Phonecard rates rise in the North

Gordon Smith was in the middle of a conversation when his prepaid phone card suddenly ran out. He'd just paid $20 for the Optimum card. "There was no way I used up all the minutes," he said.

Gordon Smith was in the middle of a conversation when his prepaid phone card suddenly ran out.

He’d just paid $20 for the Optimum card.

“There was no way I used up all the minutes,” he said.

So, Smith called the company.

That’s when he learned long-distance calls advertised as seven cents a minute had jumped to 25 cents a minute.

“It shouldn’t be legal,” he said.

It’s like going to the store and buying a dozen eggs, then coming home and opening the carton to find there’s only two, he said.

“And there’s a note inside saying, ‘Sorry, there’s only two now.’”

Optimum told Smith that its service provider, Northwestel, had increased its rates.

“It all comes down to Northwestel,” said Smith. “They have to pay a certain rate to Northwestel.”

Smith has been using prepaid phonecards for all long-distance calls since he moved to the territory four years ago.

It saved his business money and kept his home phone bill down.

But about three weeks ago, that changed.

Hoping it was just Optimum that jacked its rates, Smith tried a Star card.

But the new high rates still applied.

They also applied on True North Cards.

“Suddenly a $20 card is worth just $5,” he said.

The phonecard companies raised their rates about three weeks ago, said a clerk who sells the cards at Riverside Grocery.

“Northwestel learned about the savings and upped the cost,” said the clerk.

But Northwestel denies raising the rate it charges the phonecard companies.

“We haven’t changed our rates,” said Northwestel spokesperson Sunny Patch.

Companies buy a block of wholesale minutes from Northwestel, said Patch.

“And those service providers have a right to set the rates as they choose.”

Navigata, a phonecard company that distributes Optimum, begged to differ.

Northwestel has a tariffed rate for calls originating in its territory, Navigata employee Lori Jehta told CBC News last week.

“So we are now being forced to pay the 30-cents-a-minute tariffed rate.”

Not true, said Patch.

“Northwestel’s tariffed rate is only 4.5 cents a minute.”

Navigata refused further comment.

But after repeated calls, the company offered a clarification:

In the CBC story, “A quote from Navigata indicated a relationship between Northwestel’s tariff and Navigata’s increase in prepaid phone card rates.

“Navigata would like to clarify that Northwestel is in no way responsible for the recent rate changes on its prepaid phone-card products.

“The rate changes were made in response to a change in Navigata’s underlying cost to deliver service.”

That’s the end of the statement, said Jehta.

She refused to answer any further questions.

The rates Northwestel charges phone-card companies are not regulated, according to the Canadian Radio-television and Telecommunications Commission.

The rates are set by the phone providers, said the commission.

Smith is not the only Yukoner who’s frustrated.

An employee at the 202 Motor Inn (who did not want her name in the paper), used to use phone-cards to call her aging parents in China.

“I used to call them every day,” she said.

“Now, I haven’t talked to them in two weeks.

“It’s too expensive.”

At first, she didn’t realize the rates had changed.

“When you dial, a voice comes on partway through the instructions saying the rates have changed for the 867 area code,” said the employee.

“But it’s a low voice that’s hard to hear, and it’s different from the loud instructions voice.”

It was only after a phonecard that usually lasted 200 minutes, suddenly only lasted for 40, that she realized something had changed.

She is not sure how she is going to call her parents now.

Smith isn’t sure of his next move either.

“Maybe a class action lawsuit,” he said.

Northwestel is a private company that is owned by Bell Canada.

Contact Genesee Keevil at