Northwestel Inc. hasn't done enough to meet its own revenue needs prior to seeking aid through the national contribution fund, Telus told a Canadian Radio-television and Telecommunications Commission (CRTC) hearing this morning.

The CRTC began its week-long hearing at the High Country Inn in Whitehorse to examine a submission regarding a new regulatory framework proposal for Northwestel.

The proposal includes new business and residential long distance calling plans that would see a monthly rate increase of $2 for residential lines and $5 for businesses.

'The telecommunications world is anything but static,' Paul Flaherty, Northwestel's president and chief executive officer, told the hearing in the company's opening statements.

The last time the regulatory framework of telecommunications was examined in the North was in 2000 and a lot has changed since then, said Flaherty. It's the commission's responsibility to find a way to strike the right balance among competing objectives, he added.

Northwestel provides telecommunication services for more than 110,000 residents in the Northwest Territories, Nunavut, the Yukon and northern British Columbia and is owned by Bell Canada.

In Whitehorse alone, there are more than 18,000 lines, while in the approximately 96 other communities served there are 500. In some communities, it costs upwards of $9,000 to put an access line in, said Flaherty.

'The small communities are, from a pure economic point of view, not economic to serve,' he said.

'Telecom services provided to these communities, and the networks built to provide them, are not economically sustainable on their own. They cannot exist without some form of external subsidy to maintain them.'

The question becomes to what extent northern infrastructure services must be subsidized, said Flaherty. But it has always been government policy to ensure that northerners have reasonably comparable and affordable services as the rest of Canada does, he said.

However, Willie Grieve, the vice-president of public policy and regulatory affairs for Telus, said in his opening statement he will be using cross-examination time to look at whether Northwestel's real purpose is to try to isolate itself from loss of revenue due to competition.

Telus has concerns about how Northwestel will be implementing the funding it is seeking from the national level. Northwestel must also demonstrate the reasonableness of its expenses, it was further argued.

Yellowknife Mayor Gordon Van Tighem, via video conference, said the current services provided by Northwestel in the N.W.T. is almost a monopoly for local services.

The telecom company is often slow to react to the communities' needs, he said.

He added in regards to cell phone and Internet service for many communities in the territory, the promotion of the products is not much more than an illusion.

'Risk and reward are a principle we believe in,' he said. 'We're very concerned about the potential rate increase.'

Changing rates could have implications for business and low-income families and communities, he said.

Roger Rondeau, president of the Utilities Consumers' Group in Whitehorse, agreed.

'There's a special stewardship we hold you to for the rate payers in the North,' he told the commission's representatives.

The group is opposed to any rate hikes that are unnecessary, said Rondeau, and is set on encouraging the CRTC to protect the low-income members of society.

'We do not agree with any type of different rates for different parts of the community and we don't believe any community should be disenfranchised with other regions or communities in the North,' he added.

It is unlikely there will ever be any real competition on the local market, he said, and affordability must remain imperative if Northwestel is going to go directly into price regulation.

'(The CRTC) must direct a fair balance between the ratepayer and the service provider,' he said.

Representing the Yukon government, Andrea Buckley, director of policy, planning and research with the Department of Economic Development, said the territory is interested in the growth compared against net benefit, the viability of the service, the flexibility of Northwestel and the comparability of the services.

The regulatory framework must promote both investment and growth, said Buckley.

'Solutions must be adapted for northern communities and societies.'

The opening statements of the hearing concluded this morning. The commission is now listening to presentations by panels discussing marketing, financing and policy.

The focus of the hearing is expected to include price changes, rate changes, local and long distance services, high-cost areas of service, competition for Northwestel in the territories and the ability to implement the proposed framework for 2007.

The goal is to hear as many views as possible throughout the hearing, said the commission's chair, Richard French, the CRTC's vice-president of telecommunications.