By Tyler Marr

Rural residents concerned bills could rise over CRTC subsidy phase out

Jun 13, 2017 | 3:27 PM

Rural residents are worried CRTC changes could jack up landline costs and are making their voices heard.

In December 2016, the Canadian Radio-Television and Telecommunications Commission (CRTC) decided it would possibly phase out local subsidies for landlines in high-cost serving areas. Sasktel said these subsidies total almost $17 million. It was designed to keep wireline service affordable in high-cost areas, such as rural and northern Saskatchewan. 

This was cause for concern for Adeline and Edward Palchinski who reside on a farm in Cudworth. The couple fear their monthly bill could double. They rely on the landline as their soul source of communication as cell phone coverage at their home is “not the best.”

“We are not young no more so we need to phone doctors and what not,” she said. “[Our daughter] phones here a lot and when the phone isn’t working, they are worried and so are we.”

Brian Ballantyne from Meadow Lake learned of the matter from the local paper. He was disgruntled with the lack of communication from the CRTC. 

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“I certainly don’t need another $100 to $300 increase a year on my telephone bill,” he said. Ballantyne made submissions on behalf of himself and his 98-year-old mother-in-law. She is legally blind and deaf. 

“With a landline, she can hear because it is right up against her ear and she has never used the Internet in her life,” he said.

The decision has also raised a number of red flags for the Consumer Association of Saskatchewan.

Alongside the lack of communication, President Ruth Robinson said the Association does not feel it is fair to force residents to pay the huge prices. 

Though supportive of a user pay system, “when people are vulnerable, we have to make things affordable. We think it is a bad move and we should be supporting those people until they have viable other options,” she said.

These other options include broadband internet and cell phones. But it can be challenging and costly to provide these services to residents in rural areas according to SaskTel vice president of corporate counsel John Meldrum. The telecom company has come out against the proposal.

Meldrum said if SaskTel could pipe broadband to residents in rural areas they would. However, when the cost to install fibre optics is tens of thousands of dollars per kilometre, it is not feasible to do so for individual customers.

On top of this, the company is running into numerous customers who have no desire to hook up Internet. This limits their ability to generate revenue from broadband should the subsidy be cut.

“They are older people who are sort of saying, ‘let me try to understand this. I have a service, it meets all of my daily needs for talking with the doctor and ordering my prescriptions. But because there is a better bell and whistle coming along, it is not going to be subsidized anymore,’” he said.

He explained how the subsidy phase out would lead to cost increases for as many as 100,000 customers who rely on the service, as SaskTel would be forced to recoup the nearly $17 million it receives from the subsidy fund.

Meldrum also said the CRTC could just wait it out as people slowly move away from landlines as their primary telecommunication device.

The CRTC, however, said people may be getting ahead of themselves as the commission is very early in the consultation process.

“We are at the stage where we are trying to figure out who really needs this subsidy,” John Macri, director of telecom policy with the CRTC said.

Macri said if the subsidy were to get cut, an immediate rate change would not be imminent. SaskTel would have to apply to the CRTC to increase rates as they regulate them, and rates can only be increased as much as inflation each year.

The idea behind investigating a phase-out of the subsidy stems from the growing demand for broadband service in the country. Macri said the CRTC wants to reassess the subsidy formula which has not been touched for nearly 20 years to see what companies can provide service to rural areas with out the subsidy. The goal is to create a new subsidy that would direct funds collected from these services towards expanding and improving networks. Any company could then apply for this new subsidy to help cover costs for broadband service expansion.

“It is about taking that money going towards an older service and investing them in newer services,” Macri said. “But if those customers still need that subsidy, it will still be there, we are not going to take it away.”

Though he understood everyone’s concern, Macri said it is the job of the CRTC to “look at the systems we have in place and make sure the subsidies are efficient and effective.”

The CRTC recently extended the deadline for online submissions on the topic to June 15.

tyler.marr@jpbg.ca

On Twitter: @JournoMarr