Regulator relaxes rural price caps

1 May 2007

Canada’s telecoms regulator the CRTC yesterday relaxed some of the existing tariff controls for the country’s largest incumbent local telephony operators, Bell Canada, Telus Communications, Bell Aliant, MTS and SaskTel. Effective 1 June, the CRTC has allowed the former regional monopolies to increase the price of local telephony services in rural areas by 5% or the inflation rate, whichever is lowest, but has left the price cap intact for cities. The operators can also vary rates among customers depending on where they live, and other factors. The regulator also said it will let the companies boost the price of a payphone call to CAD0.50 (USD0.45), from the current maximum of CAD25; Bell Canada has been charging CAD25 since 1981. The new set of rules ‘provides greater pricing flexibility for large telephone companies, while providing a ceiling for prices to individual consumers,’ Richard French, the CRTC’s vice-chairman, said in a statement. The new conditions come after the government ordered the CRTC to rely on market forces instead of price regulation as much as possible. Mirko Bibic, Bell Canada’s chief of regulatory affairs, said that the decision is a ‘clear sign that the CRTC has taken to heart the policy direction set out by the government last December.’ The incumbents are all in the process of applying for price deregulation for their fixed line and bundled services in cities across the country. The telcos face strong competition from cablecos offering triple-play services, including Rogers, Shaw, Cogeco, Videotron, Access and EastLink. Cable operators and other new entrants to regional local telephony markets are not subject to price regulation.