NorthwesTel must drop its DSL Internet rates, reduce the overage charges for users who exceed their bandwidth, and give up its practice of charging an extra fee to customers who purchase Internet service but no phone line.
That’s according to a decision released this week by the Canadian Radio-Television and Telecommunications Commission, intended to improve northerners’ access to the digital economy.
“Although we recognize the exceptional situation that exists in NorthwesTel’s territory, we must not let these challenges hinder the development and affordability of telecommunications services in the North,” commission chairman Jean-Pierre Blais wrote in a release. “Access to reasonably priced Internet services plays an essential role in the North’s economic and social development. With this decision, we are reducing the gap between what consumers pay for Internet services in the northern and southern parts of Canada.”
Subscribers to NorthwesTel’s DSL, or digital subscriber line, Internet service, which relies on the user’s phone line, will see their rates drop by 10 to 30 per cent. Users with the DSL Internet Lite or DSL Internet 2 plans will receive a 10 per cent cut, while the price of DSL Internet 5 and DSL Internet 15 will be cut by 30 per cent.
Currently, those plans go for $41.95, $64.95, $89.95 and $119.95 per month, respectively. The majority of DSL Internet users are in the Yukon’s communities, as cable service is not available outside of Whitehorse. Cable Internet users will not be affected by the reductions.
The changes will take effect by May 4, and NorthwesTel will not be permitted to raise its rates again for any residential Internet service before the end of 2017.
The decision also forces NorthwesTel to abandon its surcharges for customers who purchase stand-alone DSL Internet services and no phone line. The company currently charges $20 per month to residents and $30 to businesses (reduced from an initial charge of $50 for businesses) for stand-alone Internet. Those fees will be gone by May 4, too.
Lastly, the company is required to reduce its overage fees for customers who exceed their bandwidth limits by at least 50 cents per gigabyte, by February 2016. The current overage rates stand at $2 per gigabyte for premium cable users, $2.50 per gigabyte for cable users, and $3 per gigabyte for DSL users, according to a February news release.
NorthwesTel has already reduced those rates voluntarily at various points over the past several years, for a cumulative drop of 70 per cent.
“This is a surprising and unprecedented decision with a significant financial impact on NorthwesTel, given that our prices on residential Internet services in many smaller and remote communities throughout the North are already being provided below cost, without any subsidy,” the company wrote in a statement. “We’re continuing to study the direct impacts of the decision and evaluating our options moving forward.”
In a dissenting opinion, commissioner Candice Molnar wrote that she could not support the commission’s decision, and raised concerns about how NorthwesTel will compensate for the reductions.
“The revenue impact of the price reductions is not insignificant and is recurring. There is no reason to expect this impact to be borne by NorthwesTel’s shareholders,” she wrote.
“Perhaps NorthwesTel will reduce its capital investment in what have become highly unprofitable DSL Internet services, at least in its most high-cost serving areas. Perhaps NorthwesTel will delay elements of its modernization plan. Perhaps it will request an exogenous adjustment, which would allow the company to recover the lost revenue from other regulated services, including other Internet services. Whatever the outcome, it will be telecom service users in the North who will live with the consequences.”
Andrew Robulack, a Whitehorse-based online communications analyst, is also unsupportive of the decision, but for different reasons. He felt it didn’t go far enough.
“It’s a pretty weak regulatory decision. NorthwesTel dodged a bullet, basically. It’s a fairly hollow statement, a fairly hollow order – the headline-grabbing news, the reduction in the DSL rates. The minority of the northern population uses that technology, it’s old tech,” he said.
“The cost reduction should have been across the board and affected the entire northern population, if the CRTC wanted to make a statement and have a real impact… There definitely should have been a reduction in cable rates, which have a higher cost difference ratio from southern Can`ada to northern Canada.”
Robulack argues that at this point in time, Internet service is essential and should be treated as a public utility, like water or power, rather than as a source of profit.