Northwestel unveils major improvement plan

SEAN McKIBBON

IQALUIT— The cost of basic residential phone service could go up by $5 a month if the CRTC approves a plan by Northwestel to upgrade basic telephone service.

“That’s not the highest in Canada, but it does put us among the highest,” said Mark Walker, Northwestel’s vice president of carrier services.

This week Northwestel submitted its proposal on how it will compete in an open long distance market a year from now, and how it will bring basic service up to new national standards set by the CRTC last October.

The plan calls for a $68 million investment in improving Northwestel’s service, and a $35 million CRTC subsidy to help the company make up the money it loses by serving small, remote Northern communities.

But what remains to be seen is who will pay for the subsidy, and how it will be collected.

The new and improved basic telephone service would include access to new features such as call display, call return and local Internet access.

Cheap long distance

But the upgrade wouldn’t come cheap. Under the plan, Northwestel would invest $68 million dollars in upgrading it’s basic service and providing telephone service to people who never had it before.

Over a period of 10 to 15 years Northwestel expects the CRTC to guarantee it a 12.25 per cent return on its investment, said Walker. That means the return would almost certainly come through the $35 million subsidy Northwestel wants the CRTC to approve.

“There are only about nine communities we make money in,” said Walker.

Northwestel hopes that a subsidy can make up the difference between the money it already loses on the smaller communities, the money it needs to invest to improve its service, and the money that it will lose to other companies competing for long distance customers.

“There will be long distance competition in the North. If we were to maintain the high rates we have now, but with competition, we would be a non-existent company,” said Walker.

Under the plan, residential long distance rates will fall considerably with the introduction of a new system of billing customers a maximum of $20 for up to 600 minutes of long-distance calls during evenings and weekends.

Anything over 600 minutes would get billed at 10 cents per minute. Rates for long distance calls placed during business hours would be reduced by 15 per cent.

Small and medium-sized businesses will be charged flat long distance rates of 13 cents a minute for direct-dialed long distance calls within Northwestel’s operating area.

For calls elsewhere in Canada, the rate will climb to 16 cents per minute and U.S. calls will cost 19 cents per minute.

The average rate for long distance calls right now within Northwestel’s service area is 40 cents a minute, Walker said.

Deals for business

According to the Northwestel plan, the company will introduce contract-based long distance plans for larger businesses. The contracts will offer discounts to large companies that make a lot of long distance calls or calls that take a long time.

Walker said the proposed rates had been designed not only to compete with companies entering the northern market, but with southern long distance plans.

Because of radically cheaper rates in the South, many people were simply avoiding Northwestel’s long distance rates by having their friends, family or business contacts in the South place calls to the North.

Initially, only people in Yellowknife, Iqaluit, Whitehorse and Fort Nelson would have easy access to competition, being able to simply place a regular long distance call, and have a competing long distance company bill them, Walker said.

People in other communities would have to dial a series of other numbers first before placing a call to take advantage of competition.

“To roll it [competition] out across the North would cost Northwestel an awful lot of money,” said Walker.