MTS Allstream, SaskTel defend local subsidy regime

The CRTC should maintain its local subsidy regime, MTS Allstream and SaskTel told the commission Wednesday as part of its hearing on access to basic telecommunications services. The CRTC is in the process of reviewing its local subsidy regime, which ensures rural and remote areas have access to affordable, basic services. Under the regime, the commission collects funds from telecom providers and redistributes them to smaller phone companies that serve remote areas. On Tuesday Bell Aliant told the committee the regime was “broken” and should be eliminated in most regions. The company said the subsidy regime, which is calculated in part on how costly it is to provide services in each area, favours western providers over their eastern counterparts. Bell Aliant said it receives six times less in subsidies than MTS, SaskTel and Telus Communications Co., although the companies serve comparable areas. But MTS told the commission Wednesday that the regime has been “demonstrably effective” in promoting affordable access to telephone services in rural areas. MTS president Kelvin Shepherd said the subsidies are based on cost estimates that were calculated after extensive studies. “We certainly think the current methodology and the current approach of looking at costs specific to each carrier are important and should be maintained,” he said. “ believes the costs that are included in the formula are too high. I would go back to say the costs are what the costs are … I think the costs probably reflect the reality that there are different costs in this country to serve different areas.” SaskTel told the commission Wednesday it should maintain its regime, but alter its definition of high-cost areas to reflect only those that are truly rural or remote. The Crown corporation said it “strongly disagreed” with Bell Aliant’s position, and will provide its arguments during the hearing’s rebuttal phase, beginning Nov. 3. EastLink also presented at the hearing Wednesday. The company said the CRTC should remove its suspension prohibiting smaller phone companies, or competitive local exchange carriers (CLECs), from entering the operating territories of small incumbent phone companies, or incumbent local exchange carriers (SILECs). The company said allowing CLECs to enter small markets would increase competition.

MTS Allstream, SaskTel defend local subsidy regime

Brief | October 27, 2010

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