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Phone competition on horizon
by Glen Korstrom
NNSL (Jan 26/98) - Soon it's going to cost less to get that long-distance feeling. NorthwesTel's rates are on their way down.
This will happen regardless of what the Canadian Radio-television and Telecommunications Commission decides in early February about how competition will be introduced in the North.
"We know our long-distance rates are high and that we have to bring them down," said corporate communications director Anne Grainger.
But Grainger justified the company's current high rates by pointing out that only six of the 92 communities NorthwesTel serves are profitable.
For example, Grainger said the company recently introduced full service to 20 customers in Jean Marie River, population 70, at a cost of $450,000.
"That's our mandate," she said.
The CRTC will make a decision sometime soon on issues such as whether or not to establish a national subsidy fund to help NorthwesTel make up for the expected loss of revenue that will accompany competition. And if so, whether to draw on federal government coffers or ask provincial phone companies to dig into their pockets to help out NorthwesTel.
"Otherwise, how can we guarantee that people in Tuktoyaktuk have affordable service?" Grainger asked.
Increasingly, phone companies have had to lower long-distance charges because of growing competition from e-mail, Internet chat software such as MIRC or ICQ and videoconferencing software.
If customers use their cable service for Internet needs, and add a microphone and speakers, they can avoid long-distance charges completely, routing their conversations through the Net.
NorthwesTel also loses revenue when Northerners arrange for southern friends to initiate the call from less-expensive calling zones.
Though the CRTC-approved telephone competition in the rest of Canada (except Saskatchewan) in a June 12, 1992 ruling, they exempted the North, largely because of its low population density and high cost of providing local service.
Without long-distance revenues, NorthwesTel would have to increase its local rates.
But on Feb. 28, 1996, the commission decided to consider Sprint Canada's application for long-distance service in the North.
Saskatchewan now has competition, leaving the North as the only Canadian region left with a phone monopoly.
Still, a monopoly benefits some Northerners, as basic service costs less. Grainger said cross-subsidization can mean subscribers can get a basic dial tone for as low as $9.42 per month.
Grainger also said NorthwesTel will issue phone cards for sale later this year.
The cards, used more for convenience than saving money, can be swiped through some models of pay phones. |