CRTC orders rural broadband expansion, phone rebates

The CRTC has ordered Canada's telephone companies to spend more than $300 million to provide broadband access to rural communities andservices for people with disabilities, and refund customers living in cities about the same amount.

Residents of 350 rural and remote communities in British Columbia, Alberta, Manitoba, Ontario and Quebec should start seeing better broadband services in the next few months, with a full rollout to be completed by the end of 2011, according to the Thursday ruling by the Canadian Radio-television and Telecommunications Commission. Improved services for people with disabilities should be rolled out in those provinces, as well as Saskatchewan,over the same time frame.

Additionally, the phone companies Bell Canada, Telus, MTS Allstream, SaskTel and Bell Aliant have until March25 to submit proposals to the CRTC on how they plan to issue rebates to residential customers living in cities.

Those customers have since 2002 been paying into so-called deferral accounts, which have been administered by the respective phone companies and which the regulator estimates to now total$650 million. At the time, the CRTCdecided against allowing price cuts on local phone services in order to entice cable companies such as Rogers Communications and Shaw Communications to invest in their own phone networks, which would compete with the likes of Bell and Telus.

Urban customers thus continued paying the same rates, with the amount of the proposed cut which was to be the rate of inflation minus a productivity offset of 3.5 per cent instead going into the accounts.

The CRTC in 2006 directed the phone companies to submit plans on how they would roll out the new services. Most phone companies said they would spend about five per cent of their accounts on services for people with disabilities, with the exception of SaskTel. The company said broadband was already widely deployed to rural communities in the province, so it would spend its full account on services for disabled customers. The CRTC approved SaskTel's plan.

Bell (which now owns Aliant),MTS and Telus must roll out broadband in their respective rural communities using the lowest-cost technology available, and with download speeds of at least one megabit per second. The CRTC has estimated the cost of such a rollout will amount to just over half the amount in the deferral accounts.

Those measures should ensure the phone companies don't try to pocket the majority of their deferral accounts by claiming inflated costs on their rollouts.

"They can't put in a Mercedes when we're asking for something that is less than a Mercedes quality,"said Len Katz, vice-chairman, telecommunications, for the CRTC, adding that the regulator's engineers will examine the rollout plans to see if lowest-cost technologies are indeedbeing used.

Bell, MTS and Telus now have until March 17 to spell out plans on broadband rollout to the specific 350 communities selected by the CRTC.

Key parts of the CRTC's rebate decision could bemade mootnext week, however, when two separatecourtappeals areheard. Bell has objected to giving customers who paid into the account a rebate, arguing that the CRTC does not have the authority to order retroactive rebates on prices it has previously agreed to.

On the other side, several consumer groups led by the Public Interest Advocacy Centre have argued that the rural broadband plan should be scrapped and 100 per cent of the deferral accountsreturned to urban customers, who overpaid on their phone bills in the first place.