SaskTel under pressure to serve the North

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People living in rural and remote areas of Saskatchewan could soon be paying more for basic telephone services, said Jack Hillson, the province's newly appointed minister for intergovernmental affairs.

Hillson, the Liberal MLA from North Battleford, said rural and remote residents could be saddled with higher telephone rates in light of a recent decision by the Canadian Radio-television and Telecommunications Commission (CRTC).

On October 19, the CRTC rejected a proposal to have telephone companies across Canada form a national funding pool to help pay for basic telephone services in remote or sparsely populated areas. Hillson was quick to criticize the CRTC's decision, suggesting the commission's failure to promote a national funding pool could be costly for Saskatchewan's rural and northern residents.

"We're extremely concerned that families in rural and northern Saskatchewan have been cut loose by this decision" said Hillson. "In the absence of a national funding pool similar to the one that Americans have, we are very concerned that telecommunications will eventually be out of reach for farm families and northerners."

Sean Caragata, general manager of corporate affairs with SaskTel, said the CRTC decision leaves the provincially owned telephone company in a difficult situation.

Historically, SaskTel has used profits from its long-distance operations to subsidize basic telephone services in remote regions of the province.

Since 1996, however, deregulation of the telephone industry has opened the door to new long-distance companies and has taken a huge bite out of SaskTel's long-distance earnings.

In the past decade, SaskTel has dropped its long-distance rates by nearly 60 per cent in an effort to compete with aggressive newcomers such as Sprint and AT&T.

"SaskTel has always maintained basic services at artificially low levels using subsidies from long-distance . . . but with the reduction we're seeing in long distance revenues, that level of subsidization may not be sustainable," said Caragata.

"Right now, there are just too many long distance companies that are going for the low-hanging fruit and cherry-picking profits by providing long-distance service in high-density areas."

"We know that our subsidy for rural services isn't sustainable. If the CRTC doesn't address the problem, there would be pressure to reduce that subsidy. There would be significant pressure on rural and remote telephone rates."

Despite its rejection of a national funding pool, the CRTC received positive reviews for another decision to expand basic telephone services to residents in the most isolated parts of the country.

That ruling means telephone companies across Canada are now required to provide a basic level of telephone service to all residents, regardless of where they live.

As defined by the CRTC, basic telephone service now includes:

o A private line with touch-tone service and internet capability.

o Access to enhanced calling features such as 911 emergency service and voice message relay for people with hearing difficulties.

o Access to an operator and directory assistance.

o Access to long-distance services.

o A current copy of the telephone book.

For residents in isolated parts of Ontario and the Northwest Territories, the announcement of expanded basic telephone services came as welcome news. But in Saskatchewan, the decision will have no discernible impact on rural and remote telephone users, said Caragata.

With the exception of the 911 emergency line, SaskTel already provides all of the basic services to every one of its customers.

By the spring of 2002, a 911 emergency service will also be available to every SaskTel subscriber at a cost of $1 per month per residential line, said SaskTel spokesman Tim Kydd. The 911 line is already running in Swift Current, Prince Albert, Saskatoon and Regina.

"For us, the CRTC decision didn't address the long-term issue of (funding remote services)," said Caragata. "Next to the Northwest Teritories, we have the most rural and remote service area in Canada . . . and conversely, we have a relatively small urban base with which to support that service."

Hillson said the province may launch an appeal of the CRTC decision to federal cabinet or may seek an exemption based on the province's inordinately large rural population.

"We are very concerned that if this decision stands and is not modified, SaskTel's ability to retain basic services throughout rural Saskatchewan and in the North will become prohibitively expensive."

According to figures released by the province, SaskTel earned profits of about $39.9 million in the first six months of 1999. During the same period last year, SaskTel profits were pegged at about $66.5 million.