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SOMBA K'E/YELLOWKNIFE
If approved by the Canadian Radio-television and Telecommunications Commission (CRTC), residential and business telephone service in Yellowknife and across the North will increase by $2 monthly as of Jan. 1.

The rate increase was among the proposals presented by NorthwesTel Inc. at this week's CRTC hearing at the Yellowknife Inn, which is being held to review the telecommunication company's current regulatory framework in the North.

"It must be recognized that the cost of providing services is increasing and that Northerners cannot rely solely on the National Contribution Fund," NorthwesTel president and CEO Paul Flaherty said in his presentation to the commission. "We think it is inappropriate for prices for all other goods and services to go up and for telecom rates to remain frozen."

Several interveners at the hearing objected to the proposed rate increase, including the GNWT, represented by chief information officer Dave Heffernan.

"We can see no reason why Northerners should be subject to a more punitive rate increase policy than applies to all other residential local service users in Canada," Heffernan said, noting CRTC policy requires rates to be capped at $30, or to be capped where existing rates are already above $30.

The current monthly rate for residential basic service in Yellowknife is just over $31.

"NorthwesTel has not provided any convincing justification for the increase and that (a business rate increase) too should be denied," Heffernan said.

The rate increase, which NorthwesTel has proposed take effect Jan. 1, 2012, would go toward recovering costs and contribute to fixed and common costs, the company said.

"While many parties oppose these rate increases, the company has attempted to strike a balance among competing objectives," Flaherty said. "Recognizing our high-cost operating environment, reducing unsustainable implicit cross-subsidies, minimizing the impact on the National Contribution Fund, and ensuring that the impact on consumers is reasonable."

NorthwesTel's current estimated subsidy requirement is $20.8 million, with an estimated increase proposed for 2012 to $24.3 million, the commission heard.

The company does not receive subsidies for its services in Yellowknife and its other major centre - Whitehorse - which provide a cross-subsidy of more than $10 million per year to the other 94 communities NorthwesTel serves in the North.

This cross subsidy is one of the main factors why NorthwesTel argued against the feasibility of competition being allowed into the Northern telecommunications market.

"If local competition were to be introduced, but restricted to Whitehorse and Yellowknife, there is no doubt that the higher margins generated from certain services and lower cost customers would be the target of the entrants," Flaherty said.

SSI Micro founder and CEO Jeff Philipp, who told Yellowknifer that "SSI is ready to launch voice services and we believe we have a better solution," told the commission that "NorthwesTel's objections to local competition do not stand up to any scrutiny."

The CRTC is expected to reach its decisions based on the proposals at the hearing before the new year.

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