Northwestel asks CRTC for rate hikes

Northwestel wants you to pay more for your local telephone service.

But at that same time, they say they want to find more ways of charging you less for long distance calls, and make it easier for other companies to come north and compete with them in a long-distance market that until now, no one wanted to enter.

And they’re not just looking for different rates. They also want the CRTC to use a different form of regulation for the company.

It’s all part of a new proposal that Northwestel filed recently with Canada’s telecommunications watchdog, the CRTC.

“If the CRTC accepts our proposal, what it will do is change the whole way that we operate as a company,” said Anne Kennedy, Northwestel’s director of public affairs.

The CRTC has scheduled a public hearing in Whitehorse, with videoconference links to Yellowknife, Iqaluit and Fort Nelson, for July 10.

In their application to the CRTC, Northwestel says they want to raise local residential phone rates by $2 a month per line, and local business phone rates by $5 per month per line.

If the CRTC says yes, these would be the first local phone rate hikes since Jan. 1, 2001, when Northwestel raised local rates but also dropped long-distance rates dramatically.

At that time, the CRTC set Northwestel’s rate for “network access” at $29.33 per month, allowed the company to bring in a 10-cent-a-minute long distance plan, and allowed the company to get a subsidy starting at $15 million a year.

The subsidy, paid out of a fund created by a tax on the national telecommunications industry, makes up for the money that Northwestel lost by dropping its long distance rates. It’s mostly used to subsidize the high cost of providing local phone services in every community.

But since then, Northwestel’s costs, especially for fuel and labour, have risen, Kennedy said.

And she points out that the basic monthly price for a phone line is still much less than what other northern customers pay, even in high volume markets like Whitehorse and Yellowknife.

In some small communities, it costs the company more than $100 per phone line to provide access to their network, but customers pay only $29.33 for basic service.

So a $2 a month increase for residential users is “not out of line with what’s being charged down south,” Kennedy said.

Kennedy also said Northwestel is proposing to make it easier for other telephone companies to compete with them on long distance calls.

To do that, Northwestel suggests that a special charge paid by competing companies, called the “carrier access tariff,” be lowered.

Right now, a long distance company such as Sprint Canada or Primus must pay Northwestel 7 cents a minute for access to its satellite-based equipment — in both directions — for a total of 14 cents a minute.

Kennedy said that since Northwestel’s long distance plan is based on a 10-cent-a-minute rate, no one will ever be able to compete with them until the carrier access tariff is lowered.

Under their new plan, Northwestel also wants to introduce a long distance plan for businesses that’s similar to those in southern Canada.

At the same time, they propose a new “service improvement plan” aimed at upgrading obsolete equipment.

As for the new form of price regulation that the company is requesting, Northwestel says they want the CRTC to use a “price-cap” system instead of the “rate of return” system that’s now used.

Under the current system, Northwestel must apply to the CRTC every time they want to introduce a new service or a new rate, a process that can take many months.

But Kennedy said that Northwestel wants to be able to respond more quickly to customer demands and changes in telecommunications technology.