Discussing the future of phones in the North

Northwestel is looking to raise the cost of landline phone access. The Canadian Radio-Television Telecommunications Commission held hearings in Yellowknife.

Northwestel is looking to raise the cost of landline phone access.

The Canadian Radio-Television Telecommunications Commission held hearings in Yellowknife this week to review the telco’s operations in the North.

Northwestel asked the commission to permit a $2 increase in business and residential telephone service.

They are also asking the commission for a $4.8-million increase in its annual subsidy, to $25.6 million from $20.8 million, as well as funding for a service-improvement plan to bring caller ID and other features to remote communities.

Rates have not changed since 2007. Northwestel contends a rate hike will bring them closer to the cost of providing service, but that it would still be priced below cost.

“Landline service is priced the same everywhere in the Yukon and this $2 charge will help balance the difference between Whitehorse and the communities,” said Emily Younker spokesperson for Northwestel.

“In more remote communities the cost of providing service is just astronomical,” she said.

The governments of both the Yukon and Nunavut oppose increased rates.

“There is no clear, compelling justification for the proposed rate increases,” wrote the Yukon government in its submission to the regulator.

To offset some of the increased costs, Northwestel is proposing a rate reduction for the cost of teleconferencing to $0.17 from $0.35.

However the Yukon government “has significant concern about the impact of these price increases on the competitiveness of Yukon businesses.”

Northwestel’s rates for phone and data service are already some of the highest in the country.

The Yukon government wants that reduced.

“Basically we want to see the cost of information and communication technology competitive to that in theSouth,” said Harvey Brooks, the Yukon’s deputy minister of economic development. “We want to see the same equivalent innovation in the products and services that you’d find in other markets.”

But other markets have competitors.

“What you’re dealing with is the last regulated monopoly in the Western world,” said Dean Proctor, SSi Micro’s chief development officer. “It’s kind of an anachronism.”

SSi Micro is an internet service provider that operates in more than 50 communities across the Northwest Territories and Nunavut.

It does work in both Asia and Africa but isn’t yet operating in the Yukon.

SSi would like to start offering home phone service, but to do that it needs the acquiescence of the CRTC.

Under current regulations only Northwestel has access to local numbers.

“We’d like to offer a full suite of services but we can’t go the final step and provide local voice service because we don’t have access to 867 phone numbers or have access to a direct connect for Northwestel,” said Proctor.

Right now if someone in Rankin Inlet called their next-door neighbour over SSi’s VoIP service, the call would be routed all the way to Ottawa before it went next door.  If network access in the North were shared in the same way it is in the South, it would solve this problem.

SSi wants the CRTC to give them that access.

“That would really allow full competition to take place,” said Proctor.

Northwestel is not against letting a competitor into the market, said Younker.

“We’re not opposed, in any way, for local competition for telephone service,” she said. “Should competition come in our larger population centres we would ask that our subsidy be shifted so we’re not losing money to provide these essential services to our remote communities.”

But the sticking point for Northwestel is network access.

It doesn’t want to share.

In its submission to the CRTC, Northwestel wrote it felt providing local access would be too expensive and that a “resale model continues to be the most appropriate for the North.”

Northwestel uses a similar model for data services.

Its data rates are 15 to 30 times more than anywhere else in the country, said Proctor.

“A northern premium should be around 10 per cent of what you would be paying in the south,” he said. “It has clearly gotten out of whack.

“A northern premium is not 30 times, it’s just not.”

To put it in perspective, if KFC marked up a bucket of chicken at the same rate Northwestel does for data services, an 18-piece with fries would cost more than $500, according to a recent report from the Seaboard Group, a technology consulting firm.

If the CRTC takes the same hands-off approach to telephone service as it does with internet, Proctor fears that it will keep competitors like SSi out of the market.

“If they allow local competition, but also put it in place with outlandish costs then essentially the effect will be the same as not allowing local competition,” he said.

The hearings wrapped up yesterday.

The CRTC isn’t expected to reach a decision until the end of the year.

Contact Josh Kerr at

joshk@yukon-news.com

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