Long-distance proposal
Ten cents a minute still a year off for NorthwesTel

Terry Halifax
Northern News Services

Yellowknife (Feb 14/00) - Northerners currently pay the highest long-distance rates in North America and will continue to do so until the year 2001, according to phone company officials.

NorthwesTel recently filed an application with the Canadian Radio-television and Telecommunications Commission (CRTC) which outlines a proposal for increased service, local rate hikes and a subsidy provided by southern phone companies which will allow long-distance competition.

While customers in the rest of Canada enjoy the benefits of competition, the CRTC ruled the North requires "special consideration," saying no competition would take place before July 2000.

Marguerite Vogel, the CRTC's regional director for Western and Northern Canada, said long-distance competition likely won't happen now until 2001.

"The schedule hasn't rolled out the way we thought it would two years ago," Vogel said. "So competition probably won't roll out until early next year."

Vogel said the CRTC determined that the vast service area is much more expensive to cover than in southern jurisdictions where there are large concentrations of population. The company currently services 68,000 phone lines in four time zones.

Ray Hamelin, chief financial advisor for NorthwesTel, said the proposal should come as good news to all customers.

"We in the North are about to make a breakthrough and create a national fund that will feed the North in order to bring the North services that do not exist today," Hamelin said. "This is extremely good news for Northerners."

Hamelin said the rates offered in the south just aren't feasible in the North.

"It's impossible for us to offer you guys 10 cents a minute," he said. "We don't even need competition. If we dropped our price to 10 cents a minute, I'd close the doors and we're out of business."

The solution to the high cost of long distance is to get help from southern telephone companies, Hamelin said.

"The only way we can do this, is by having the southern industry send a subsidy to NorthwesTel," he said. "The southern (telephone companies) are going to be paying us, on average, about $35 million a year."

The subsidy program has worked for people in Alaska, Hamelin said. The telephone companies in the lower 48 states pay into a pool which subsidizes the Alaskan telephone market.

"Alaska is not dissimilar to the NorthwesTel situation," he said. "Because it's high cost to serve out there, there has been a subsidy and it's almost 20 years old now."

NorthwesTel also has plans to upgrade existing service throughout the North with features like call waiting, call display, access to local Internet, as well as upgrading all old analogue phone lines to digital.

"We will be upgrading all of our transport lines," he said. "We're hoping to get this all completed over four years."

NorthwesTel services a total of 68,000 customers, with 35,000 of those residential customers who now spend an average of $38 per month.

Northerners have also seen monthly phone bills rise over the past two years. The first increase came Aug. 1, 1998, when local rates were boosted $4 per line. The second increase came one year later, when rates were hiked an additional $6.

The CRTC said the increases were approved as long as they would be offset with lower long-distance rates, and NorthwesTel would not realize profit or loss from the local line increases. Long- distance rates did drop with the introduction of 15-cent Saturdays.

"The recent increases were designed to be revenue neutral," Vogel said. "The price of residential phone service had to be pegged at closer to cost as possible, so residential rates would go up and long-distance rates would go down."

Hamelin said NorthwesTel has proposed that local rates be increased a further $5 on Jan. 1, 2001.

"Some people are going to win, some people are going to lose, but on average, it's neutral to the company," he said. "Those that don't make long-distance calls will lose, those that are heavy long distance will win, but on average it's neutral to the company."

Hamelin said that over the next four years, the company now plans to spend $168 million on capital improvements. That's up from the $100 million it originally planned.

"It's such a huge program we don't even have the manpower to do it," Hamelin admitted. "We're going to need outside help from down south to come and help us deploy all these grandiose plans."