Rogers 2015 Annual Report Download - page 78

MANAGEMENT’S DISCUSSION AND ANALYSIS
• ownership and operation of our communications systems; and
• our ability to acquire an interest in other communications systems.
Regulatory changes or decisions can adversely affect our
consolidated results of operations.
Our costs of providing services may increase from time to time as
we comply with industry or legislative initiatives to address
consumer protection concerns or Internet-related issues like
copyright infringement, unsolicited commercial e-mail, cybercrime,
and lawful access.
Generally, our spectrum and broadcast licences are granted for a
specified term and are subject to conditions for maintaining these
licences. Regulators can modify these licensing conditions at any
time, and they can decide not to renew a licence when it expires. If
we do not comply with the conditions, a licence may be forfeited or
revoked, or we may be fined.
The licences have conditions that require us, amongst other things,
to comply with Canadian ownership restrictions of the applicable
legislation. We are currently in compliance with these conditions. If
we violate the requirements, we would be subject to various
penalties and it could include losing a licence in extreme cases.
Cable, wireless, and broadcasting licences generally cannot be
transferred without regulatory approval.
CANADIAN BROADCASTING AND
TELECOMMUNICATIONS OPERATIONS
Our Canadian broadcasting and telecommunications operations –
including our cable television systems, radio and television stations,
and specialty services – are licenced (or operated under an
exemption order) and regulated by the CRTC under the
Broadcasting Act.
The CRTC is responsible for regulating and supervising all aspects
of the Canadian broadcasting and telecommunications system. It is
also responsible under the Telecommunications Act for the
regulation of telecommunications carriers, including:
• Wireless’ mobile voice and data operations; and
• Cable’s Internet and telephone services.
Our cable and telecommunications retail services are not subject to
price regulation, other than an entry-level small basic cable
television package ordered by the CRTC for introduction on
March 1, 2016, because the CRTC believes there is enough
competition for these services provided by other carriers to protect
the interests of users, so has forborne from regulating them.
Regulations can and do, however, affect the terms and conditions
under which we offer these services.
SPECTRUM LICENCES
ISED Canada sets technical standards for telecommunications under
the Radiocommunication Act (Canada) (Radiocommunication Act)
and the Telecommunications Act. It licences and oversees:
• the technical aspects of the operation of radio and television
stations;
• the frequency-related operations of cable television networks;
and
• awarding and supervising spectrum for wireless communications
systems in Canada.
ROYALTIES
The Copyright Board of Canada (Copyright Board) oversees the
administration of copyright royalties in Canada and establishes the
royaltiestobepaidfortheuseofcertain copyrighted works. It sets
the copyright tariff royalties that Canadian broadcasting
undertakings, including cable, radio, television, and specialty
services, pay to copyright collectives.
BILLING AND CONTRACTS
Manitoba, Newfoundland and Labrador, Nova Scotia, Ontario, and
Quebec have enacted consumer protection legislation for wireless,
wireline, and Internet service contracts. This legislation addresses
the content of such contracts, the determination of the early
cancellation fees that can be charged to customers, the use of
security deposits, the cancellation and renewal rights of the
consumers, the sale of prepaid cards, and the disclosure of related
costs. Rogers is also currently subject to the CRTC Wireless Code
and will come under the forthcoming CRTC Television Service
Provider Code of Conduct to become effective in 2016.
The provincial laws are generally consistent with the CRTC Wireless
Code. See “CRTC Wireless Code” for more information.
FOREIGN OWNERSHIP AND CONTROL
Non-Canadians can own and control, directly or indirectly:
• up to 33.3% of the voting shares and the related votes of a
holding company that has a subsidiary operating company
licenced under the Broadcasting Act, and
• up to 20% of the voting shares and the related votes of the
operating licensee company may be owned and controlled
directly or indirectly by non-Canadians.
Combined, these limits can enable effective foreign control of up
to 46.7%.
The chief executive officer and 80% of the members of the Board of
Directors of the operating licensee must be resident Canadians.
There are no restrictions on the number of non-voting shares that
may be held by non-Canadians at either the holding company or
the licensee company level. Neither the Canadian carrier nor its
parent may be otherwise controlled in fact by non-Canadians.
Subject to appeal to the federal Cabinet, the CRTC has the
jurisdiction to determine as a question of fact whether a given
licensee is controlled by non-Canadians.
Pursuant to the Telecommunications Act and associated
regulations, the same rules also apply to Canadian
telecommunications carriers such as Wireless, except that there is
no requirement that the chief executive officer be a resident
Canadian. We believe we are in compliance with the foregoing
foreign ownership and control requirements.
On June 29, 2012, Bill C-38 amending the Telecommunications Act
passed into law. The amendments exempt telecommunications
companies with less than 10% of total Canadian
telecommunications market measured by revenue from foreign
investment restrictions. Companies that are successful in growing
their market shares in excess of 10% of total Canadian
telecommunications market revenue other than by way of merger
or acquisitions will continue to be exempt from the restrictions.
76 ROGERS COMMUNICATIONS INC. 2015 ANNUAL REPORT