ARCHIVED -  Transcript - Yellowknife, NWT - 2000/06/12

TRANSCRIPT OF PROCEEDINGS

FOR THE CANADIAN RADIO-TELEVISION AND

TELECOMMUNICATIONS COMMISSION

TRANSCRIPTION DES AUDIENCES DU

CONSEIL DE LA RADIODIFFUSION

ET DES TÉLÉCOMMUNICATIONS CANADIENNES

SUBJECT / SUJET:

REGIONAL CONSULTATION / CONSULTATION REGIONALE

HELD AT: TENUE À:

Government of the Immeuble législatif

Northwest Territories' du gouvernement des

Legislative Building territoires du nord-Committee ouest

2nd Floor, 2e étage, Salle de la

Northwest Tower Room Tour du nord-ouest

Room A Salle de comité A

Yellowknife, N.W.T. Yellowknife, TNO

June 12, 2000 le 12 juin 2000

Transcripts

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

Transcription

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès-verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

Canadian Radio-television and

Telecommunications Commission

Conseil de la radiodiffusion et des

télécommunications canadiennes

Transcript / Transcription

Regional Consultation / Consultation Regionale

Northwestel Inc. - Implementation of toll competition and review of regulatory framework, quality of service and related matters / Norouestel Inc. - Mise en oeuvre de la concurrence dans l'interurbain et examen du cadre de réglementation, de la qualité du service et d'autres questions

BEFORE / DEVANT:

Jean-Marc Demers Chairperson / Président

ALSO PRESENT / AUSSI PRÉSENTE:

Carolyn Pinsky Secretary / Secrétaire

HELD AT: TENUE À:

Government of the Immeuble législatif

Northwest Territories' du gouvernement des

Legislative Building territoires du nord-Committee ouest

2nd Floor, 2e étage, Salle de la

Northwest Tower Room Tour du nord-ouest

Room A Salle de comité A

Yellowknife, N.W.T. Yellowknife, TNO

June 12, 2000 le 12 juin 2000

TABLE OF CONTENTS / TABLE DES MATIÈRES

PAGE

PRESENTATIONS / PRÉSENTATIONS

Mr. Don Sian 8

Telecommunications Partnership

Hon. Charles Dent 15

Member of the Legislative Assembly of the Northwest Territories

Mr. John Ondrack 23

Yellowknife Chamber of Commerce

His Worship David John Lovell 33

Mayor of Yellowknife

Ms Peggy Wilkes 49

Northwest Territories Chamber of Commerce

Ms Alison McCambridge 58

Executive Director of NTnet Society.

Ms Sandy Lee 65

MLA of the Legislative Assembly for

the riding of Range Lake

Hon. Roger Allen 70

MLA for Inuvik, Twin Lakes and Minister

responsible for the Northwest Territories

Housing Corporation, the Public Utilities

Board and Responsable for Youth

Mr. Don Sian 82

Telecommunications Partnership

Mr. Byron Hynes 85

Private citizen

Mr. Dennis Bevington 89

Private citizen

REPLY / RÉPONSE

Mr. Paul Flaherty

President of Northwestel 95

Yellowknife, N.W.T. / Yellowknife, TNO

--- Upon commencing on Monday, June 12, 2000 at 0910 /

L'audience débute le lundi 12 juin 2000 à 0910

1 THE CHAIRPERSON: Ladies and gentlemen.

2 Good morning to everyone and welcome to this regional consultation.

3 My name is Jean-Marc Demers and you would have had the pleasure of hearing your regional commissioner, Ron Williams, had it not been for family preoccupations of a serious matter, and he is in Edmonton at the moment.

4 I am what we call a national commissioner and I will be the Chair of today's session.

5 Here with me today is the Commission's legal counsel, Carolyn Pinsky who will also do double duty as hearing secretary. I invite you to call on Carolyne with any questions that you might have.

6 Before I begin, I would like to say that we are happy to be here in Yellowknife and are pleased to have this opportunity to hear your views on a number of fundamental telecommunication issues for people in the north.

7 I would also like to welcome at this time anybody who is participating through telephone conferencing.

8 Do we have people on the phone?

9 UNIDENTIFIED SPEAKER: Yes, we do.

10 THE CHAIRPERSON: Thank you. You are all welcome. I welcome those who are on the line.

11 This is the first of a number of public consultations in this proceeding. The second and third will be held tomorrow in Whitehorse at 9:30 and 5:30 local time.

12 There will be a video conference link, I understand, to the Northwest offices in Yellowknife from the Whitehorse consultation. Is that still the case? Yes.

13 So anyone who is not able to participate today will have a further opportunity tomorrow.

14 These public consultations are part of a larger process to explore a number of issues relating to how telecommunication services will be provided in the territory served by Northwestel.

15 In February of 1998, the Commission issued a decision in which it concluded that there should be competition in the provision of long distance service in Northwestel's operating territory.

16 However, it also concluded that competition should not be introduced until the Commission had finished its deliberations on telephone service to high cost service areas and had established the specific terms and condition for long distance competition.

17 The Commission issued its decision in the high-cost serving areas proceeding in October, 1999 and has initiated this proceeding to determine the terms and conditions of toll competition.

18 Some of the issues that we hope to hear your views on include the following: What are the appropriate terms and conditions necessary for a sustainable long distance competition in Northwestel's territory? How appropriate is Northwestel's proposed Service Improvement Plan? What do you think of the quality of Northwestel's service and what is a fair rate of return for Northwestel?

19 I may or may not ask you a few questions after your presentation. I want you to know, however, that the Commission is most interested in hearing what you have to say and in keeping this process as informal as possible. If you are not comfortable answering questions, just let me know.

20 While we often hear from groups who are familiar with telecommunications issues and the Commission's processes, we are also eager to hear the views and opinions of individual Canadians on these issues.

21 At this point, I would like to ask legal counsel to address the process that we will be following today.

22 Carolyne.

23 MS PINSKY: Thank you.

24 I will call on each person who has registered in advance with the Commission and if there is anyone here today who hasn't registered in advance and who would like to speak today, please speak with me.

25 In the interest of ensuring that as many oral submissions as possible can be heard, the submissions will be limited to 20 minutes each. To ensure that the recording and transcription people will be able to produce an accurate record, when speaking please ensure your microphone is on when you speak and when you are finished please turn it off so we don't get feedback.

26 All submissions heard at this consultation will be transcribed and will form part of the public record of this proceeding. Anyone wishing to purchase a copy of the transcript may speak with the court reporter who is sitting behind the window in the corner of the room.

27 Copies of the transcript will also be available on our Web site, the Commission's Web site. In addition to your oral submissions at this consultation, I would like to remind you that everyone has the opportunity to file written submissions by June 23rd and those will be considered along with everything else as part of the public record of this proceeding.

28 After everyone is finished with their presentations, we will take a short break -- approximately 15 minutes, after which representatives from Northwestel will be given the opportunity to respond to the comments heard today.

29 Northwestel can also address any comments raised at this regional consultation in the course of their written argument which is to be filed at the later by June 23rd or the last day of the hearing in Whitehorse. That hearing begins on Wednesday.

30 THE CHAIRPERSON: Thank you, Carolyne.

31 On the subject of sitting hours, well we will adjust ourselves, depending on how long and how many people we have. But I imagine if we are not finished, we will adjourn around noon and resume in the afternoon, around one thirty or two o'clock.

32 Before I turn to the secretary to call our first presenter, let me ask if there are any preliminary matters to be addressed. Maybe Northwestel's representatives could identify themselves for the record?

33 MR. FLAHERTY: I am Paul Flaherty, the President of Northwestel.

34 THE CHAIRPERSON: Okay.

35 MR. VACHON: I am Claude Vachon, Vice-President of Network Operations for Northwestel.

36 THE CHAIRPERSON: Thank you, Mr. Vachon. Thank you.

37 I will now ask the secretary to call the first presenter.

38 MS PINSKY: Thank you.

39 Is a Vi Beck here? Mr. or Ms Beck?

40 Mr. Don Sian?

41 THE CHAIRPERSON: Thank you, sir. Go ahead.

PRESENTATION / PRÉSENTATION

42 MR. SIAN: Thank you, Commissioner Demers.

43 My presentation today is being presented by myself on behalf of the northern-based Telecommunications Partnership.

44 My name is Don Sian. I am a lifelong northerner with 25 years in the telecommunications industry.

45 I have held operational, managerial, director and assistant vice-president-level positions with Northwestel in Yellowknife and Iqaluit before retiring and seeking other business opportunities in the north.

46 I have also held various positions in the community such as Alderman and Mayor of the City of Yellowknife, President of the N.W.T. Association of Municipalities, international board member on the Arctic Winter Games, just to name a few.

47 As you can see in the speech, if you are following along, I was to congratulate Mr. Williams on his recent appointment to the CRTC.

--- Laughter / Rires

48 I will continue to do so in the wish that you will at least pass along my presentation to him.

49 THE CHAIRPERSON: I will tell Ron tomorrow.

50 MR. SIAN: Thank you.

51 I feel that at this juncture in northern communication evolutionary history it is very important to have a fellow northerner participate directly in the adjudication of CRTC-9921.

52 Given his past experience in related business and government, given his in-depth knowledge of the north, its communities, its cultures and its people, and given his sensitivity to the challenging economic, geographical and climatic realities of operating a pan-northern company, I am confident that he would be able to apply a balanced perspective to the evidence being presented by Northwestel and various participants.

53 I would also like to thank the CRTC for agreeing to hold this regional consultation in Yellowknife. Even though Northwestel continues to migrate staff, operational functions and responsibilities from the regions to their headquarters in Whitehorse, Yukon, and given the fact that the majority of Northwestel's major customers and revenues are derived outside the boundaries of the Yukon, I believe it would have most inappropriate to have excluded this region from the hearing process. So thank you.

54 In reading through the mountains of evidence submitted by the company, either directly or through the interrogatories, I tried to synopsize and understand Northwestel's conditions for competition in the north.

55 While I readily admit that I am not a regulatory expert -- and after reading through this have no intention of becoming one -- I submit to you that while Northwestel purports to support competition, the terms and conditions proposed will not achieve the desired results.

56 In fact, the net impact of their proposals will contribute to a continuation of the status quo monopoly situation. This would curtail competitive forces from coming into the northern marketplace and ensuring customer choice and a reduction of costs for the public.

57 I believe the north will continue to be economically disadvantaged as compared to the rest of Canada.

58 Competition, as it has proved with the opening up of the markets in southern Canada, has provided customers with new products, cheaper prices, improvements in quality and enhanced customer services.

59 What Northwestel is promoting is a form of competitive monopoly which I feel would not achieve the desired results that the public, the governments and the CRTC wish for northern Canada.

60 Northwestel's proposed conditions for the introduction of competition are as follows: The introduction of a sustainable cap rate of 5 cents per minute end. The establishment of a supplementary funding of $35 million, if not more. Rejection of the establish of an imputation test. Provision of equal access in four major centres with the potential of only four other locations. Rejection of the CRTC application of the split-rate base model. Requesting a regulated return for up to at least three years.

61 If these conditions presented by Northwestel are to form the basis of future competition, then the national competitors have spoken by virtue of their absence at these proceedings -- and there was none registered when I checked last.

62 If there is to be competition, it would appear that it would be the smaller, more innovative communication providers that will be required to fill a void, at least in the short-term. To this end, we need to be ensured of a level playing field.

63 This includes, but is not limited to, consideration of the following points: A sustainable cap which allows competition to exist. For example, Northwestel's proposal of 5 cents per minute end means that competition would pay 10 cents per minute for an intra call while competing with the company selling for the exact same cost -- and by that I am referring to the residential rates and the toll plans.

64 The supplementary fund of $35 million must be made available to all competitors that want to compete in the north and provide infrastructure base services.

65 Three, the implementation of the imputation test in conjunction with the establishment of a lower sustainable cap rate is critical if competitors are to be able to compete fairly.

66 Four, the identification of equal access roll-out plan for the next four communities -- and I have identified Inuvik, Hay River, Fort Smith, Norman Wells -- and the provision to expand equal access as and when identified by competitive carriers, complete with identified time frames to make this happen.

67 Five, the established split rate base model for monopoly services and competitive infrastructure. Without this, Northwestel will receive the benefit of supplementary funding and their proposed ROE to compete with other communication service providers.

68 Six, I strongly oppose the request for any guaranteed ROE on the competitive network. This simply continues the environment of a communication monopoly in the north.

69 In conclusion, it will come as no surprise to you that Telecommunications Services contributes significantly to the backbone of the social fabric of the north and they will be the engine that will be the driver of the future.

70 We fully support the Commission's basic service objectives. We fully support the establishment of a fruitful communication services as compared to the south. We fully support the establishment of a funds to achieve these objectives.

71 What we do not support is conditions that will maintain the status quo for the foreseeable future.

72 We believe there are already smaller service providers carving out niches in the marketplace and the challenge for the Commission will be to not only protect these existing operators, but also to ensure that climates for new competitive service opportunities are established for the northern customers to truly enjoy the technological advances of the 21st century.

73 Thank you, Commissioner Demers.

74 THE CHAIRPERSON: Thank you very much, sir.

75 Well, I think you went right into what our hearing will be about. I don't know if without having my colleagues here I can ask you questions.

76 Unless you have a few things that you would like to say apart from that -- maybe sometimes you would want to add, I don't think I would want to --unless you want to elaborate -- I would not want to question you to be more explicit on certain things because you said what the company is asking and you said what you think the principles on which the Commission should study that application.

77 Would you have something else to add apart from that, sir?

78 MR. SIAN: No, I don't. I will be providing a written brief in conjunction with the rules of the hearing. So anything else I might want to add as a result of what I may hear over the next couple of days, I would include in that brief.

79 THE CHAIRPERSON: Okay. Well thank you very much. It is appreciated and then we will see you in Whitehorse. You will be there?

80 MR. SIAN: No, I won't be in Whitehorse, but I will be enjoying Northwestel's technology and watching it over a video conference.

81 THE CHAIRPERSON: I see. Thank you very much, sir.

82 MR. SIAN: Thank you.

83 THE CHAIRPERSON: Ms Pinsky.

84 MS PINSKY: Mr. Charles Dent.

PRESENTATION / PRÉSENTATION

85 HON. CHARLES DENT: Thank you. Thank you, Commissioner Demers.

86 My name is Charles Dent and I am a member of the Legislative Assembly of the Northwest Territories, representing a constituency called Frame Lake. Frame Lake is one of seven constituencies in Yellowknife.

87 I too would like to thank the CRTC for agreeing to hold a consultation meeting here in the north. Given the importance of the issue that is under consideration, residents of the Northwest Territories deserve the ability to make their comments directly to decision-makers.

88 My presentation will be brief and far less technical even that Mr. Sian's. I have no experience in the telecommunications field. But as I said, I do think it is important that you hear from northerners what we want and what we expect.

89 The technical aspects of how we get it will have to be set out by others and approved by you. And I know you will take seriously the responsibility you have to ensure a level playing field in telecommunication services for all Canadians.

90 Mr. Commissioner, northerners expect relatively similar service to southern Canadians at relative similar prices. I think you expected to hear that given the definition of basic telephone service provided by the Commission last fall. But that is the key message that I want to give you today.

91 Since competition started in the rest of Canada, northerners have had to endure countless ads on television and in print offering unlimited long distance service for just $20.00 a month. When we call to try and take advantage of those offers we are told, "Sorry, this rate isn't available in your area". Meanwhile, we continue to pay hundreds of dollars a month for long distance service.

92 This has made us feel like second-class citizens. We deserve the benefits competition has brought to other Canadians. We deserve the choice of service providers available to other Canadians. It is time that we saw competition in the north.

93 However, Mr. Commissioner, most of us understand that just throwing the door open to competition might mean that those of us who live in the larger communities would see lower costs while those living in smaller communities could see a reduction in service levels and rising costs. So in a huge territory with a widely dispersed population competition must be managed, brought in with conditions that ensure everyone enjoys the benefits.

94 While cross-subsidization has its problems, I see no other way for northerners to enjoy similar costs for telephone service to southern residents. The population within the Northwestel operating area is too small to bring costs in line with the rest of the country. Without a subsidy from other Canadians, there is no way our costs will be similar to those enjoyed by those other Canadians.

95 Therefore, I support the idea of a supplementary fund to reduce the cost of phone service to northern residents.

96 Northwestel has proposed that local rates be increased to $31.33 per month for all N.W.T. residents. I think that most people would agree that all northerners should pay the same rate, but I do not accept the argument that our rates should be that high.

97 Yes, it costs more for nearly everything in the north. But our local rates are already very high and have increased dramatically over the past four years. This increase has not come with a lower long distance rates that other Canadians have seen.

98 So how much should we pay? Southerners have for some time recognized that in order to support business development in the north, a premium needs to be paid. Our government uses a premium of 15 per cent for the business incentive policy meaning that companies resident in the Northwest Territories will enjoy a 15 per cent competitive advantage on tenders. This is, as I said, in recognition of the higher cost of operating a businesses in the Territories.

99 I suggest that this sets a reasonable bench mark. Our cost for basic local service should be no higher than 15 per cent over what the average Canadian pays. While Northwestel has proposed an increase to $49.70 per month for a single business line and $58.00 for multiple business lines, some have suggested that business line charges should be increased even more dramatically.

100 Again, I would argue that businesses operating in the north already face a significant comparative disadvantage in Canada because of the high cost of doing business in the N.W.T. and should not have to pay more than 15 per cent more than the average Canadian business.

101 We already have very few businesses and only a few are very profitable. Perhaps I can give an example that shows how small the business sector is. In the 1998-99 fiscal year, the Government of the Northwest Territories only projected that it would collect $6 million dollars in corporate income taxes -- and that was before the division of the Territories into the N.W.T. and Nunavit. Compare that to the $51 million expected that same year in personal income taxes, it gives you a sense of the scale of the size of our business community.

102 Other than a few really large companies in the natural resource sector, so many of our businesses are operated out of the owner's home as a sideline. It would be unrealistic to expect to pick up a significant portion of the cost of local service from higher business line costs.

103 The increase proposed by Northwestel for business phones is probably at the high end of what might be reasonable, if not already too much. I had trouble putting together the rates across Canada because they vary so much to get a true picture of whether or not that is within the 15 per cent. It is much easier in the residential cost to see that we were going to be higher there.

104 There seems to be no way but through cost-subsidization for northern residents to see similar prices for phone services that southern residents enjoy.

105 However, this approach is not new in Canada since people who live in northern and remote parts of the provinces typically enjoy rates similar to those enjoyed in the larger urban centres. All we ask in the north is similar treatment.

106 The problem, if you agree that we need cross-subsidization, becomes one of determining how much of a subsidy is reasonable and how to monitor it.

107 Southern Canadians who pay more each month for phone service so northern residents can have an affordable service need to know that they are not paying any more than is absolutely necessary. There needs to be some way to demonstrate that the phone company is being efficient. I submit that one way to do this would be to offer the subsidy to any company prepared to offer local service in the Northwest Territories. In other words, open up the local market to competition as well. I believe that will force NortWestTel to be efficient or lose customers to a competitor.

108 This approach will require more ongoing vigilance on the part of the CRTC than is perhaps the case in other regions, but that may be what is necessary to ensure northerners enjoy the same level of service as other Canadians for similar costs.

109 If other companies know they too will qualify for subsidies, I am confident they will be interested in considering the north. It will then be essential for the Commission to examine cost and revenue projections and equitably set conditions for accessing the subsidy fund.

110 In the end, the key result must be that northern Canadians enjoy similar telephone services to southern Canadians at similar prices. Since telecommunications is a federal responsibility, we look to the CRTC to ensure equity between northern and southern residents is achieved by next January.

111 Thank you. If you have any questions, I would be happy to respond.

112 THE CHAIRPERSON: Thank you, Mr. Dent. That is a very interesting subject that you have raised, especially the subsidy between the north and the south. I am sure you know how important that matter is.

113 But maybe at the end you have referred to local competition and, of course, what you are saying is interesting, but just to make sure I think it would be fair to say that the hearing we have would not be discussing the matter of local competition. We will be focusing on a few things among which competition in the long distance, but at the present time it is not focusing on local competition. You probably know that and it is interesting what you are saying. I am not discussing that point.

114 You have indicated also what people in the south may think when they pose the question of subsidizing the north and I think you focused on that and probably the hearing will be discussing that in details.

115 One point that I wonder if in your writing or to your knowledge, on the point of the SIP, the Service Improvement Plan, that Northwestel has provided and proposed in that hearing, do you have any comments? Do you know, for example, of any of the people in your riding whether they have or will have service improvement through the proposal that is put forward here by the company? Do you know?

116 HON. CHARLES DENT: I am not aware that there will be any significant improvement in services. We have things like call display available in Yellowknife right now. So I think that we won't see a significant change in terms of technology.

117 I think the one thing that I have had a number of people talk to me about -- and I am not technologically versed enough to know whether or not this is something that is envisioned in the Service Improvement Plan -- is a concern about whether or not the Service Improvement Plan goes far enough. For instance, in Internet technology I hear that wireless is the up and coming thing and that is not really envisioned in the Service Improvement Plan.

118 So I have had a couple of people talk to me about whether or not going the copper wire route is actually going to allow the company to be ready for the next sort of jump in technology. And again, I am not qualified to make that assessment. But that is the one issue that I have had constituents bring up to me.

119 THE CHAIRPERSON: Your big qualification is having an office with people knowing your telephone number, I think.

120 Well, thank you, Mr. Dent. You will not be in Whitehorse, but I am sure you will hear from us and there will be some reports and press coverage, I am sure, of the hearing.

121 Thank you, sir.

122 Carolyne.

123 MS PINSKY: Thank you. Mr. John Ondrack.

PRESENTATION / PRÉSENTATION

124 MR. ONDRACK: Good morning.

125 My name is John Ondrack. I represent the Yellowknife Chamber of Commerce. On behalf of the Chamber of Commerce, I would like to express our gratitude for the opportunity to speak to the Commission regarding implementation of toll competition.

126 First, let me say that we are not, nor shall we ever become experts in all matters under consideration in these proceedings. We have interests and concerns and are thankful that the CRTC is responsible for regulating Canada's broadcasting and telecommunication systems to ensure they serve the public interest.

127 The Yellowknife Chamber of Commerce is a number driven, non-profit organization dedicated to the promotion of business in Yellowknife. Yes, we represent Yellowknife, by far the largest community in the Northwest Territories. Yellowknife is often perceived by our fellow communities in the N.W.T. as a community that gets more than its share of northern benefits. With our large, or relative large, populace, ease of access and proximity to northern resources we become attractive for new investment and development dollars.

128 There is little that we can do about this poor press, save to recognize the continued economic development of Yellowknife and prosperity for its people is and always has been dependent upon our support for provision of services and facilities to our northern neighbour.

129 The north is Canada's last frontier and there is much benefit available to all Canadians through support of the development of this region.

130 We recently completed a survey of our membership to solicit their views with respect to telecommunications services in the north. We have discovered that our members are generally not satisfied with the current telecommunications services in the north. Common complaints include lack of services and choice, poor reliability, poor service and high cost of services. While our members chastise, they offer that there have been improvements of late, but not enough and far too slowly. Over 94 per cent of survey respondents believe that the introduction of competition will cure the service ills.

131 We asked our members, "Should all communities receive the same basic services as defined by the CRTC?". Over 70 per cent said "Yes", saying such things as, "Basic services are required for communities to grow". There were concerns expressed by respondents that the introduction of services had to make some business sense to be viable.

132 On the issue of the cost of services, our members clearly indicated that our long distance toll rates should be reduced to southern levels and over 70 per cent disagree with the proposed increase of $5.00 per month in the local access rate.

133 This is a very sensitive area for northerners who have seen little done until recently to shrink the gap between southern and northern business telephone company costs. Most feel our cost of service is too high already. There are, however, northern businesses that offered they would be willing to pay slightly more for our remote location.

134 We asked the membership, "Do you believe that telecommunication services in the north should be supported by a southern subsidy as proposed?". Here, 65 per cent of respondents said, "Yes" with comments like, "The postal service is 46 cents a letter for all so should basic phone rates be nationwide".

135 On this issue, there were concerns about the level playing field for all and accountability of the provider.

136 Finally, our survey prompted a letter from a Yellowknife charitable organization that is worth of note here. This organization is very frustrated in its attempts to expand its scope and provide support to more communities. I quote from the letter:

137 We would like to highlight that the Yellowknife Chamber of Commerce recognizes it is a problem that Northwestel's market areas area not all in the control of our incumbent local exchange carrier. They do indeed operate in a high cost service area wit a relatively small market to fund services provision. The provision of new services seems to have been a balancing act for Northwestel. They can only introduce new services when demand reaches a point where need and/or mass frustration override the distasteful price require to justify service implementation.

138 The mass frustration we speak of has surfaced in our membership survey and it points out that Northwestel may be in danger of losing a great deal of their market share if the implementation of competition is not performed under a reasonable set of terms and conditions.

139 The general position of the Yellowknife Chamber of Commerce is as follows: We support the position that all Canadians regardless of where they live are entitled to a basic level of service at an affordable price for residents and businesses.

140 We believe the definition of the basic level of service should be carefully considered with due consideration to locale need and viability.

141 For example, in a small remote northern community, toll-free access to emergency services or even the Internet would seem much more critical than a privacy feature such as call messaging services or call name display.

142 We believe that the definition of basic service should be reconsidered and amended frequently. Today's rapid changes in communication technologies have tremendous impact on the competitiveness of our businesses. We are highly dependent upon telecommunications technologies and there is a need for our businesses to stay current in terms of hardware service options to fully participate in the regional, national and international economies.

143 The Yellowknife Chamber of Commerce supports facilitation of competition in telecommunication services to ensure that we are receiving value for our money and address concerns that current service is not delivered in an efficient manner.

144 We believe that long distance services throughout the N.W.T. can stand competition under existing rules and structures with few problems and many benefits. It is the local service, including access to the Internet, which requires special measures given the size of markets in the smaller communities.

145 We are concerned that the terms and conditions of toll competition must ensure that any subsidization does not prejudice businesses now providing basic services in smaller communities or those that are preparing to provide such services at this moment.

146 We support the CRTC position that it is a national responsibility to assist in achieving a basic level of service in all northern communities and agree that the best solution for assisting in the achievement of a basic level of services is that of a fund to be created. Contributions to the fund should flow from a tariff levied against all long distance calls across the country, all corporations -- not just Northwestel -- should be able to access this fund. Any corporation that will provide any of the basic services in the smaller communities, in a quality cost-effective manner should be able to bid through the CRTC for access to the fund.

147 Our specific position on Northwestel's Service Implementation Plan is as follows: We agree with its purpose to extend and improve basic service and consider the period of about four years as reasonable. We are pleased that the basic service would be extended to locations now unserved and would be improved to customers now undeserved. However, due consideration must be given to our concerns expressed earlier in this document.

148 Northwestel proposes that all customers would have access to custom calling features and call management services including call display for local calls. We are concerned that such features as call display are very costly to implement and are beyond what we would perceive as basic service.

149 Northwestel proposed new facilities would be provided to encourage ISPs to locate in communities. The Internet is quickly becoming an indispensable tool to businesses and this pleases the Chamber.

150 Northwestel's long distance local service proposal calls for general reduction in long distance rates offset by an increase and a charge for basic local residential or business services. This plan would certainly benefit high end users of long distance toll services and it is probable that the majority of customers would benefit in reduced costs to some degree.

151 Our membership presently does not support the increase in the local access charge. We believe that this would be more palatable once the entire scope of this proceeding and high cost service area decision are made public.

152 Also the long distance rate plan seems to have placed a burden of revenue generation in this area upon business customers as opposed to residential. Several respondents to our membership survey protest this disparity.

153 We consider reasonable the Northwestel proposal that its entire operating area be open to long distance competition on January 1, 2001 with equal access in Whitehorse, Yellowknife, Fort Nelson and Iqaluit, and in other services access to any long distance provider that chooses to offer service by dialling an additional access code or toll-free number as well.

154 In closing, let me thank you for coming to Yellowknife and taking time to hear our concerns. We are truly thankful that the CRTC is considering our views. As you examine the issues surrounding this proceeding, we trust your decisions will allow your northern countrymen to benefit from affordable access to modern telecommunication services in the very near future.

155 THE CHAIRPERSON: Thank you, sir. It is very interesting that you have been talking about a survey. In fact, when I was walking the path this morning, I was wondering if we would have such a survey.

156 Was it a very sophisticated survey? Could we have a copy of that survey? Do you think it is useful for us to have a copy?

157 MR. ONDRACK: I would be pleased to provide a copy of the survey to you later in the day perhaps.

158 There is with the report I gave you a list of the key questions that we asked. It was a fax-back survey. Our challenge was to get a response from our membership in a hurry. We were pleased that about 30 per cent of the membership did respond and that there was a great deal of comments provided in support of the questions and I think those would prove interesting to you.

159 THE CHAIRPERSON: Thank you very much.

160 Well, you have raised very interesting issues and as I said to a presenter earlier the best for me is to discuss it when all my colleagues are there because it is easier and we get the same information at the same time. You will not be in Whitehorse?

161 MR. ONDRACK: I am unable to attend.

162 THE CHAIRPERSON: Thank you.

163 Well, I do not say that thinking that this is only a meeting that would not count if you are not coming to Whitehorse, but I was really enquiring so that I will want to report to my colleagues on what is happening here in a very fair manner.

164 Thank you very much, Mr. Ondrack.

165 MR. ONDRACK: Thank you.

166 MS PINSKY: Would you be up to providing a copy by 3:00 today?

167 MR. ONDRACK: Yes, I would.

168 MS PINSKY: Thank you.

169 And could you also provide a copy to Northwestel?

170 MR. ONDRACK: I certainly will.

171 MS PINSKY: Thank you.

172 THE CHAIRPERSON: Thank you.

173 MS PINSKY: Mr. Dave Lovell.

PRESENTATION / PRÉSENTATION

174 HIS WORSHIP MAYOR LOVELL: Thank you.

175 Which mic do you wish me to use here? Okay, I will speak into that one. Thank you.

176 First of all, looking the other way --

177 THE CHAIRPERSON: The one in front of you doesn't --

178 HIS WORSHIP MAYOR LOVELL: They are using it for the telephone here.

179 THE CHAIRPERSON: Oh, I am sorry.

180 HIS WORSHIP MAYOR LOVELL: There you go. I will use that one.

181 Thank you very much. It is hard to make a presentation with your back to the --

182 THE CHAIRPERSON: Back to back.

--- Laughter / Rires

183 HIS WORSHIP MAYOR LOVELL: First of all, thank you very much for coming. Welcome to Yellowknife and I certainly hope you enjoy your stay here.

184 The City agrees with the fundamental objectives of the federal Telecommunications Act being that all Canadians, regardless of where they live are entitled to a comprehensive range of telecommunications services at an affordable price.

185 Affordable is the key word since this is not the case today. The City of Yellowknife agrees emphatically with the CRTC decision to designate Northwestel's operating area as a high cost servicing area. To spread the cost only over the Northwestel operating area would result in prohibitive rates with a crucial infrastructure and its ongoing maintenance.

186 The City of Yellowknife, its residents, businesses and other organizations have in the past paid and currently are paying for a level of service that we feel is totally inadequate across the north.

187 The Commission recognized this by way of its October 1999 decision. The amount that northerners are paying today for long distance rates is grossly unfair. In fact, the spread between the rates offered in the south has ballooned in recent years causing many of our residents and businesses to look for cost-saving measures which are not always kosher.

188 More often than not, northerners, the friends and family in the south, are just getting them to call here, reducing the number of long distance calls that are coming out of the Territories and the city, thereby reducing the revenue for Northwestel and reducing the residents and businesses' flexibility in using telecommunications.

189 The City of Yellowknife realizes that telecommunications play a crucial role in our daily lives and how business is transacted. In fact, the city was in the forefront of using the Internet technology in how it conducts its business by way of its virtual City Hall. Inexpensive and fast Internet access as well as competitive long distance rates is critical in order to retain our citizens and in order for our businesses to compete with those in the south.

190 Northwestel's estimate of $68 million over a four-year period for the cost of upgrading and replacing their equipment requirements and an additional $35 million on an annual basis for maintaining the system in order for a full range of services to be offered, including competitive long distance rates, cannot be done through its existing customer base. The only reasonable solution is to subsidize this high cost service area.

191 If Canada is to truly offer equal access to telecommunications to all its citizens, then all of its citizens should help create this opportunity.

192 Thank you very much, sir.

193 THE CHAIRPERSON: Thank you, Mr. Mayor. Thank you very much for welcoming us to Yellowknife.

194 Here, again, I think you understand that you have put your finger on the real concerns that we will be discussing with Northwestel during the hearing. Although maybe I should have said we will invite -- as we said, at the beginning, we will invite Northwestel to speak at the end of the presentations and this may give us some indication as to the reaction to what you have said.

195 The matter of the subsidy between the south and the north is certainly an important point, an important point for the people in the south and an important point for the people of the north. It will be part of a deliberation -- a serious deliberation.

196 So, thank you very much. I have no questions, for the moment. Thank you, Mr. May.

197 HIS WORSHIP MAYOR LOVELL: If I could --

198 THE CHAIRPERSON: Yes.

199 HIS WORSHIP MAYOR LOVELL: -- I would like to just emphasize one thing here.

200 THE CHAIRPERSON: Please do.

201 HIS WORSHIP MAYOR LOVELL: While, we do agree and we want competition, most definitely, our big fear is in cherry-picking. You know, if someone -- if southern companies come in, I think Yellowknife could probably stand on its own and benefit through competition, but we are dealing with the whole Territories. And without -- you know, Yellowknife is dependent on the rest of the Territories, our wealth and our well-being is the whole Territories, we are the capital here, and without proper and adequate communications, telecommunications, in the settlements, in the smaller places, we all suffer. So, you know, it would be thing, I suppose we could say, "Sure, let's just have competition and we will let it fall where it is", but if Northwestel is to truly provide a regional service, it is going to need the outside help. We simply do not have the customer base here to make it happen.

202 THE CHAIRPERSON: Thank you.

203 MS PINSKY: Minister Allen? I am not sure he's arrived yet.

204 UNIDENTIFIED SPEAKER: He's not here yet.

205 MS PINSKY: Okay. Ms Alison McCambridge?

206 UNIDENTIFIED SPEAKER: She's not here.

207 MS PINSKY: Okay. Mr. Rob McPhee?

208 THE CHAIRPERSON: Please go ahead, sir.

PRESENTATION / PRÉSENTATION

209 MR. McPHEE: Yes. Thank you very much for allowing the NWT Association of Municipalities to present its position regarding telecommunication services in the Northwest Territories.

210 We will just give a little background on our association.

211 For 34 years, the NEW Association of Municipalities has collectively represented and worked on behalf of our membership, who are community governments in the Northwest Territories. Currently, all 23 incorporated municipalities in the NWT are members of our Association.

212 In addition, through our Northern Employee Benefits Service Program, we service approximately 40 communities in Nunavut and the Northwest Territories.

213 Also, collectively, in the NWT in Nunavut, we service approximately another 30 organizations, such as Northwest Territory Housing Associations.

214 We feel the issue of telecommunications in the north is an important one to address, and that's why we are here today.

215 Like all organizations, digital technologies and, more recently, digital communications have affected our Association.

216 Regarding the costs for the level of service in the north:

217 As you are well aware, costs for telecommunications in the north are higher than anywhere else in Canada. While each individual type of service is reducing in price, the number of services are ever-increasing and collectively swallow up a larger and larger portion of the community government installers every year.

218 In the 1970s, voice lines alone were adequate; in the 1980s, extra lines were required for faxes; and, in the 1990s, even more communication lines are required for the combination of voice, fax and Internet lines.

219 Each of these services, then, has charges for the services provided over that line, including toll charges and, more recently, volume charges for digital communications. Aggregately, the cost of telecommunications increases every year for community governments.

220 The larger costs are combined with a decreased ability to pay, due to shrinking transfer payments between different levels of governments.

221 Specifically, regarding telephone service, recently, at our annual general meeting in Fort Simpson, our membership formally recognized this issue and it was subsequently addressed in two resolutions that were passed by our membership -- and you can find these resolutions attached in Appendix A.

222 Resolution 2000-4 demonstrates just one instance where the cost of telephone lines can be prohibitive to emergency services, at the community level, in the Northwest Territories.

223 This issue was also addressed by a letter from the Town of Inuvik -- which you will find attached in Appendix B.

224 Resolution 2000-11 directs the NWTAM -- which is the acronym for the NWT Association of Municipalities -- to urge Northwestel to provide better and more economical service without delay.

225 Regarding Internet costs:

226 Fully two-thirds of our members do not local Internet access of any kind; of the remaining one-third that have some form of local access, most are dial-up and only a few distinct communities have dedicated connections. For the two-thirds without local access -- which are predominantly the smaller communities -- the technology exists but it is prohibitively expensive. For example, presently, the least expensive option, for a community government, is to purchase a connection where costs for monthly access, telephone lines and equipment rental are in excess of $1200 per month. In addition, there is a one-time cost of approximately $5-10,000. The technology is there, but who can afford it?

227 If CRTC mandate that the local Internet access is granted, as per Northwestel's service improvement plan, we would recommend that it be done in a way where there is a choice at the community level. Northwestel addresses the ability to provide local Internet access at the community level in their service improvement plan which will, no doubt, be done with Sympatico service, which is an internal product to Northwestel.

228 This is a double-edged sword for community governments. While local toll-free Internet access is welcome, this allows Northwestel to compete head to head with existing Internet service providers, even though it has a monopoly and perhaps, now, even a subsidy. This would have a negative effect on the existing Internet service providers and would dampen local businesses in the Northwest Territories; therefore, we are recommending that local toll-free Internet access be provided in all Northwest Territory communities that are currently without local ISPs and that it be done in a way where community governments have choices over who provides them with Internet service -- provider services.

229 Regarding the quality of the level of service:

230 In the 1970s, when voice lines were predominant, the quality standard was easy to measure: you could hear a person on the other end of the line and make out what they were saying, or you couldn't.

231 In that regard, phone service in the north was running at a similar quality to southern areas.

232 Again, with the advent of fax machines, the quality of the line became more of an issue; and, now, with digital communications, the quality is crucial.

233 As a result, in the 1970s, the quality that we had was more in line with our southern counterparts but, today, we are slipping farther and farther behind, due to the precision required by digital communications.

234 Specifically in regards to telephone service, due to satellite latency and slower line speeds, the service is not as clear or reliable as other areas of our country. Complaints from our members include trouble-making connections, getting cut off, hearing other conversations, connection trouble with incoming long-distance calls, static during calls, single rings and wrong numbers -- and, again, these are supported in the letters from our members that you will find in the appendix.

235 It is still not uncommon for fax transmissions of any length to be disconnected and the sender must retry. Regarding fax transmission speed and interruptions, this translates into higher toll charges.

236 In addition, when considering improvements to the infrastructure in the north, we would urge the CRTC to mandate that when infrastructure is updated, that it is improved to be technologically advanced so that it can accommodate the present and future needs of northerners, it would not be desirable to apply large capital investments to retrofit or extend the useful life of antiquated equipment.

237 And regarding Internet:

238 As described, earlier, only one-third of our members have local Internet access. The technology that is currently being used supports asynchronous, or non-real-time, transmission, including e-mail attachments, Web browsing, et cetera. But synchronous, or real-time, communications, such as audio and video streaming, are still not practical.

239 Of the two-thirds of our members that do not have local access, a few dial long distance to review e-mail and attachments and incur toll charges that often range in excess of $300 per month; however, most do not since the cost is simply too high for the level of that service.

240 In communities where local Internet service providers have become available, community governments have promptly started using Internet technologies.

241 So what does all this mean to our members?

242 Well, some of the implications are that -- regarding what the future will bring, if telecommunication services are properly managed, for northerners -- properly managed telecommunications will have an impact on economic development, education and access to services.

243 Regarding economic development:

244 Due to the geography of the NWT, our communities are located right in the heart of the richest mineral deposits and greatest eco-tourism opportunities in the country. Many community governments have now taken over the portfolio of community economic development.

245 The most promising economic opportunities for communities come from dealing with people outside of their home community.

246 If we can provide proper telecommunication services at an affordable cost, these communities will be in a much stronger position to be able to react to the national and international opportunities. However, the opposite is also true: If they do not have the proper telecommunication tools the opportunities will slip away.

247 Regarding education:

248 Programs, such as the School of Community Government and other educational organizations, are now making the shift to delivering online distance education to community governments. Obviously, these educational resources are only acceptable to community governments that have access to the new technologies.

249 If community government personnel in the north cannot access the online educational resources, we will be left with traditional education methods only which, in the north, typically involves very high travel costs.

250 Regarding access to services:

251 In addition, more organizations, such as the federal government, the territorial government and private industry, are all moving to provide more services online. As services become available online, the traditional services, such as person-to-person contact, are often withdrawn.

252 Due to this change in interaction with other organizations, community governments in the north are in a risky position where they may actually have access to fewer services in the future. The only way to minimize this risk is to ensure that access to telecommunication services, especially Internet services, for communities governments is made reliable, available and is accessible at a reasonable cost.

253 To conclude, telecommunication services for community governments in the north are a vital tool to allow our communities to respond to and embrace the future for the benefit of its citizens. Areas such as cost, quality and availability of these services will help determine the opportunities that community governments have. Better access means better options.

254 As we move into the global village of telecommunications, the NWT has an opportunity to be as accessible as anywhere else in the world -- and this is really a first for us because of our geographical position -- but we can only do this if the telecommunications environment allows for this to be.

255 As a result, our Association urges the CRTC to make both telephone and Internet services available to all Northwest Territory community governments with a higher level of service and lower cost than is currently available. This will translate into higher accessibility of telecommunication services for our northern communities, which means increased opportunity.

256 Access to these telecommunication services will help keep the gap between the rest of the nation and the NWT as close as possible. Currently, the gap is widening, and we hope that the CRTC has the ability to minimize this gap for the benefit of northerners -- and attached, you will find the appendix.

257 If there are any questions, we would be happy to answer them.

258 THE CHAIRPERSON: Thank you very much, sir.

259 It is a very interesting document and we will read it carefully, and it is interesting that you bring us the feelings and the requirements of the smaller municipalities of the Territory.

260 May I ask if, at the time you did the work on this memorandum, you had in your hands the plan, for example, the improvement plan of Northwestel and -- whether you had it or not -- whether, right now, your members would have a comment to make on it whether that answers what they are looking for?

261 MR. McPHEE: I am going to suggest that most of our members are not intimate with the knowledge of the service improvement plan; however, there are certain members that are.

262 We have done some research onto it and, also, made our members aware that we are going to present this information and we asked for their feedback on it, and that's where the letters came directing us to make this presentation.

263 Does that answer your question?

264 THE CHAIRPERSON: It does. I wonder if you are able to go farther on the propositions of the company because, from my understanding of the improvement plan, they have focused in very specific areas and these areas, I am sure, represent some of your members.

265 I think my approach would be, usually, when it does not answer, people come to know it quite quickly.

266 You would not have reactions on the very specific nature of what the company is trying --

267 MR. McPHEE: Perhaps not on the specific recommendations but, perhaps, more on the general implications.

268 THE CHAIRPERSON: Okay. Well, thank you very much.

269 Probably our counsel will indicate, at the end, if you wanted to -- and this is for everybody who is participating. There is a deadline but you have, still, some time. Should something come up, either here today, or tomorrow, or in the days to come, Miss Pinsky will indicate when you would have to have these comments in to the Commission.

270 MR. McPHEE: I took note of the June 23rd deadline, so.

271 THE CHAIRPERSON: Okay. It is very important. Anything that comes to mind or comes to your knowledge and that you wish us to know.

272 Thank you very much, sir, and, please, our thanks to all those who have worked on making this memorandum.

273 MR. McPHEE: Thank you.

274 THE CHAIRPERSON: Miss Pinsky?

275 MS PINSKY: Thank you.

276 Sandy Lee?

277 UNIDENTIFIED SPEAKER: I don't believe she's here yet.

278 MS PINSKY: Okay. Peg Wilkes?

PRESENTATION / PRÉSENTATION

279 MS WILKES: Good day.

280 My name is Peggy Wilkes. I am more known as "Peg".

281 On behalf of the Northwest Territories Chamber of Commerce, I welcome you to our territory. I want to express how pleased we are that the Commission has come to Yellowknife.

282 We are confident that after your northern visit your will have a better understanding of the special challenges facing Canadians north of 60.

283 The NWT Chamber of Commerce, through its memberships, has many concerns regarding telecommunications. On their behalf, I present this very general document.

284 As one of the most vast regions in Canada, and North America, we, as businesses and residents, are presented with many barriers that make basic communications with the rest of the country, and sometimes the world, a struggle.

285 We hope you will appreciate how extremely dependent on telecommunications businesses are, in order to participate on a regional, national and, for that matter, an international playing field.

286 Communications are a substantial portion of our operating costs commercially and, as such, we have a huge stake in the Commission's decisions that will have a lasting impact on our ability to participate in a global economy.

287 We applaud the CRTC's decision and identification of the need for a basic level of telecom services at an afford cost for all Canadians. Just as the postal system allows the mailing of a letter anywhere in Canada at 46 cents, so should the Canadian Radio and Telecommunications Commission ensure that all residents, including those of the north, have access to basic telecom services at a reasonable rate.

288 The definition of "basic level of service" per the Chamber's members varies somewhat from that of the Commission's. We are of the mind, as is our territorial government, that emergency services, cell phone service, toll-free access to Internet, message-name display, and a number of standard features used in the south should be available to us also.

289 There is no question that we are economically disadvantaged when competing with southern businesses in a number of ways. However, the high cost of communication and transportation are key and keep our commercial enterprises from becoming more competitive, self-sufficient and, in some cases, as with new businesses, fiscally viable.

290 One such factor that's prohibitive, in terms of business, is the lack of alternative suppliers for goods and services. In particular, the absence of competition in telecommunications on all levels, whether it be long distance, local exchanges, cell phones or Internet services, directly impacts northern economic health.

291 We are, therefore, in full support of the CRTC's ruling to ensure the introduction of long-distance competition. The premise under which the introduction of competition must be handled in a very delicate manner.

292 While the NWT Chamber agrees that access to a special fund is an absolute necessity and an integral part of the process, we are very concerned that such access not be limited to a sole source.

293 It has been proven across North America that competition is beneficial for both the consumer and the suppliers. Having acknowledged that, we recognize that, in this very fragile economic climate, measures must be taken so as not to jeopardize the stability of current infrastructure suppliers. For the most part, northerners have come to understand that the current entity has power and privilege, which most cannot afford to question or disrespect.

294 If the goal is to have a quality, cost-effective telecommunication service available to all Canadian business at a reasonable price, then extraordinary measures would need to be taken to preserve the integrity of the CRTC decision.

295 Although there is a legitimate and justifiable need for supplementary funding to afford northern Canadians' inherent rights, the Chamber is also cognizant of the fact that there are northern businesses who can provide telecom services who have been denied access to subsidies.

296 That being stated, the Chamber's position is that a sole-source supplier could conceivably cross-subsidize its operations if the CRTC is not diligent in its review process or does not implement a framework to prevent such potential abuse.

297 Further, should the CRTC grant access to a special fund, it is imperative that any guaranteed rate of return for a supplier of the Commission's decisions does not allow predatory pricing, which would discourage true competition for LD services.

298 While it is clear that north of 60 is a high-cost service area, requiring additional assistance from other parts of Canada to bring basic services, we urge the Commission to be rigorous in its mechanisms to monitor and review the defined area, the breakdown of costing of utility versus competitive services, and the consideration of resale and competitive alternative services without delay.

299 The Chamber also holds the view that, given the fact we are now charged the highest rates in Canada for telecommunication services, to allow a rate increase of any sort, whether local business or residential, would be a punitive measure to levelling the playing field for northerners.

300 One last consideration for the Commission, from the Chamber, is its strong belief that any corporation doing business in the NWT should have a dedicated presence and profile in our communities. It is essential that employment opportunities born of the north display a commitment to residency in our Territory now and in the future.

301 Finally, we urge the Commission to stand firm, that it is a national responsibility to assist all Canadians in achieving a basic level of service, and would reiterate the need to facilitate competition. Competition would lead the way to ensuring better value for dollar spent as well as address the fact that current services are not delivered in the most efficient and effective manner.

302 In conclusion, the Chamber trusts that, after taking into consideration the voices and concerns of northerners, the CRTC's decision, its process and administration undertaken for equality will uphold the fundamental principles of the equal access Canadian fund.

303 Thank you.

304 THE CHAIRPERSON: Thank you very much for this interesting presentation.

305 Well, I think it makes precise comments on what we are about to hear.

306 I understand you represent most of the communities with commercial enterprises in the Territory?

307 MS WILKES: Correct. As the Yellowknife Chamber is representative of the businesses of Yellowknife, so is the NWT Chamber representative of the business community in the entire Territory.

308 THE CHAIRPERSON: Thank you.

309 Maybe a similar question I was the previous presenter.

310 The quality of service and the improvements that Northwestel is proposing in its application to the Commission, have you had a chance to discuss that with members? Or would members have talked to you about the proposed improvement plan that the company is proposing to us?

311 MS WILKES: As a committee, several were involved in putting forward thoughts on the hearings, in general, and we did not go through very detailed specifics of the service improvement plan but chose to focus, generally, on the state of telecommunications as a whole.

312 THE CHAIRPERSON: Thank you. Thus, you left some space for us, I suppose --

313 MS WILKES: Exactly.

314 THE CHAIRPERSON: I could feel that. Thank you.

315 Maybe I should make a point that is more precise as I think I commented, on Mr. Dent's presentation, that we were not going to hear -- we were not there for local competition, that this application was framed in such a way that we were to discuss long distance. I am sure you both and everybody here knows that in, quote, the south, the Commission has, of course, implemented a policy of local competition, but it did that after, first, bringing in long distance competition. I just wanted to make sure that was not a theoretical statement on my part, that we would not, at one point, look at local competition, but I just wanted to make sure I was fair to all of you who -- I am sure you know it exists. And, of course, it is probably not as quickly putting itself into operation in the south but, still, the Commission has put out a basis on which local competition could exist.

316 Thank you very much. I think that's all I would have to ask you. But if you have anything to add or if, in the course just before we break, you have something else to add, please feel free to do so.

317 MS WILKES: Thank you.

318 THE CHAIRPERSON: Ms Pinsky.

319 MS PINSKY: Ms Vi Beck?

320 MS BECK: I don't have a presentation -- Peggy Wilkes did the presentation for the Northwest Territories Chamber of Commerce -- but thank you for the opportunity.

321 MS PINSKY: You are welcome.

322 THE CHAIRPERSON: Thank you for being here.

323 MS PINSKY: Miss Alison McCambridge?

PRESENTATION / PRÉSENTATION

324 MS McCAMBRIDGE: Good morning.

325 THE CHAIRPERSON: Good morning.

326 MS McCAMBRIDGE: Welcome to the Northwest Territories.

327 My name is Alison McCambridge. I am the Executive Director of NTnet Society.

328 On behalf of the NTnet board of directors, the Internet service providers and Internet user membership it represents across the north -- which does not include all Internet service providers -- I would like to thank the CRTC for considering these proceedings worthy of requiring your personal visit to the Northwest Territories to hear northern concerns about this uniquely northern issue.

329 I have, for your review, a written version of this presentation, together with letters directed to the CRTC and NTnet Society which provides you with comments of our membership and those of telecommunications companies in the north.

330 As you have and will hear by a number of presenters, during your proceedings, the north has long awaited an efficient and effective provider of telecommunications to address the needs of our residents and business community.

331 NTnet is in full support of seeing the realization of long-distance competition, basic services and Internet user for all its residents. In fact, Internet itself was brought north by a group of volunteers who evolved into NTnet Society. It was also, for that matter, innovative individuals and business, such as private telecommunication companies other than Northwestel, who introduced technology some four years ago which is superior to, in our opinion, and lower priced than that which was recently introduced by Northwestel. Many of us are rather proud of our initiatives, as they relate to telecommunications in the north.

332 Independent northern business facilitated that service and made a move to such technologies -- actions undone by Northwestel, until proven by northerners. Moreover, the better part of these technologies and services were introduced without the advantage of a subsidy.

333 These are the northern experts in telecommunications. They have already had business dealings with competition to Northwestel, including Telus and Sprint, satellite service providers, providers of fibre optics and others. Therefore, we feel we are in a position to express our view towards their current SIP, proposed plans for long-distance competition and the manner in which these evolve and are implemented and monitored.

334 Firstly, the possible scenario of seeing Northwestel cross-subsidize its competitive service through revenue from its utility arm is not one which we would condone. As with the Stentor Group, we believe the CRTC should ensure the absence of anti-competitive behaviour, or pricing, or cost allocation by a monopoly company.

335 We know who owns Northwestel and we know what Northwestel owns. How does a cable company owned by Northwestel -- which they state is a separate company and must be self-sustaining -- possibly afford its own ATM pipe, with approximately 300 customers at flat rates at a cost which we pay more than $12,000 per month, and sustain itself without assistance from the parent company?

336 The sale of ADSL in the City of Yellowknife is prohibitive to Internet service providers of late owing to Northwestel's rising rates, which rates have been raised to them to the point at where costs are prohibitive to reselling the services. It is more expensive than the simple cost of purchasing it by an end user.

337 To solidify the absence of predatory pricing, NTnet recommends the need for an imputation test in Northwestel's proposal, proving the pricing safeguard to ensure there is no squeezing out of competitors' margins.

338 Entry into the northern market must not be accompanied by costs which are prohibitive to doing so.

339 We also recommend verification by CRTC that there be no hidden costs imposed, for instance, lease line rates, and that the CRTC carefully consider the concept of the guaranteed rate of return, as proposed by Northwestel.

340 The Northwest Territories is moving beyond the need for a monopoly telecommunications company. We are more than ready for competition and we host much of it within our boundaries. In fact, in many areas of telecommunications, there already exists northern companies who are capable, experienced and technologically more advanced than Northwestel, in a position to provide services needed in the north. Are they to be afforded the benefit of such subsidies?

341 We would propose that any funds accrued for the high-cost serving area infrastructure and advancement of services to northerners be made available to any provider of such services if they are deemed as meeting the criteria to be established by the CRTC as comparable.

342 Further, we would suggest that the CRTC play a key role in allocating such funds. In fact, the CRTC may consider moving such allocation of subsidies closer to or completely to the end user.

343 If the CRTC moves towards equal access, as of Jan. 1, 2001, we would ask that the Commission implement resale immediately, or as soon as practical. The need to wait for equipment or infrastructure to implement the competitive service is not justifiable and the access to resale would, without a doubt, benefit northeners. We are still waiting for cable Internet resale.

344 Markets are cornered with delays, to the detriment of private industry. To deal with the problem after the fact is a bureaucratic and lengthy process. It does not compensate private industry with lost revenue incurred as a result and it is our position that the existing marketing is not one which plays on a level field.

345 We note that the CRTC has not yet dealt with the issue of local competition, but we do urge you to consider local competition as an issue which needs to be addressed soon.

346 In general, it is our opinion that the north is ready for it.

347 Will the CRTC ensure that northern business remains a viable enterprise in the telecommunications world? And will the CRTC ensure that northerners are afforded the competitive process that is fair to residents, business and competitive providers?

348 Northerners do, without a doubt, require the assistance of southern telecommunications companies via the subsidy fund available. One of the remaining questions is whether the subsidy should be provided exclusively to Northwestel or whether it should be available via the most efficient providers of such services; and the final question, whether the CRTC ought to ensure safeguards to ensure the process in which any competition is afforded a level playing field so as to provide equal service. Any such subsidy fund must be closely monitored by the CRTC.

349 We are the final frontier in telecommunications competition for Canada and are in a unique position here because we are a high-cost serving area. We deserve the ability to communicate without an additional burden because of our location.

350 We thank the CRTC for moving forward, on our behalf, to ensure that northerners are afforded the opportunity to communicating and being information equals to the rest of Canada.

351 Thank you.

352 THE CHAIRPERSON: Thank you very much. It is very interesting, also.

353 I don't think I have questions for you, at this moment. It is very interesting, especially the point of view from which you come and I am sure we will have it in mind for many days to come. Thank you.

354 MS PINSKY: Ms Sandy Lee?

PRESENTATION / PRÉSENTATION

355 MS LEE: Thank you, Mr. Chair.

356 I would like to apologize. I believe my name was called a few times but a conflict arose this morning that I couldn't get out of and I thank you very much for giving me the opportunity.

357 THE CHAIRPERSON: You are welcome.

358 MS LEE: My name is Sandy Lee. I am a member of the Legislative Assembly for the Yellowknife riding of Range Lake.

359 First of all, I would like to congratulate you for holding this hearing in Yellowknife and giving us an opportunity to speak to you on this issue firsthand.

360 The purpose of my presentation here is quite simple and it is pretty basic, and I basically want to support the proposal that you have on high-cost serving areas because I believe that for every voice in the south that speaks against it we need to have a voice here that supports it, and that's basically the reason why I am here.

361 I would like to express my support for the CRTC's decision to designate the north as high-cost serving areas.

362 I would also like to express my support for the need for CRTC to take a step further and set up a subsidy program in order that necessary improvement to the telecommunication infrastructures in the north can be made.

363 I should also make it clear, from the outset, that I am not here to speak to the specific proposal being submitted by Northwestel.

364 Going back to my first point, I support your high-cost serving area decision because I believe, fundamentally, that this speaks to the core values we hold as Canadians; and that is, regardless of where we live, we all have the right to a certain level of basic services. We believe this to be true, in terms of basic services in health, education and, to a certain extent, even in transportation. Our country is built on this understanding and I believe telecommunication in the 21st Century is as basic a service as health, education and transportation.

365 And we have known in Canada the cost of providing these services vastly differ from one end of the country to another. But through careful decision making and public law and policy, we have made it possible for a semblance of equality in these services to exist throughout our land -- and I believe this is a task at hand for the CRTC with respect to telecommunication services in the north.

366 I do not think I need to convince the need for the public policy intervention in the north. The simple fact is that we make up 40 per cent of the land mass but less than a half of one per cent of the Canadian population. This really speaks to the reality of what we have to contend with.

367 Currently, Northwestel serves 96 communities and 80 per cent of the communities have less than 500 lines.

368 The second point I would like to make is that I would like to express my support for the CRTC's decision to expand the definition of "basic telephone services" to include individual line, local services and toll-free access to the Internet.

369 As well, I am also encouraged to see the opening up of the competition of long-distance rates in the north. I believe this is inevitable and it is completely in line with what needs to take place.

370 As an elected representative of the territorial governing body, I believe strongly that we must be equipped, all our citizens must be equipped in all aspects to move forward into the 21st Century and I believe this means that all of our communities should be plugged in, so to speak, with the same level of telecommunication technology available elsewhere.

371 Our Assembly is making advances is telehealth and long-distance learning and this scheme fits into what we need to do in telecommunications.

372 Finally, in terms of the proposal being put forward by the Northwestel, I do not have the technical background to give you an intelligent presentation on that. I do believe, however, that it is very important that CRTC ensures, to the extent possible, necessary accountability is built in, in terms of the way the subsidy is spent, what levels of infrastructure is built and what services each community will have, regardless of the service provider, and this includes necessary R&D spending to meet the specific needs of the north.

373 I tried to talk to local business operators on this proposal, and that's what I believe people are saying, that if this goes through and Northwestel becomes a service provider, it will really enhance the power of Northwestel and with that, has to come equal amount of accountability.

374 I do not believe there is free money and any subsidy that comes is someone's money and it has to be carefully expended, in the interests of all public -- of the public. We owe it to those who give it to us to -- in order that we have the basic level of service.

375 That concludes my short presentation.

376 I thank you again for the opportunity.

377 THE CHAIRPERSON: Thank you very much, Madam Lee.

378 I have no questions, but I hope you will stay with us at the end. Thank you for being here.

379 Miss Pinsky?

380 MS PINSKY: Minister Allen?

PRESENTATION / PRÉSENTATION

381 HON. ROGER ALLEN: Thank you very much. Good morning all.

382 The name is Roger Allen. I am the MLA for Inuvik, Twin Lakes. I am the Minister responsible for the Northwest Territories Housing Corporation, the Public Utilities Board and Responsable for Youth.

383 I am here today to represent the government of the Northwest Territories in this proceeding that we consider to be of critical importance to the north. Today I am sitting in for the Honourable Vince Steen, Minister of Public Works and Services, which is the department responsible for telecommunications regulatory matters for this government.

384 The department is represented today by the Deputy Minister, Mr. Bruce Ratray. Other staff from Public Works and Services will be in attendance at the oral hearing that starts tomorrow in Whitehorse.

385 Commissioner, while this is the first time I have appeared before the CRTC, it is not the first time for this government. In 1993, Don Morin, as the Minister of Public Works and Services, and subsequently our Premier, appeared before the Commission at the regional hearing in Yellowknife.

386 At this hearing, he petitioned you to direct Northwestel to extend service to a number of unserved communities in the territories to which service extension had been repeatedly delayed.

387 In, 1997, Goo Arlooktoo, another Minister of Public Works and Services, and subsequently our Deputy Premier, appeared before you and petitioned for the introduction of long-distance competition.

388 Then, in 1998, Jim Antoine, yet another Minister of Public Works and Services, and later our Premier, appeared in the high-cost area proceeding.

389 In his submission, Mr. Antoine spoke of the particular reliance that we have on telecommunications in the often harsh northern environment and made three specific recommendations; these were -- and I quote,:

390 Sometimes we have been happy with the decision that the CRTC has reached in these proceedings and sometimes we have not.

391 We are happy that service was extended to seven formerly unserved communities but are unhappy that the quality of service and level of available services remain inadequate.

392 We are happy that the CRTC agreed to introduce long-distance competition in the north but are unhappy that, after two years, we are still waiting.

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393 We are happy that long distance rates have come down, though unhappy that they did not come down more and although it was not an easy thing to do we gave our support to a series of local rate increases that have moved the local rates we pay from amongst the lowest charge in Canada to where they are now the highest.

394 Now we are at crossroads. First, the time has come to introduce long distance competition. We have waiting a long time for competition and let's not be further delayed for any reason.

395 Second, we need to implement the findings of CRTC Decision 99-16 which stated that:

396 I do not believe it is an exaggeration to say that the manner in which Decision 99-16 is implemented is of the greatest interest to us. The Commission's decision on this matter will be one of the single most important determinant as to whether northerners are provided with a level of telecommunications service that allows them to effectively participate in the 21st century information age. The opportunities that would be presented by a favourable decision are tremendous.

397 However, the difficulties resulting from an unfavourable decision would have a very negative effect on the north. The Government of the Northwest Territories will be submitting written and possibly oral final argument in this proceeding and will provide details and recommendations concerning the many matters at issue in the current proceeding.

398 Today for the remainder of my presentation what I would like to do is highlight those issues that we view as being most critical and outline the government's position on those issues.

399 Service Improvement Plan. Let me begin with the Service Improvement Plan proposed by Northwestel in response to the Commission's Directive and Decision 99-16. In general the government supports a proposed SIP and considers that it represents an important step in upgrading the level of service in the north.

400 We are, however, concerned that the Plan does not go far enough, that without enhancements it will fail to meet the basic service objectives set out in Decision 99-16.

401 For example, under Northwestel's SIP, many northerners will continue to be denied access to enhance services that are routinely available in the south. Such services include call name display and voice messaging service amongst others. In the detailed recommendations we make in our final written argument, we will therefore be asking the Commission approves Northwestel's SIP subject to incorporation of the modifications we feel need to be included. We will also be suggesting that it is essential that no delays be permitted in completing the SIP and that Northwestel be strictly held to a four-year timetable for its completion. Any failure to meet such a timetable would result in delays and bring service in the north to a level more comparable to others available in the south and would be wholly unacceptable to this government.

402 While a four-year limit should be established for the completion of the current SIP, I also want to stress that the SIP cannot be viewed as simply a one-time event. As technology evolves and new services materialize, it will be necessary to continually review the adequacy of service levels provided in the north and other high cost areas.

403 As the Commission noted in Decision 99-16:

404 Rates. Monthly local rates paid by Northwestel's residential customers have risen by at least $17.00 since 1996 and are now higher than the rates charged elsewhere in Canada. If we do not include charges for extended various service -- as you know the majority of our communities are very small -- it means that for the average resident it continues to cost more and more to simply have the capability to locally call to the few dozens other homes that exist in that community. While some northerners in all communities will enjoy offsetting reductions in the cost of long distance services, there will remain a good number of residents in the smaller communities, particularly those of Aboriginal descent who are not traditionally regular users of long distance and who will obtain no significant benefits from reduced toll rates.

405 Mr. Steen is the Minister of Public Works and Services and also the Minister Responsible for Senior Citizens in his territory. He asked that I convey his concerns that the senior citizens particularly in the smaller communities must be able to afford to have their own telephone simply for their own security and for the ability to access emergency assistance.

406 Local price increases must not make the cost of this basic capability unbearable to our seniors. Business local rates have risen by at least the same amount over the past few years and now are among the highest rates charged in Canada. Despite this history of rate hikes, Northwestel is seeking a further $5.00 a month increase and has indicated that while it has no specific plans on the drawing board additional increases may be necessary in the future.

407 I indicated earlier that while it was not an easy thing to do, this government had supported a series of local rate increases that occurred in recent years. Enough, however, is enough. This government believes that all Canadians should be entitled to receive comparable telecommunication services at comparable rates.

408 Currently, residential customers in the north are receiving less and being asked to pay more. To further increase our rates would only be to aggravate the situation and to risk seriously compromising the affordability of telecommunication services in the north.

409 Accordingly, we recommend that no increase to residential local rates be permitted at this time. To limit the amounts that would otherwise need to be derived from supplementary funding from southern telephone companies and because business rates while high are below the rates charged in other jurisdictions, we are not however opposing the proposed $5.00 increase to business local rates.

410 So with regard to long distance rates, we strongly support Northwestel's proposal to introduce new discount plans and rates comparable to those available in the south, while our basic long distance rates are somewhat comparable to rates in the south, they are far above the rates under southern discount plans.

411 Not only does this place our business at a huge competitive disadvantage and unduly burden northern residential customers, it is also counterproductive and ultimately unsustainable. Under the current environment, the high rates have resulted in huge revenue losses to Northwestel through a result of bypass activity.

412 With the introduction of long distance competition, unless such discount plans are approved, then Northwestel's market share loss will be enormous and its project revenue loss will actually be far greater than what would result from the introduction of the proposed discount plans.

413 As well, the availability of the discount plans will assure than smaller communities which competitors do not choose to enter will also share in some of the benefits of competition.

414 Long distance competition. A final word about long distance competition itself. In our final argument in the long distance competition proceeding, this government has noted that competition yields a number of benefits. These include: The development of new service and pricing packages; the tearing of service plans and prices to individual needs; the overall responsiveness of the market to consumer needs; improved supplier efficiency and productivity. As well, we noted that these benefits were of particular significance in the northern context due to the critical role that all that long distance communications plays when communities are separated by huge distances and the geography and climate is harsh. That was in October 1997.

415 In 1998, the CRTC concluded that long distance competition should be introduced in the north by mid-2000, following some rate rebalancing and implementation of measures relating to high cost area provisions. That rate rebalancing has been completed and the current proceedings will implement the measures identified in the high cost area decision.

416 Accordingly, we urge the Commission to allow no further delay in the introduction of long distance competition. Northwestel has said that implementation on January 1, 2001 with a cut-over to equal access on March 31, 2001 is fully feasible. Northern consumers are eagerly waiting. No further delay should be accepted.

417 In closing, let me thank you for responding to the Honourable Vince Steen's suggestion to conduct this meeting in Yellowknife and to hear our concerns and those concerns of others in person.

418 We feel very strongly about the issues I have discussed today and we trust that in your deliberations in this proceeding you will arrive at a decision that will allow northerners to participate more fully in the benefits that affordable access to a modern telecommunication service can be provided.

419 Thank you.

420 THE CHAIRPERSON: Thank you very much, Mr. Minister.

421 This is very useful, especially when you put it into context of what your government has done in front of this Commission, has presented in the past and what we ought to do in the coming days and in the coming years.

422 I don't think I have questions to you. I think it is very clear and we will take a very close look and have our people at the CRTC analyze and focus it so that we don't forget any of the details that you have provided us today.

423 Thank you very much for permitting the CRTC to use the home of your government and the home of the Legislative Assembly of the Northwest Territories for this work. You may not have been here this morning, but we had very interesting presentations from many different angles of what our coming days are to be on and of the importance of the decision of the Commission in the near future.

424 So thank you very much for your help.

425 Ms Pinsky, please.

426 MS PINSKY: Has Mr. Bill Erasmus arrived? No? Okay. We have actually gone through our list.

427 Mr. Don Sian mentioned that he wanted to make a further presentation.

PRESENTATION / PRÉSENTATION

428 MR. SIAN: Commissioner Demers, one thing about going first in a proceeding is that it was so long ago people tend to forget you even existed.

429 I do want to spend a few moments and talk from the perspective of a private residential undeserved customer.

430 I live 20 miles outside of Yellowknife and I am on Northwestel's ruraltel system. I must admit that I am in an emotional and intellectual quandary because I am probably one of the few individuals who believe that once you make a lifestyle choice you live with the consequences of that choice including communication services in remote areas.

431 However, having said that and reading the service objectives of the CRTC and further reading Northwestel's comments with respect to the SIP, I now find myself living in an undeserved area and as such, even though I was happy with voice quality communications, I do feel that it is important to maybe take a couple of minutes to address the premium cost we pay with respect to living out of the non-urban areas.

432 We do pay premium cost for that particular service as well, sir, we pay 4 cents per minute for originating and terminating traffic just to get into the switch network. Given that it is an undeserved area and Northwestel, through the SIP, intends to upgrade service, certainly to our area, even though there are not other RuralTel customers here, I am sure the company will hear very loud and vociferously from their Yukon friends who live outside the Whitehorse boundaries.

433 I think that what Northwestel in the Service Improvement Plan talks about is general in terms of objectives and doesn't deal with the technology.

434 So I just have a few points to make that I believe the technology providing and upgrading service to these areas must be digital and wireless so as not to impugn the quality of lifestyle that people have left the community to enjoy. I think that immediately, effective January 1 of next year, the premium charges associated with these undeserved areas must be dropped. With respect to that, I think that RuralTel customers are not an overly demanding group of people and we would support Northwestel's plans with respect to the service improvement area as it applies to our particular perspective.

435 THE CHAIRPERSON: Thank you very much. An interesting aspect of the application in fact.

436 Ms Pinsky.

437 MS PINSKY: I would just like to ask if there is anybody else in the room that would like to make a presentation.

438 THE CHAIRPERSON: Please come forward, sir.

PRESENTATION / PRÉSENTATION

439 MR. HYNES: Hi. By name is Byron Hynes and I am just here as a private individual to express a couple of points of view of my own.

440 I have been a Northwestel customer for 11 years now, both in Hay River and Yellowknife, and I would not say that I am a fan of Northwestel. A couple of my colleagues across the table may smile to hear me say that I am not a fan of Northwestel.

441 I am, however, cognisant that they are doing a difficult job in a difficult are, but I wanted to point out that my understanding -- and I have some family members who have been in the north a lot longer than have -- of telecommunications in the early days and whatnot is that it has always been done as a for-profit-enterprise and it has always been done at a profit. And now I hear certain overtones in some of the conversations I have with individuals associated with Northwestel that that seems to be no longer possible and I also have heard them say -- individual employees of Northwestel -- comments with regard to competition that, "We, Northwestel, own this infrastructure and we should be entitled to some sort of recompense for opening it up to competition".

442 While it is true that they own those goods and those products, they have been bought with customers' money like mine while returning the maximum profit allowed by law or by regulation or application.

443 So I just think that that is a perspective that sometimes gets overlooked in this. I am also concerned with the monitoring of whatever is implemented in the Service Improvement Plan and things like that. I have seen an ad in the newspaper within the last few months that tells me that Northwestel's long distance rates have been reduced to now 20, 30, 40 cents a minute, and then later that day I get a bill that has one minute call to Guelph that cost me $1.48. So there is a lot of spin and a lot of optics and a lot of marketing involved in that.

444 When Northwestel comes to the public -- or any firm for that matter comes to the public -- I have dealt as a representative of my employer and my employer's contractees with other telecommunication companies, Sprint and Telus, and negotiated with them as well, and all telcos I think suffer from it a little bit. They will make promises, or they will come and they will say, "Here is what we intend to do", and then they will arrive and find that it is difficult to do that and it is expensive and there are delays and there are provisioning errors and there is equipment that is not in place when it is supposed to be in such. But what kind of mechanism is proposed to ensure that what is promised has happened.

445 But just as an example, my service here in Yellowknife, yes, it does have caller display. It does not have caller name display. It has caller number display only and because it is my understanding that Northwestel does not implement, I think it is called signalling service 7, a particular technology on the switch here in Yellowknife, it does not work except for calls within Yellowknife. I mean even within Yellowknife it does not work for cell-phones, it does not work for centrex services such as the government. It is extremely limited.

446 When I have called Northwestel's service people and Northwestel's customer people have said I am lacking this service. It is not a payment issue. I would pay almost whatever is asked to have my service work properly. The person in Whitehorse says, "Oh, it works fine here" and that is quite literally --in fact, I had one person that it took me many minutes to convince them that because it worked in Whitehorse did not mean it worked in Yellowknife.

447 So I am concerned that we need to ensure -- and I want to be careful that I am not accusing Northwestel of doing anything or planning anything or attempting anything untoward. I am not trying to say that. I am just saying that I am concerned that we must have some sort of mechanism to ensure that the commitments that are made by any company coming in, whether it is Northwestel that is already here, or by a long distance competitor, if they say, "We are going to implement this within four years, or we are going to have this kind of rate or we are going to offer this kind of service or we are going to do this, that and the other thing", how is that monitored and is there a mechanism that will correct it if it is not. Like in the sense that, "You have not done as you promised in your application to provide competitive long distance or you have not done as you promised in your SIP, therefore your check this month from the subsidy fund is on hold or is reduced" or whatever.

448 I just present that to the Commission as a consideration to how monitoring and effectiveness is guaranteed in whatever plan is implemented.

449 I think anything else I had to say was already made in the formal presentations.

450 Thank you.

451 THE CHAIRPERSON: Thank you very much, sir.

452 MS PINSKY: Thank you. I will just ask again whether there is anybody else in the room who would like to make a presentation.

453 THE CHAIRPERSON: Come in please, sir.

PRESENTATION / PRÉSENTATION

454 MR. BEVINGTON: Good morning. My name is Dennis Bevington and I come from a small town to the south of Yellowknife known as Fort Smith.

455 I am pleased to be here today and to have the opportunity to say a few words even informally as this.

456 I have some concerns about the development of the telecommunications services throughout the north. I think primarily, as a long-term northern resident, I am concerned that we remain in a service area that is dominated by one company by regulation and by the direction of this body.

457 Clearly to me the opportunities for northerners is to understand what that means to them in a fiscal sense or limited to people in small communities. There is an impression that we are subsidized and the cost that are incurred on our behalf for telecommunication services are not fully covered by our rates that we pay. At the same time, there is not really an understanding of what those costs are and why those costs are being incurred on our behalf.

458 I think there is a definite need for greater information on the cost of service on a community by community basis. Just as in the case with many utilities, a clear understanding of the nature of the cost of telecommunications for a community such as Fort Smith would be valuable.

459 Then I think the people in the community would have a better understanding and appreciation of their position in this conglomeration of interests we call the telecommunication service in the north of Canada and it does extend across political jurisdictions and to understand the nature of the cross-subsidies between the Yukon, N.W.T., Nunavit and northern B.C. as an issue that I think is hardly developed as of yet.

460 Understanding cost is the start of understanding how to better provide the service to individual communities and gives individual communities the opportunity to look at whether there are independent provision or providers or different directions that can be taken that can reduce those costs. Without that information, I think we are at a disadvantage.

461 Options for provision of services to different communities are increasing exponentially in this new age, the digital age. To understand what it means to link into a four-year program with Northwestel today for a community such as ours where within 12 months or 18 months we may see that the wireless age is on us with a vengeance and the choices that we have made today for the next four years are inappropriate.

462 So I think within telecommunications right now there is a technology that is driving us to competition and in the north it should be no different. Competition is important when technology changes. Competition can ensure that the technology will be appropriate for the particular communities and for individual communities in different fashions.

463 So on behalf of smaller communities, I think information is extremely important and certainly I would hope that the CRTC would encourage the provider to provide that information in the future.

464 I note the concern here of applying a subsidy. I think I firmly agree with the presentation that was made earlier by an independent provider, that there is a real need to act carefully in this regard, that subsidies can reinforce monopolies and can also lead to a situation where new technology which would be more appropriate and which would bring better services to a community faster may be stalled.

465 In my community, Fort Smith, over the years we have gone through many technologies with the provision of long distance services. We have gone from tropiloscater, to one system of satellite to another. Today with this third system that is in place, that someone has paid a very good deal of money for, we still have less than adequate long distance services.

466 We have the situation where for a very high price you can talk to somebody in Yellowknife and hear yourself talking back almost immediately. So we have a very poor service that hasn't been enhanced over the years with the changes in the technology at huge costs that have been put in there.

467 So I think when you don't have competition, you have an opportunity for technologies that perhaps are not appropriate or to remain that are tied to a private company's need to protect its assets. I would like to know as well, in terms of information, what is the CRTC's position on the protection of assets or Northwestel? In the case where we have a monopoly now, will we have to suffer the corporate decisions if they prove faulty for us? Will we remain having to pay for those corporate decisions over the very long term even though profit may be accruing from them -- even though profit may have been accruing from them for many years?

468 So I am very concerned that by linking into a long-term plan with Northwestel we will continue to hold onto assets or continue to pay for assets that may not be appropriate and that in a proper competitive environment would be the responsibility of the shareholders of the company that installed them.

469 So those are some of my issues. I think you could also look at the service area that Northwestel has. I mean, right now it is the political boundaries of three territories and part of northern B.C. who encompass this. I would be interested in terms of what is the long-term thinking about those service boundary areas? Will they remain constant as to their size and will Northwestel retain a monopoly on the service within that area at the local level? Will there be at some point in time a rationalization of service up here by geographic location rather than political location?

470 Now some of the issues that I see in from of us with telecommunications, I am sure I am very interested in the discussion here, and I thank you for the opportunity to speak.

471 THE CHAIRPERSON: Thank you very much, sir.

472 I don't think I could comment on --you raised important issues and they are in the mind of the CRTC, but I don't think it has evolved in a sense that I could answer to you today on assets and investments would be a monopoly type of option that the Commission has followed up to now.

473 Now what will happen in the future is for all of us to consider and you have raised pertinent questions.

474 So thank you very much.

475 Ms Pinsky.

476 MS PINSKY: I believe those are all the presentations that we have for today.

477 I would propose that we take a 20-minute break or so and then Northwestel will have the opportunity to make a reply presentation.

478 THE CHAIRPERSON: Okay. Do you have enough time? It is 11:12. Could we start at half past or would you prefer a little longer?

479 MR. FLAHERTY: Perhaps 25 to, if that is okay.

480 THE CHAIRPERSON: Okay. So we will continue our consultation at 25 to 12.

--- Upon recessing at 1113 / Pause à 1113

--- Upon resuming at 1138 / Reprise à 1138

481 THE CHAIRPERSON: Well, I think most of us are here back again.

482 So we would be ready to hear from Northwestel. Mr. Flaherty.

REPLY / RÉPONSE

483 MR. FLAHERTY: Thank you, sir.

484 Commissioner Demers, ladies and gentlemen. Thank you very much for the opportunity to be here today.

485 My name is Paul Flaherty. I am the President of Northwestel.

486 I would like to begin by welcoming you to the north as some of the others have today. It is a beautiful day and a great place to be.

487 We are very pleased that the Commission has decided to hold hearings in the entire north on this, and I think it was a great opportunity to be here in Yellowknife again to hear the concerns of the people in this area directly.

488 I am also pleased that there is such interest in improving telecommunications in the north judging by the people that came this morning to the session.

489 There will be further input from any other parties at the public consultation in White Horse tomorrow. We are expecting a large turnout there as well and as well as during the formal hearing.

490 By the end of this process it will certainly be clear that northerners are very interested in obtaining access to services similar to those in the south as similar prices to those in the south.

491 Northwestel's proposals in this proceeding are intended to ensure that this happens in all communities across the north, from the large urban centres like Yellowknife to even the smallest remote villages like Griese Fjord in the north.

492 During the many days of formal hearings in the north, Northwestel will be discussing the details of its proposals and responding to the issues raised by various parties including those here today.

493 There will be ample opportunity for the company to go into detail of its proposals and to reply to questions from the Commission and other parties.

494 Bearing that in mind, I don't propose today to go through every aspect of our plan or every issue identified. However, there are a few items that I would like to respond to.

495 Some have suggested that the Commission should make supplementary funding available to a number of service providers in the north, in addition to or instead of Northwestel.

496 As you are certainly aware, Commissioner Demers, the Commission held public consultations across Canada, including here in Yellowknife, during the high cost serving area proceeding. The purpose of that proceeding was to ensure that basic service as defined by the Commission is extended to as many Canadians as possible in high cost areas. The Commission considered a variety of proposals regarding how to achieve that objective, including relying on many competing service providers who could establish or introduce service in remote areas.

497 The Commission also considered a proposal that any service provider be permitted to bid on providing service to high cost areas and that the Commission fund the lowest bidder.

498 However, in the Commission's decision released on October 19, 1999, it was decided to retain the obligation to serve on the incumbents:

499 These carriers were directed to file Service Improvement Plans which meet the Commission's directives.

500 In view of this decision in responding to the Commission's directives, Northwestel has filed the Service Improvement Plan that we will review over the coming days. In the same decision, the Commission recognized:

501 And that is many of the concerns that we heard today from folks about the high cost of long distance services.

502 The Commission concluded that with the introduction of long distance competition in the north, this source of internal funding for the network would come to an end and that Northwestel may not be able to meet the obligations imposed on it by the Commission without external funding. Thus recognizing that the company will lose its main source of internal funding, the Commission has said it would look at external funding to ensure the company is able to meet this obligation, to upgrade and extend the network.

503 In this proceeding, rather than reopening or reconsidering all of these issues, we have proceeded with a plan that reflects the Commission's decisions and implemented its directives.

504 We believe that our plan for both service improvement and long distance competition meets the Commission's objectives in a balanced and reasonable manner. The company's proposed Service Improvement Plan responds to the Commission's decision of presenting a four-year plan that will extend service to unserved locations and upgrade the undeserved parts of the network, including the area Mr. Sian spoke of earlier.

505 In this regard, I note that all of the people here today who expressed an interest in obtaining service are included in the company's Service Improvement Plan.

506 In addition, as directed by the Commission, the plan includes investments and upgrading the quality and capacity of the company's long distance network.

507 The total value of these investments over four years is in fact approximately $76 million. I think Mayor Lovell earlier mentioned $68 million. That number is standing at $76 million as we speak today.

508 If approved by the Commission, these investments will begin starting in 2001. Also starting early in 2001, the company propose that long distance competition begin so that customers in the north will have choice and lower long distance rates. Northwestel proposes to offer rates that are generally very close to those offered by the larger national carriers from southern Canada.

509 The company's plan in general terms is to ensure that customers -- northern customers --have reasonably comparable services at reasonably comparable rates compared with Canadians in southern Canada -- many of the same comments that we heard from the people who spoke at this morning's session.

510 Before leaving the Service Improvement Plan, there are a few aspects of it that I would like to note. The company's plan as set out in its detailed filing will result in schedule upgrades, new features and extension of service in all communities and regions of the north. The company accepts the obligation to present a plan that will cover every community, even the remote villages of the High Arctic.

511 In our view, it is important that the plan to improve and extent services in the north benefit all communities and not just the larger urban centres where there is enough concentration of business to be self-supporting.

512 The Commission heard from the Mayor of Yellowknife earlier today about the concerns of cherry picking. In fact, our plan is a plan that is not cherry picking. We are proposing to offer common rates and services to all communities across our entire territory.

513 Secondly, I would like to note that the Commission also required the telephone companies to present a plan that would ensure that every community will have access to Internet service on a local dial-up basis. There are 66 communities in the north today with no local access to the Internet.

514 We have presented a plan that would provide wholesale access service for up to two Internet service providers in all these communities.

515 We proposed to make this available even in communities as small as Kakisa in Northwest Territories which only has 19 network access lines.

516 Any Internet service provider that wishes to use these facilities to offer retail Internet services will receive the benefit of a subsidized rate for the use of wholesale access services.

517 So just to be clear, we would not charge the cost of those facilities to the Internet service providers. It would be at a subsidized rate, a rate we believe an Internet service provider could make money on even in the smallest communities as I spoke of earlier.

518 On the issue raised by the Government of the Northwest Territories of additional services that potentially should be included in SIP, things like long distance call display, voice message services, we have considered those, but part of our challenge is to bring forward a reasonable plan that recognizing we are going to be asking others to help pay for this, we feel it is appropriate that we have to put balance and ensure reasonability in our plan. To include the two items that the Minister mentioned would add another $35 to $40 million of capital to our plan. So at this time, we haven't included that particular element.

519 Some parties appearing today have raised questions regarding the affordability of service. As everyone, including the Commission, will appreciate the question of what is affordable is ultimately a matter of judgement. There are parties in the proceeding, particularly large carriers from the south, arguing that the Commission should set much higher rates than proposed by the company.

520 Those parties believe that supplementary funding for the north is fundamentally wrong and unwarranted. They argue if cost to provide service in the north are high, then northerners should be required to pay for such services through much higher rates that those that prevail in southern Canada.

521 On the other hand, there are some in the north who would argue that services should be extended and the north network upgraded, but that no rate increase is justified -- and I think we heard that from several folks today.

522 So again, it is one of judgement and I think we will have to go through the proceeding and determine what is the appropriate balance in this situation.

523 The company has tried to strike a reasonable balance between these two positions. We have proposed the $5.00 local rate increase effective 2001 to apply equally to all customers, business and residence. We are aware, as is the Commission, that local rates have been rising in southern Canada in order to move rates closer to cost recovery.

524 It would be impossible to set rates at full cost recovery in the North since in our communities with less than 500 lines, the real cost of residence service is $92.00 a month.

525 So really it is an impractical goal to try and think we would raise rates to the point of matching cost.

526 We have proposed a rate which in our judgement strikes a reasonable balance between the need to have northerners make a fair contribution towards the cost and benefits of upgrading, extending and maintaining the network and on the other hand, the need to draw on supplementary funds paid by southern Canadians.

527 I would also like to note that the Commission has looked at affordability in the past and one of the conclusions it reached was that affordability depended not just on local rates, but also on the total bill paid by customers.

528 In that regard, our filing shows that for the average residential customer, the total bill will drop by $7.56 a month. This decrease occurs as a result of the substantial savings that will flow from the drop in long distance rates. This is important since northerners are large consumers of long distance services.

529 In terms of accountability -- and we hard that several times this morning -- Northwestel is committed to being accountable. We recognize how important our role is. In fact, we are liking it to a case of being a trustee. We are being given potentially funds to use from the south and we have an accountability as a trustee would to those funds. And again, when I look back at the balance I spoke of a few minutes earlier, we recognize how important that role of trustee is and that is why we have gone to great steps to try and balance much of what we have brought forward.

530 In addition, to ensure accountability, we have proposed a very detailed tracking mechanism that would be reviewed on an annual basis by the Commission.

531 So, we think through those two steps -- ensuring that we bring balance and through a very detailed annual tracking mechanism -- that we can ensure that we are accountable for the plans that we are putting forward.

532 In addition, it appears some parties believe we are proposing a guaranteed rate of return. This is not what Northwestel is proposing. In fact, what we are proposing is to continue the existing rate of return regulation. Supplemental funding is not a guarantee of return; it is an amount of money that would be agreed to at the beginning of the year but all the risk that's in the business is still there. So there is no guarantee in what we are bringing forward.

533 In closing, I would like to emphasize the importance of these hearings to everyone in the north. Telecommunication services and facilities constitute the backbone of the modern economy. They are even more important to the people in the north due to the vast distances between our communities, the harsh climate and the geographic separation from the major centres in southern Canada.

534 We are pleased to participate with all other parties in the Commission's process and to resolve these issues and look forward to continuing this process in Whitehorse in the days ahead.

535 Thank you.

536 THE CHAIRPERSON: Thank you very much, Mr. Flaherty.

537 This concludes our consultation in Yellowknife for today, so we would like to thank you very much, especially the presenters but also those who were with us all morning, and I remind you that there are consultations in Whitehorse tomorrow, at 9:30 and at 5:30, of a similar nature and as we indicated, at the beginning, these may be available by telecommunications in Yellowknife.

538 Thank you very much.

539 Also, the hearing itself it is possible, is it, Miss Pinsky, to see it or hear it at a distance? Are you aware?

540 MS PINSKY: I am not aware of that but I can check.

541 UNIDENTIFIED SPEAKER: Are you videoconferencing --

542 THE CHAIRPERSON: Not video, certainly.

543 MR. FLAHERTY: Tomorrow, there is a facility available, on a videoconference basis. Beyond that, we had made no arrangements for public participation.

544 THE CHAIRPERSON: Okay. And you can be updated, those who have Internet, on the Commission's Internet site for information on the Whitehorse hearing, all the time.

545 UNIDENTIFIED SPEAKER: How quickly can we expect that facility to be updated?

546 For instance, I was not aware, believe it or not, that the decision had been made on the high-cost -- what is it? -- service area. I could not or did not locate that --

547 THE CHAIRPERSON: The decision?

548 UNIDENTIFIED SPEAKER: -- decision paper on the site.

549 THE CHAIRPERSON: Well, it is certainly on our site and we could certainly --

550 UNIDENTIFIED SPEAKER: It might be a little difficult to find but it is there.

551 UNIDENTIFIED SPEAKER: Well, the decisions, as soon as they are issued, do go onto the Web site. There may be a problem, in terms of navigating around the Web site. And the transcripts will be available on the Web site, as well.

552 UNIDENTIFIED SPEAKER: Please contact the CRTC when things don't go as they should -- as things don't go as it is written in the book.

553 Thank you very, very much. Have a good afternoon.

554 Thanks to you all for the hospitality in Yellowknife.

--- Whereupon the hearing adjourned at 1152 /

L'audience est ajournée à 1152

Date modified:

2000-06-12