The Canadian Radio-television and Telecommunications Commission held hearings in Whitehorse last week.
With their acronyms, legal babble and accounting jargon, it’s as if public events are held in Spanglish.
For example: “The commission seeks comments on the status of long-distance competition in Northwestel’s territory,” it said in its briefing document.
Alright so far? Good.
Now, brace yourself …
“Northwestel should address whether any changes are required to the level of the CAT rate and whether the CAT rate should be developed using an approach similar to that used for the large ILECs taking into account the company’s market conditions and costs where equal access is available.”
You stopped reading at about line three, right?
Yeah, we thought so.
The commission is saying Northwestel should figure out whether it wants to change the fees it charges other firms to use its lines.
Currently, Northwestel charges seven cents per minute for each incoming and outgoing call — essentially it’s skimming 14 cents per minute for each long-distance call originating from rival phone companies.
For this, it does nothing but look pretty — no billing, no service … nothing. It’s a simple toll.
Second, the commission wants to know if Northwestel should be able to monkey with the formula it uses to set that seven-cent fee, to account for market conditions and its costs.
And this is paragraph No. 26 of 54 detailing the scope of the commission’s public consultation.
It is confusing stuff.
And the commission wonders why almost nobody shows up to participate in its public hearings.
That lack of public oversight plays into the hands of the giant telcos, like Telus and Bell, which owns Northwestel (but doesn’t like to admit it).
Hearings like this set the course of the telecommunications industry.
They lay down the rules, determine costs, whether competitors can enter the market and even if the industry will continue to be regulated, or whether the CRTC will pull back from its role.
This latest one, held in the Yukon, will determine the terms under which rival firms can compete with Northwestel.
It will determine how much people pay for their basic phone lines.
It will determine how Northwestel can packages its services, and how much it can charge.
It will determine how large a subsidy, pulled from southern phone companies, Northwestel wheedles out of the commission. It currently gets $10 million. It wants $40 million.
And it will determine how Northwestel is regulated, perhaps allowing it to draft price regulations rather than be policed based on its earnings.
One thing’s for sure, it stands to change your phone service package, and how much you fork over for it.
But the subcurrent of the recent hearings is something more profound.
The future of Northwestel itself.
With the arrival of voice over internet calling, the telecom industry is in the midst of profound change.
And Northwestel’s antique business model is being challenged.
So far, the telco has sought to block these services while complaining to the CRTC that they will destroy its business.
Internet phone calls don’t pay the bills, argue Northwestel executives.
Northwestel owns the bandwidth, and it charges a pretty penny to access it.
And, since the advent of broadband access, Northwestel has tapped a new market, one that didn’t exist 11 years ago.
It is making money.
It just isn’t making as much from long-distance calls.
That said, it has managed to raise the basic access cost for phone lines to somewhere around $40. In 1990, it was around nine dollars.
Why did the CRTC allow the telco to raise its fee? To make way for long-distance competition.
Well, it has taken about 12 years for the competition to arrive, and Northwestel has collected more money throughout that period.
As well, everyone who has broadband has to pay roughly $60 a month, in addition to having that first phone line.
For that, customers are given a block of broadband.
They can spend it surfing porn, downloading music and videos or, perhaps, phoning friends in London, Paris and Beijing via Skype.
But Northwestel objects.
It wants to restrict how its customers use the internet.
It wants to force customers to pay for bandwidth, and for their long-distance phone calls.
It wants to double dip.
To justify its position, it raises the spectre of eroding service to rural communities in the North — Northwestel won’t be able to afford to do it.
It’s an old play, one that it has used for years to block competition and boost its revenues.
This time, it wants higher subsidies from southern telcos — up to $40 million a year from $10 million.
And it wants to raise the cost of basic phone service.
It could raise the toll it charges competitors to use its phone lines.
And it will probably raise the rates it charges people for its frill services, like call display and call waiting.
The CRTC hearings are wrapping up and, though only a select few can speak the lingo, the gist is clear: Northwestel customers and competitors are going to pay, pay pay. (RM)