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"A well-developed broadband infrastructure will serve as a gateway for Canadians to participate in the digital economy," said Konrad von Finckenstein, Q.C., Chairman of the CRTC. "The target we have established is the minimum speed we believe consumers in rural and remote areas should be able to receive. The industry is actively responding to market demands and we have every confidence in its ability to meet the target."
The CRTC anticipates that this target will be reached through a combination of private investments, targeted government funding and public-private partnerships. The launch of new satellites and advances in wireless technologies will make it possible to provide Canadians in rural and remote regions with reliable broadband connections at reasonable rates and higher speeds than those available today.
Despite Canada’s unique geography, 95% of households currently have access to Internet download speeds of at least 1.5 Mbps through telephone, cable or fixed-wireless networks. Over 80% of households already have access to download speeds of 5 Mbps or higher.
The CRTC will closely monitor the industry’s progress in reaching the target.
Local telephone service
Given that competition is flourishing in 80% of residential telephone markets, the CRTC has lifted the requirement to meet the basic service objective in these deregulated areas. The CRTC determined, however, that large telephone companies must continue to offer residential subscribers a basic telephone line at a reasonable rate. Companies will have the flexibility to gradually increase rates for this service over the next three years, to a maximum of $30 per month.
In regulated areas, the CRTC is maintaining the obligation to provide basic residential telephone service and to meet the basic service objective. Most incumbent telephone companies will continue to receive a subsidy to ensure basic telephone service is offered to all consumers in rural and remote areas and to help offset higher costs.
The CRTC will phase-in a new formula over the next three years, which will reduce subsidies available to companies in regulated areas. To offset lost subsidies, companies will have the option of gradually raising their rates to a maximum of $30 per month by 2013.
"Some companies in rural and remote areas charge their customers much less than what it actually costs them to provide this service and, as a result, their rates are lower than in urban areas. The new price ceiling will make for a more consistent and reasonable rate across Canada and reduce the reliance on subsidies," said Mr. von Finckenstein.
Local competition
Finally, the CRTC will continue to encourage greater consumer choice in the residential telephone market for Canadians in rural and remote areas. The CRTC has decided to maintain its existing framework for competitors wishing to enter territories served exclusively by smaller telephone companies.
To ensure that the smaller companies are able to provide reasonable access to residential telephone service, the CRTC has introduced the following measures:
- Smaller telephone companies will continue to receive subsidies for their subscribers until competitors can offer service to 75 per cent of the market.
- Smaller telephone companies will be able to claim half of the subsidy they would normally receive for subscribers that switch to a competitor during the first three years of competition.
- New entrants will be required to pay the start-up costs in markets where the smaller telephone company has fewer than 3,000 subscribers. Start-up costs can include those associated with ensuring that consumers are able to keep the same telephone number when changing providers (number portability) or connecting the competitor’s network with that of the smaller telephone company.
[May 4, 2011]
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