified products, non-registered products, and products causing harmful interference
   3. initiates investigations based on complaints received from the public or the industry and
   4. performs product testing related to compliance and enforcement investigations
7. conducting stakeholder engagement to educate, to provide guidance for, and to collaborate with a variety of groups and organizations, such as CBs, testing laboratories, manufacturers, equipment associations, distributors, Canadian retailors, and other federal departments
8. conducting engineering studies and analysis for emerging technologies and assessing possible impacts of new technologies on the existing equipment and network ecosystems

30. The proposed fees in the Consultation were established following the Guide to Establishing the Level of a Cost‑Based User Fee or Regulatory Charge, in accordance with TBS guidance. This costing exercise includes the consideration of both direct and indirect activities and represents an accurate reflection of the costs to ISED to administer the telecommunications and radio equipment program. ISED will conduct periodic fee reviews to ensure that a neutral cost-revenue balance is maintained.   

31. Accordingly, ISED will implement all changes proposed in the Consultation with the introduction of new fees, as well as proposals to amend, rename and repeal existing fees as applicable.

32. As noted in the Consultation, current service standards for the administration of radio equipment approvals reflect the time following a request being approved to being listed on the TAR or REL (2 business days). These service standards do not account for the time spent on assessing and reviewing applications submitted by CBs, but rather the measure of time that ISED takes to place an approved certification/registration in the TAR or the REL. ISED does not consider the current service standard to be meaningful for industry, given that the time between an application being received by ISED to the time that it is approved is not currently subject to a service standard.

33. Given the above, ISED proposed to introduce a service standard of 14 calendar days for the certification of radio equipment and for the registration of telecommunications equipment that begins upon submission of the application to ISED, and will be considered completed once the application is approved and listed on either the TAR or the REL. Any deficiencies in the application will terminate the 14-day service standard window, given the need to pursue remedial actions with applicants.

Summary of comments

34. Comments were received by SaskTel, which stated that the proposed changes seem unreasonable, with fees increasing substantially across the board, and timelines increasing by a factor of 7.

Discussion

35. The intent of introducing a service standard of 14 days is to capture the time between an application being received by ISED to the time that ISED approves and places equipment information on the TAR or the REL. This activity is not accounted for in the current 2-day model. The proposed standard more accurately reflects the time required for ISED to assess equipment registration applications, and will therefore be more meaningful for stakeholders. Given the above, ISED will adopt the new service standards as proposed in the Consultation.

36. Following the publication of the Decision, ISED will revise, as appropriate, all associated documentation such as fee orders and TRC‑49.

37. ISED intends to have all necessary documentation and systems ready to administer the revised fee regime related to telecommunications and radio equipment as described in this Decision and to have the new associated fees take effect by September 1, 2023.