Rogers 2010 Annual Report Download - page 111

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ROGERS COMMUNICATIONS INC. 2010 ANNUAL REPORT 115
(E) Pursuant to CRTC regulation, the Company is required to pay
certain telecom contribution fees. These fees are based on a formula,
including certain types of revenue, including the majority of wireless
revenue. The Company estimates that these fees for 2011 will amount to
approximately $31 million.
(F) Pursuant to Industry Canada regulation, the Company is required
to pay certain fees for the use of its spectrum licences. These fees are
primarily based on the bandwidth and population covered by the
spectrum licence. The Company estimates that these fees for 2011 will
amount to $85 million.
(G) In addition to the items listed above, the future minimum lease
payments under operating leases for the rental of premises, distribution
facilities, equipment and microwave towers, commitments
for player contracts, purchase obligations and other contracts, including
outsourcing arrangements, at December 31, 2010 are as follows:
Year ending December 31:
2011 $ 755
2012 409
2013 315
2014 246
2015 184
2016 and thereafter 292
$ 2,201
Rent expense for 2010 amounted to $180 million (2009 – $181 million).
(A) In August 2008, a proceeding was commenced in Ontario pursuant
to that province’s Class Proceedings Act, 1992 against Cable and other
providers of communications services in Canada. The proceedings
involve allegations of, among other things, false, misleading and
deceptive advertising relating to charges for long-distance telephone
usage. The plaintiffs are seeking $20 million in general damages and
punitive damages of $5 million. The plaintiffs intend to seek an order
certifying the proceedings as a class action. Any potential liability is not
yet determinable.
(B) In June 2008, a proceeding was commenced in Saskatchewan
under that province’s Class Actions Act against providers of wireless
communications services in Canada. The proceeding involves allegations
of, among other things, breach of contract, misrepresentation and false
advertising in relation to the 911 fee charged by the Company and the
other wireless communication providers in Canada. The plaintiffs are
seeking unquantified damages and restitution. The plaintiffs intend to
seek an order certifying the proceeding as a national class action in
Saskatchewan. Any potential liability is not yet determinable.
(C) In August 2004, a proceeding under the Class Actions Act
(Saskatchewan) was commenced against providers of wireless
communications in Canada relating to the system access fee charged by
wireless carriers to some of their customers. In September 2007, the
Saskatchewan Court granted the plaintiffs’ application to have the
proceeding certified as a national, “opt-in” class action. The “opt-in”
nature of the class was later confirmed by the Saskatchewan Court of
Appeal. As a national, “opt-in” class action, affected customers outside
Saskatchewan have to take specific steps to participate in the
proceeding. In February 2008, the Company’s motion to stay the
proceeding based on the arbitration clause in the wireless service
agreements was granted and the Saskatchewan Court directed that its
order in respect of the certification of the action would exclude from the
class of plaintiffs those customers who are bound by an arbitration clause.
In August 2009, counsel for the plaintiffs commenced a second
proceeding under the Class Actions Act (Saskatchewan) asserting the
same claims as the original proceeding. This second proceeding was
ordered conditionally stayed in December 2009 on the basis that it was
an abuse of the process.
The Company’s appeal of the 2007 certification decision was heard in
December 2010 and the Company awaits the decision. The Company has
not recorded a liability for this contingency since the likelihood and
amount of any potential loss cannot be reasonably estimated. If the
ultimate resolution of this action differs from the Company’s assessment
and assumptions, a material adjustment to the financial position and
results of operations could result.
(D) The Company believes that it has adequately provided for income
taxes based on all of the information that is currently available. The
calculation of income taxes in many cases, however, requires significant
judgment in interpreting tax rules and regulations. The Company’s tax
filings are subject to audits, which could materially change the amount
of current and future income tax assets and liabilities, and could, in
certain circumstances, result in the assessment of interest and penalties.
(E) In October 2009, the Government of Canada announced that a
settlement had been reached between the Government of Canada and
members of the broadcasting industry with respect to Part II fees.
Under the terms of the settlement, the Government agreed to forgive
the amounts otherwise owing to it up to August 31, 2009 and the fees
going forward will be approximately one-third less than historical rates.
As a result, during the fourth quarter of 2009, Cable and Media
recorded recoveries in operating, general and administrative expenses
of approximately $60 million and $19 million, respectively, for CRTC Part
II fees covering periods from September 1, 2006 to August 31, 2009.
(F) There exist certain other claims and potential claims against the
Company, none of which is expected to have a material adverse effect
on the consolidated financial position of the Company.
24. CONTINGENT LIABILITIES: