Doug Ashbury
Northern News Services

Yellowknife (Jun 19/00) - For many Nunavut residents, NorthwesTel's proposed $5 basic service hike is $5 too much, according to the territory's finance minister.

"Many Nunavut families do not use their telephone to call long distance," Kelvin Ng said.

Ng, using Pond Inlet telehealth technology, made a presentation during the CRTC hearings on NorthwesTel's service improvement proposal. Tuesday's session linked Iqaluit and Yellowknife with Whitehorse. The proposal is part of a process leading up to the introduction of telecommunications competition in NorthwesTel's service area, which includes 110,000 users in the Yukon, NWT, Nunavut and Northern B.C.

"Many Nunavut families hover at or below the poverty level. Customers that rely on local service cannot be expected to subsidize lower long distance rates," Ng said.

"Users that utilize only local service cannot be subjected to more costs."

The proposed $5 increase is among many proposals NorthwesTel, wholly owned by Bell Canada, has put forth on what it will take to bring Northern long-distance rates in line with those in southern Canada.

NorthwesTel's current local rate is $26.33 per month. The highest rate in Canada is Telebec's $34.43 in Quebec. In Newfoundland, NewTel's highest rate $19.85. Telus' highest rate in B.C. is $27.66 but Telus is proposing to raise that to $28.30.

NorthwesTel also says if it is to offer the same $20-a-month long-distance plan that is common in other parts of Canada, it will need $35 million a year from southern telecommunications companies.

As part of its service improvement proposal, NorthwesTel also plans to spend $75 million to extend and improve basic telephone service.

Call display

For Terry Vulcano, senior administrative officer with the Hamlet of Fort McPherson, service is a huge issue for the Gwich'in community.

Speaking at the hearing in Whitehorse, Vulcano likened Fort McPherson's telephone service to Botswana in the early 1980s. Vulcano said residents often experience trouble making connections, get static on the line or hear their own voice.

"I've had people advise me days later they tried to reach me but could not get through," he said.

Vulcano also said the community is in favour of adding improved service like call display.

"For three or four year's we've been asking about call display," he said.

This feature, he adds, would go a long way to reducing obscene and other prank calls during the night.

"Call display is the main issue for us."

"We have included local call display in the service improvement plan," NorthwesTel spokesperson Anne Grainger said Wednesday.

The cost of this service is included in NorthwesTel's planned service improvements.

"That (local call display) was in response to lobbying efforts by a lot of communities. From what we've determined, it's mostly a local problem," Grainger said.

Long distance call display for all communities in the service area would cost NorthwesTel $15 million, she adds.

Others, like Northern B.C. residents Greg Karas and Myrna Blake, raised the issue of privacy. Because they are forced to use radio or cell phones, they say anyone with a scanner can listen in.

"We're not asking for more, we're asking for the same," said Blake, a former NWT resident.

In 1998, the CRTC decided toll competition would be introduced in the North no later than July 1, 2000. NorthwesTel proposed it will take until Jan. 1, 2001 for the competitive process to unfold.

The CRTC is expected to make a decision in fourth quarter 2000 on NorthwesTel's proposal.

Return on equity

On return on equity, NorthwesTel is seeking to have its guaranteed return continue. In 1999, the CRTC allowed NorthwesTel a return of between 11.25 per cent and 13.25 per cent. NorthwesTel averages 12 per cent return on equity.

Return on equity is net worth at the start of an accounting period divided into net income at the end of that period.

Return on equity tells common shareholders how well their money is being employed.

Comparing return on equity with industry composites reveals how well a company is holding its own against its competitors.

For 1999, NorthwesTel's net income was $13.1 million. In 1998, NorthwesTel made $10.3 million before a $4.3 million asset writedown.

At Dec. 31, 1999, the company had $67.8 million in retained earnings with a year-end balance of $59.2 million after paying out $8.7 million in dividends.

At year end, NorthwesTel valued its telecommunications property at $441 million.

The only telecommunications company registered as an intervenor in the CRTC hearings was Telus. As of Thursday morning, Telus had yet to reach its spot in the queue.

Telus spokesperson Doug Strachan said Thursday the company is "following the hearings closely but has not made a submission."

Don Sian, who has held operational and managerial positions with NorthwesTel, suggests the lack of participation by Southern telecommunications companies means they do not want to operate in the North.

He said the proposed annual subsidy reinforces NorthwesTel's monopoly and that such a subsidy should be open to companies other than NorthwesTel.

Regardless of whether or not companies opt to come North and compete on long distance, Northerners will still get an "across the board" drop in long distance costs, NorthwesTel President Paul Flaherty said.