The Canadian Radio-television Telecommunications Commission could force NorthwesTel to lower retail Internet prices.
In a decision released this week, it found that Internet services in the North are not competitive enough to convince the commission to refrain from regulating that service.
“The terrestrial retail Internet services market in Northwestel’s operating territory is currently not characterized by active price competition and rivalrous behaviour,” according to the decision. “The commission has not found evidence of falling prices, vigorous and aggressive marketing activities, or an expanding scope of activities by competitors in terms of products, services, and geographic behaviour.”
As a result, NorthwesTel must file its Internet rates to the commission by February 4, 2104, and its cost estimates for providing Internet by March 6.
The CRTC will look at those documents and determine a price cap for Internet prices.
“That one’s a bit of a wildcard for us,” said Paul Flaherty, president of NorthwesTel.
It’s unclear at this point how that process will ultimately affect Internet prices and services, he said. But he is hopeful that the CRTC recognizes the importance of charging customers enough to cover costs, and to make infrastructure investments for service improvements in the future, said Flaherty.
The decision applies to all retail Internet, including residential, business and specialty services.
It only applies to NorthwesTel’s terrestrial network, and not to Internet delivered by satellite.
Old Crow is the only satellite-served community in Yukon.
While providing Internet by satellite is even more expensive, the CRTC found that NorthwesTel does not have market power in providing satellite Internet because it does not control the facilities that companies require to compete in that market.
When it comes to terrestrial Internet, on the other hand, competitors must pay NorthwesTel to access its fibre network.
NorthwesTel went through this regulation process recently for wholesale data services.
It was required to submit a cost analysis for those offerings.
The commission found that NorthwesTel greatly exaggerated costs. In response, the CRTC ordered a 70 per cent drop on prices.
In this week’s decision, the commission relented slightly, finding that NorthwesTel can charge a 40 per cent markup, not 30 per cent as it had previously determined.
The company is pleased with that decision, said Flaherty. That adjustment will allow the company to continue to invest in fibre infrastructure, he said.
As a result, the plan to lay fibre to Dawson City has been reinstated, although it may not happen until 2015, said Flaherty.
NorthwesTel must also resubmit it’s $233-million modernization plan to the CRTC. The plan should put more focus on upgrading transport infrastructure, the commission found.
“We’re pleased that the CRTC generally approves of the modernization plan,” said Flaherty.
NorthwesTel invested $44 million towards the modernization plan in 2013. As the company continues to invest, customers can expect more service upgrades, said Flaherty.
The CRTC will require regular updates from NorthwesTel on its progress. The company must commit to the investments regardless of its financial position, the commission found.
Jean-Pierre Blais, chairman of the CRTC, said in a teleconference Wednesday that the commission has tools to force compliance, but that they are typically not required.
“Yes we have powers to constrain them to do things, but in the vast majority of cases, they know we do have those and they will implement as requested. They’ve had a fair hearing, they got a chance to put their case forward. We listened to all parties, we’ve come up with a decision. The time for conversation and debate has moved on, and we are at the point were we are going to implement and improve this plan and monitor. So it’s a trust-but-verify approach.”
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