SaskTel ponders CRTC challenge over funding

SaskTel’s president expressed misgivings about the federal telecom regulator’s $750 million plan to shift funding to broadband from telephone services, a ruling that he believes could wind up in court depending on the yet-to-be-determined details.

Ron Styles, president of the provincial Crown corporation, said the problem lies in the lack of detail surrounding the Canadian Radio-television and Telecommunication Commission’s plan to get rid of a $100 million annual subsidy for rural and remote telephone customers to instead fund high-speed Internet with target download and upload speeds of 50 Mbps and 10 Mbps, the so-called 50/10 plan.

“SaskTel is very concerned that the local voice service subsidy that is being phased out was designed to keep wireline voice service affordable in high cost serving areas,” Styles, SaskTel president and CEO, said in a statement. “This will impact roughly 100,000 Saskatchewan households that still rely on the local voice subsidy for affordable telephone service.”

The regulator released the highlevel policy in late December, but will hold three additional proceedings this year to sort out exactly who will pay, how much, and where the money will go.

None of the major providers has criticized the plan yet. Analysts expect it will have little impact on their bottom lines since they will likely pass any Internet levy onto consumers. But Styles is concerned his company will lose a $16-million annual telephone subsidy for rural customers without a clear plan for broadband investment, he said in an interview.

“The expectations around 50/10 without necessarily the type of framework in place that financially supports it can be a bit difficult,” the president said in an interview, adding that rural customers have called SaskTel asking when they’ll get the target speeds.

“It’s not around the corner by any stretch of the imagination.”

Meantime, he said SaskTel will either need to raise prices or reduce service for rural phone customers.

“It seems like you’re taking away a subsidy that currently helps them and saying they’re not going to get other assistance for a very long time,” he said.

The CRTC’s current policy cannot be challenged in court because it was a direction rather than a specific ruling. However, providers could challenge any decisions stemming from the followup proceeding the CRTC says will begin in the coming weeks.

Styles said it’s difficult to predict what will happen until it’s clear what the new fund looks like and how it will be distributed.

The CRTC had no comment on whether the ruling could be appealed.

It seems like you’re taking away a subsidy that currently helps (rural customers) and saying they’re not going to get other assistance for a very long time. RON STYLES, president, SaskTel