The Canadian Radio-television Telecommunications Commissions spends millions of dollars each year to subsidize the cost of maintaining telephone lines . Now, the commission says it will begin phasing out that subsidy over the next couple of years to focus instead on helping hard-to-serve regions connect to broadband. According to the The Financial Post, this decision will eliminate “nearly $116 million in subsidies for local telephone service[s].”
Starting January 1st, 2019, the subsidies will be phased out semi-annually. By December 31st, 2020, the subsidies will completely end for local phone service.
In 2016, the CRTC made the decision to label broadband as a basic service, as crucial as telephone or television. Now, clearly it sees broadband as the “more critical connection.” As The Financial Post explains, “Its preliminary view was that if a person can reliably access the internet, over which they can use voice services, there is no need to subsidize residential phone lines.”
Who actually pays for these subsidies? Believe it or not, a lot of the money comes from carriers. Providers “with more than $10 million in annual revenue must contribute to a national fund that is distributed to incumbent local exchange carriers serving rural and remote areas where the monthly costs to provide service are higher than revenue.”
Not everyone is happy with this move. Opposition has bubbled up from SaskTel, Telus Corp, and Eastlink, among others, who say carriers “have the obligation to serve customers in high-cost areas, but without the subsidy could not do so with rates that are just and reasonable.”
Source: www.financialpost.com – CRTC to phase out $115 million in local phone subsidies by 2021
Published: June 26, 2018