GATINEAU – The CRTC today released new pricing rules that will govern the rates charged by large telephone companies for local telephone services, until forbearance arrives.
The rules, known collectively as the price cap regime, will come into effect on June 1, 2007, and apply to Bell Canada, Telus, SaskTel, MTS Allstream and Bell Aliant.
They only apply in regions where local phone service has not been deregulated. So they will apply everywhere at first and quickly become less and less important as markets are forborne from regulation.
"This third-generation price cap regime provides greater pricing flexibility for large telephone companies, while providing a ceiling for prices to individual consumers," said Richard French, the CRTC’s vice-chairman of telecommunications, in the press release. "Where current prices are below cost, the ceiling can be adjusted by 5 per cent per annum or the rate of inflation, whichever is lower."
The price cap regime is designed to ensure that residential consumers in regulated markets continue to have access to just and reasonable rates, and includes incentives for telephone companies to operate more efficiently and to offer more innovative services. The price cap regime was last reviewed in 2002, says the release.
This time around, the regime is open-ended, meaning no expiry deadline has been set.
Some of the highlights include:
* Residential customers in urban areas will not see a rate increase for basic local telephone service.
* Residential customers in rural areas, where it is more expensive to provide basic local telephone service, have generally paid rates at below cost. The Commission’s policy is to move rates closer to actual costs as long as prices remain just and reasonable. The new price cap regime allows large telephone companies to raise prices in these areas by the lesser of the annual rate of inflation or 5%.
* Large telephone companies have been granted the flexibility to charge different rates to different customers for residential telephone services, including optional local services.
* The Commission will no longer impose a limit to the rates that the large telephone companies may charge for optional local services.
* The Commission has approved a request to increase pay telephone rates up to a maximum of 50-cents per cash call, and up to a maximum of $1 per non-cash call. This represents the first price increase for pay telephones in many years. Bell Canada’s rates have been the same since 1981.
