OTTAWA-GATINEAU – Some of Northwestel’s Internet customers will see their monthly bills drop this spring after the CRTC ordered the telecom provider to cut its rates for certain residential Internet services.
The Commission said Wednesday that Northwestel must reduce rates for residential low-speed Internet connections over a Digital Subscriber Line (DSL), named ‘DSL Internet Lite’ and ‘DSL Internet 2’, by 10%, and that its rates for residential DSL Internet services with download speeds of 5 and 15 megabits per second, known as ‘DSL Internet 5’ and ‘DSL Internet 15’, must come down by 30%. In addition, Northwestel will not be able to increase any residential Internet rates until the end of 2017 at the earliest, and will need to seek the CRTC's permission before doing so.
The CRTC also ruled that Northwestel will no longer be allowed to charge additional fees to customers who subscribe to Internet services on their own, rather than as part of a bundle with telephone service. Both changes will take effect by May 4, 2015.
And if that wasn’t enough, the CRTC added that it will limit additional charges for Northwestel's residential customers who go over the usage allowance already included in their Internet data plans, directing the company to lower its charges for additional data usage by at least $0.50 per gigabyte by February, 2016.
The decisions are the latest aspect of the CRTC-ordered modernization plan that has also included reviews of Northwestel’s operations that resulted in the Commission opening the local market to competition, and denying Northwestel’s request to increase the prices of local telephone service.
"Although we recognize the exceptional situation that exists in Northwestel's territory, we must not let these challenges hinder the development and affordability of telecommunications services in the North”, said CRTC chairman Jean-Pierre Blais, in a statement. “Access to reasonably priced Internet services plays an essential role in the North's economic and social development. With this decision, we are reducing the gap between what consumers pay for Internet services in the northern and southern parts of Canada."
But Commissioner Candice Molnar offered a lengthy dissenting opinion, calling the price reductions “unwarranted and contrary to the Commission’s long-established tariff approval processes”, and expressed concern over their potential negative “consequences for Northern consumers that the Majority has not acknowledged”.
“How Northwestel will offset the revenue lost through the mandated price reductions is also to be determined, but I have little doubt that the cost of the Majority’s decision will be borne by Northern consumers." – Candice Molnar, CRTC
“It is noteworthy that this decision does not encompass all parts of Northwestel’s operating territory or address all technologies and Internet services relied upon in the North”, she wrote. “The extent to which this decision will create a precedent in decision making, or expectations among Northern Canadians, is yet to be determined.
“How Northwestel will offset the revenue lost through the mandated price reductions is also to be determined, but I have little doubt that the cost of the Majority’s decision will be borne by Northern consumers. Although the Majority express the view that the price reductions would not significantly impact Northwestel’s revenue or modernization plan, I question this conclusion. The revenue impact of the price reductions is not insignificant and is recurring. There is no reason to expect this impact to be borne by Northwestel’s shareholders.”
Commissioner Molnar added that she also disagrees with the decision to deny Northwestel’s proposed surcharge for stand-alone DSL Internet services, particularly residential DSL services, writing that “there is no doubt that the detailed costing information provided in this proceeding supports a stand-alone charge for residential DSL Internet services”.
“At Northwestel’s existing rates, certain DSL Internet services are provided below cost”, she continued. “By incorporating the price reductions mandated by the Majority, the aggregate profitability of the entire residential DSL service portfolio is severely reduced.”
The CRTC added that it plans to undertake a major proceeding in the coming months to review basic telecommunication services across the country in an effort to improve access to advanced and competitive communications services for all Canadians.
