Telephony competition sorely lacking in Atlantic Canada, Nfld minister tells CRTC

The price cap hearings brought all facets of Canadian society to the CRTC to discuss proposed rate increases. Walter Noel, Newfoundland’s consumer affairs minister, spoke out against Aliant’s application. An edited version of his remarks appears here. We reject proposals for further increases and for moving to a user-pay basis within our province because it would cause rural rates to rise excessively. We reject proposals to raise our rates generally simply to standardize rates in the Atlantic region as a consequence of reductions in the national subsidy. Consumers see the current regulatory regime as something cloaked, complex and distant, giving the inside track to service providers through access to resources financed by customers. They question whether under such circumstances their interests are or can be truly protected. Consumers are at a distinct disadvantage in this process because they lack expertise and do not have the resources available to service providers. They rely on government and this commission to protect their interests. I too am far from being an expert with respect to your regulations and processes. Our provincial government does not have the expertise to adequately scrutinize corporate proposals or the work of the CRTC itself. Newfoundlanders and Labradorians want a regulatory system which is good for consumers as well as service providers. We are committed to employing good business practices in conjunction with good public policy, but we must be convinced that service is efficiently provided, decisions are justified and regulation is in our interest. Regulating rates on a user-pay basis would create higher costs in less populace areas, reduce accessibility and affordability, and discourage business development. We ask you to reject that approach. Competition implies that consumers have a choice in a price-competitive environment in obtaining the lowest priced provider for a particular product. But what is the reality in Atlantic Canada? Where is Aliant’s competition in the local service market? They control 97.1 per cent of the market in my province. Under the current regime, companies claim that local rates have been kept artificially low, resulting in a disincentive to competitive entry. Raising prices would encourage competition, they contend, in spite of the failure to date and without demonstrating how consumers would benefit. What is the point in artificially raising prices to attract competition expected to lower them, which appears to be the rationale for increasing market efficiency? While companies may appear to be championing competition, it seems to us they are seeking new ways to require consumers to finance risk in facilities simply by raising basic rates. If the regulatory regime permits customer interests to be subordinated to those of investors and corporations, it will fail to meet its public policy responsibility and undermine confidence in the system. Our government sees no reason, from a competitive perspective, why Aliant requires any increase in basic telephone rates. We all have a responsibility to do what we can to ensure the provision of quality and efficient tele-phone service at the lowest necessary price. We all realize prices have to deliver returns on investment high enough to attract reliable providers. Creating a system capable of allocating costs equitably among consumers is our common challenge. Our province simply believes that what is being proposed does not further these objectives. Our government considers basic telephone service a necessity in today’s world. It should be available at equitable cost throughout the country. Low-cost areas should subsidize high-cost areas nationally and regionally as a matter of principle and fairness, because low-cost areas generally benefit in other ways as a result of how our country is organized. Toronto benefits enormously from providing services to Newfoundland, just as St. John’s benefits in providing services to rural residents of our province.

Telephony competition sorely lacking in Atlantic Canada, Nfld minister tells CRTC

News | October 10, 2001

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