CRTC says no to delay, compensation for ending landline subsidy

The CRTC has upheld its decision to phase out a subsidy for landlines through 2021, and in a pair of decisions today rejected requests to maintain the subsidy for at least 10 years and to compensate providers for eliminating it. One of the decisions released Tuesday rejects a review-and-vary application filed by the Independent Telecommunications Providers Association (ITPA) in September 2018, in which the organization said the CRTC had “broken the regulatory compact by eliminating the local voice service subsidy without offering the affected carriers just and reasonable replacement financial compensation.” When the CRTC announced the creation of the $750 million broadband fund back in 2016, it said the figure would come partially from the repurposing of the local service subsidy. Under the CRTC’s plan for the broadband fund, the landline service subsidy would be phased out over a three-year period from the beginning of 2019 to the end of 2021. In a related decision also released today, the regulator announced it would be upholding the most of regime around price caps on landline services, and would also uphold most of the regime governing forbearance from rate regulation for areas with significant levels of competition. In the decision, the regulator wrote that “the large incumbent local exchange carriers (ILECs) failed to demonstrate that the elimination of local service subsidy requires some form of regulatory or financial compensation.” “As a result,” the CRTC wrote in the Tuesday decision, “there is no convincing justification to support significant price cap changes, including increasing monthly residential primary exchange service (PES) rates to offset the loss of local service subsidy.” The CRTC had been reviewing the price cap and local forbearance regimes since 2018, when it said it would be reviewing the two regimes ahead of the elimination of the subsidy. The regulator did grant an exception to BCE Inc.’s Northwestel, for whom it found that “it is likely that the elimination of the local service subsidy will ultimately result in a material shortfall” and for whom the commission said it will launch a specific and “fulsome” review. In the interim, however, the regulator will allow Northwestel to index its residential rates to inflation, up to a maximum of five per cent annually.

CRTC says no to delay, compensation for ending landline subsidy

Brief | February 4, 2020

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CRTC says no to delay, compensation for ending landline subsidy

Brief | February 4, 2020

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