http://www.cbc.ca/money/story/2010/11/10/con-rural-hone-rates.html
Canada's biggest telephone companies are calling for an end to subsidies that maintain low local phone rates in small communities.
Last Updated: Wednesday, November 10, 2010 | 3:36 PM ET
CBC News
Canada's biggest telephone companies are calling for an end to subsidies that maintain low local phone rates in small communities.
Telus and Bell want the CRTC to eliminate rural telephone subsidies, which will save them millions but will result in a 50 per cent rate increase for rural phone service. (Adrian Wyld/Canadian Press)That means the cost of maintaining a landline for some Canadians may go up by 50 per cent. That would raise rates from around $22 to about $36 per residential line.
Right now, phone companies pay .84 per cent of their revenues into a fund to help subsidize rural customers. While smaller telcos benefit from the fund, larger companies resent paying into it. Bell pays about $60 million a year into the fund.
The phone companies made their pitches last week at a CRTC hearing in Gatineau, Quebec.
'The regulatory bargain is broken, and subsidy pools have been depleted by competition.'
—Michael Hennessy, Telus"Today, the regulatory bargain is broken, and subsidy pools have been depleted by competition. Yet that obligation persists," Michael Hennessy, senior vice-president of regulatory and government affairs for Telus, told the commission.
Hennessy cites growing competition from wireless and cable providers as one reason why Telus should no longer be obligated to subsidize some customers.
He told the commission that since 2005, Shaw has lured 800,000 Telus customers to its cable phone service, which amounts to 30 per cent of Telus's traditional market.
Canadian telephone companies subsidize rural customers by paying .84 per cent of their revenues into a fund. (iStock)Telus also says wireless is also cutting into its traditional customer base, with 14 per cent of its landline customers cancelling their residential service in favour of cellphones At least half those customers have signed with Bell or Rogers, Hennessy noted.
"What all this means is that the costs of maintaining existing networks are now spread out over a decreasing number of paying customers," he said.
Opposition to the rural rate hike is coming from two of Canada's smaller phone companies, Manitoba's MTS, and SaskTel.
"We believe that these proposed local rate increases are unacceptable and that many residents are unaware of what is being proposed," said SaskTel president Ron Styles.
He told the CRTC that the rate proposals fail to take into consideration inequities in employment and incomes across the country. He wants a full public review before any change is adopted.
"In our view, if the CRTC is going to accept such rate increases, then the public must have an opportunity to comment on the impact it would have on them," Styles said.
SaskTel pays about $5 million a year into the fund and receives $27 million back to help serve its rural customers.
Canada's biggest telephone companies are calling for an end to subsidies that maintain low local phone rates in small communities.
Last Updated: Wednesday, November 10, 2010 | 3:36 PM ET
CBC News
Canada's biggest telephone companies are calling for an end to subsidies that maintain low local phone rates in small communities.
Telus and Bell want the CRTC to eliminate rural telephone subsidies, which will save them millions but will result in a 50 per cent rate increase for rural phone service. (Adrian Wyld/Canadian Press)That means the cost of maintaining a landline for some Canadians may go up by 50 per cent. That would raise rates from around $22 to about $36 per residential line.
Right now, phone companies pay .84 per cent of their revenues into a fund to help subsidize rural customers. While smaller telcos benefit from the fund, larger companies resent paying into it. Bell pays about $60 million a year into the fund.
The phone companies made their pitches last week at a CRTC hearing in Gatineau, Quebec.
'The regulatory bargain is broken, and subsidy pools have been depleted by competition.'
—Michael Hennessy, Telus"Today, the regulatory bargain is broken, and subsidy pools have been depleted by competition. Yet that obligation persists," Michael Hennessy, senior vice-president of regulatory and government affairs for Telus, told the commission.
Hennessy cites growing competition from wireless and cable providers as one reason why Telus should no longer be obligated to subsidize some customers.
He told the commission that since 2005, Shaw has lured 800,000 Telus customers to its cable phone service, which amounts to 30 per cent of Telus's traditional market.
Canadian telephone companies subsidize rural customers by paying .84 per cent of their revenues into a fund. (iStock)Telus also says wireless is also cutting into its traditional customer base, with 14 per cent of its landline customers cancelling their residential service in favour of cellphones At least half those customers have signed with Bell or Rogers, Hennessy noted.
"What all this means is that the costs of maintaining existing networks are now spread out over a decreasing number of paying customers," he said.
Opposition to the rural rate hike is coming from two of Canada's smaller phone companies, Manitoba's MTS, and SaskTel.
"We believe that these proposed local rate increases are unacceptable and that many residents are unaware of what is being proposed," said SaskTel president Ron Styles.
He told the CRTC that the rate proposals fail to take into consideration inequities in employment and incomes across the country. He wants a full public review before any change is adopted.
"In our view, if the CRTC is going to accept such rate increases, then the public must have an opportunity to comment on the impact it would have on them," Styles said.
SaskTel pays about $5 million a year into the fund and receives $27 million back to help serve its rural customers.
Comment