O.N. Telcom privatization meeting resistance from mayors in northern Ontario

Local politicians say the Ontario government is moving too quickly to privatize a provincial-owned telco, saying the communities most affected have not been consulted. Premier Mike Harris announced plans last year to sell off all operations of O.N. Telcom, the telecom arm of the Ontario Northland Transportation Commission. ONTC serves 60,000 customers throughout northeastern Ontario, including the premier’s riding of North Bay. The mayor of Timmins ON says local politicians have passed resolutions, written letters and are intensifying their lobbying to ensure their communities are not adversely affected by the loss of an important business. "The telecommunications is essential," Jamie Lim told Network Letter. "For us it’s an essential element in leveling the economic playing field for those businesses that operate in northern Ontario and it’s a key factor in attracting businesses and job creation for the north. We’re just worried if the province divests ONTel, we don’t know what’s going to happen or who’s going to buy it or what that’ll mean for northern Ontario." Lim says the provincial government sprung the implementation of the decision too soon, and without proper consultation. On Dec. 15 the North Eastern Municipalities Action Group, represented by several area mayors, met with ONTC chair Royal Poulin. "We made it clear to him that we felt these recommendations were brought forward without any input from the communities that were going to be impacted the most," Lim says. "We weren’t included in the process. At that time we asked for a moratorium, allowing us an opportunity to have some input and to be included in the process and voice our concerns." But the opportunity for public input could be limited at this late stage in the process. The government has already taken steps to sell ONTel, as part of a two-phase privatization plan. (Other aspects of Phase I, as well as all of the second phase, revolve around transportation issues.) Consulting firm KPMG has been retained to shop the 99-year-old telco around. It visited ONTel’s headquarters in North Bay earlier this month to assess the corporate assets. "There certainly has been some show of interest," ONTel spokeswoman Judy Cardoni told Network Letter. "We have received calls. KPMG is in the process of gathering information." The Ontario government also commissioned KPMG to prepare a report on what should be done with ONTel at a time of increased competition and expensive capital spending requirements. KPMG concluded that divesting ONTel to the private sector would "capitalize upon customer service expertise and the synergies of larger telecom providers, and provide the ingredients for a healthy competitive environment supportive of lowering long distance rates." Regulatory liabilities not expected to slow sale ONTel does come with some expensive regulatory obligations which could discourage potential suitors. Shortly before the meeting between the mayors and the ONTC, the CRTC ordered the telco to spend more money upgrading its facilities. Under Order 2000-1100, the independent firm was directed to improve its service, take people off party lines and put them on single lines. The commission wants ONTel to begin offering enhanced service to 159 subscribers while adding 48 new customers who previously had no service at all. Cardoni insists the privatization will not affect the rollout of improved services. "It’s business as usual. So anything we had planned we are still moving forward with," she maintains. Any sale is still a long time away. Cardoni predicts it will be months before ONTel changes hands. "We’re probably looking past 2001 before this gets completed," she estimates. Cardoni expects the telco will be sold as one large entity, but says the government could opt to split the company’s divisions before it unloads them.

O.N. Telcom privatization meeting resistance from mayors in northern Ontario

News | February 26, 2001

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