YELLOWKNIFE - NorthwesTel customers will pay more for their phone service, but a recent Canadian Radio-Telecommunications Commission (CRTC) decision approving the rate increase has opened the door for competition.

The CRTC on Feb. 2 approved a monthly $2 increase for residential customers and $5 for commercial lines, which took effect Jan. 1.

A recent CRTC ruling could pave the way for more competition in Northern telephone service. - Jason Unrau/NNSL photo

However, northern customers could benefit by new service providers entering the market such as Primus, which purchase bulk network space on existing communications infrastructure, combine it with long-distance packages and offer consumers a competitive alternative.

"It's really an evolution," said John Macri of the CRTC telecommunications branch. "NorthwesTel is a monopoly and in opening up the market we have to do it gradually."

In 2001, the CRTC allowed regulated long-distance service competition, which brought telephone cards and long-distance resellers into the market dominated by Northwestel.

The Feb. 2 CRTC decision states it no longer needs to regulate this aspect of the business.

"We think there's sufficient competition for toll services (in the region)," said Macri.

As for third-party communications companies looking to offer competitive rates on existing NorthwesTel infrastructure, the CRTC will still regulate any deals NorthwesTel could make with these potential providers.

On the topic of the rate increases, Macri said the CRTC felt NorthwesTel was, "justified in receiving those because (Northwestel) had not had a rate increase in many years."

The $2 per month residential increases will be frozen for four years.

"On the business side, there is a little bit of flexibility to allow rates to go up by the rate of inflation," he added.

The ruling also means a cap on basic toll services but gives NorthwesTel the flexibility to reduce prices to respond to competition.

As well, NorthwesTel will receive $18.9 million a year from the National Contribution Fund, which would subsidize the provision of services in remote locations and limited market regions.

NorthwesTel had planned to hold a press conference Monday to comment on the matter but postponed it for a week, explaining its finance department needed more time to understand the ruling's ramifications.