A Canadian Radio-television and Telecommunications Commission (CRTC) hearing into a new regulatory framework proposal for Northwestel Inc. ended in clashing opinions last Thursday afternoon.

The CRTC hosted a week-long panel at the High Country Inn to look at a proposal aimed at raising local line rates and decreasing long distance carrier access fees in the North.

The submission focuses on raising the monthly charges for local telephone lines by $2 for residential customers and $5 for businesses.

Meanwhile, the carrier access tariff, which is charged per minute to each end of a long distance call placed in the North on Northwestel's network, would be lowered from seven cents to 0.8 cents.

If the proposal is approved, it would come into effect in January 2007.

The rates Northwestel currently charges are already significantly higher than those in the rest of Canada, said Sue Lott, a consumer advocate with the Public Interest Advocacy Centre in Ottawa.

If the telecommunication company's proposal is permitted to go through, the gap between what people in the North are paying compared to that in the South would only increase, she said.

Northwestel currently has the second-highest local rate in Canada.

'(Northwestel) has not done any research on the actual impact of the rates,' said Lott.

The impacts may not just be felt in the North, said Lott.

From a poverty perspective, Northwestel's request for a 300 per cent increase from the national contribution fund could have a negative impact on the poor in the rest of Canada, she said.

Northwestel wants $40 million from the subsidy program, up from the $10 million it currently receives. But it has not adequately proved it has exhausted all efforts to generate that revenue through traditional means, she said.

The company should instead be focusing on making modest adjustments to its long distance rates, rather than veering so significantly from the actual purpose of the national fund, which is meant to solely aid in the maintenance of local line telephone infrastructure.

Representatives from the Northwest Territories government said it wasn't so much a question of if the company required the national subsidy, as it was if the amount had been calculated appropriately.

Without the subsidy, phone service in the Northwest Territories would fall even further from the standards maintained in the South, it was argued.

Northwestel, however, should not be allowed to charge above a fixed rate recommended by the commission and must be directed to make reductions to its toll schedule, argued that government.

The hearings really became a question of why the rest of Canada should pay or why northerners shouldn't pay more, said James Pratt, a consultant for the Yukon government.

What needs to be understood in that discussion is the context of Canada's Telecommunications Act, said Pratt.

The objective of the act states Canada has a responsibility to 'render reliable and affordable telecommunications services of high quality accessible to Canadians in both urban and rural areas in all regions of Canada.'

In principle, Northwestel simply needs to prove it needs help to receive money from the national contribution fund, said Pratt.

'There's value to all of Canada to providing telecommunications development in the North,' he said.

Telecommunications are key in economic development, sovereignty and advancing the lives of first nations, he added.

The Yukon government would like to see a recommendation from the CRTC panel that focuses on growth, viability and flexibility, he said. There must also be protection to ensure Northwestel continues to provide quality and comparable services to its customer base, he said.

A price cap may be necessary so the gaps between the North and South don't get too large, he said, and to protect the ratepayer.

'Northwestel's rate structure has been put on a cliff and it needs to drop,' he said. The costs associated with maintaining telephone services in the North's small communities aren't going to disappear, he added.

'There would be significant impacts on the North if it's not included in the subsidy.'

But Michael Ryan, the legal consultant for Telus Corp., argued Northwestel is proposing to use its funds in a way that goes on the purposes of the national pot.

Northwestel, wholly owned by Bell Canada, has connections with Bell Mobility and Latitude Wireless cell phone services, broadband Internet and cable television provisions the national fund is not meant to finance.

There is no company anywhere in Canada that receives a subsidy amounting to 25 per cent of its revenue, said Ryan. But that is exactly what Northwestel is asking for.

That, in itself, should be an indication that something is 'not quite right' with Northwestel's proposal, he said.

The CRTC mustn't approve the proposal, as is, argued Telus. The company instead recommended Northwestel charge a minimum of 4.15 cent cents per minute per end for its carrier tariff before it be permitted to access the national contribution fund.

'The company has not given enough thought to affordability or reasonably,' said Ryan, adding Northwestel's proposal is 'fundamentally flawed.'

It must strive to meet its own revenue requirements before asking the rest of Canada to subsidize, he said.

'We take our role as the service provider of last resort very seriously,' said Paul Flaherty, the president and chief executive officer of Northwestel.

'As we go forward into a new regulatory regime, we are looking for a model that will permit us to continue to serve in that way and survive financially.'

The hearing and the proposed regulatory framework aren't about Northwestel, said Flaherty it is about the future of telecommunications in the North.

How northerners use telecommunications are changing, he said. With the increasing availability of free online telephone services, such as Skype, more people are moving away from the traditional telephone network, he added.

Approximately three per cent of northerners now use the voice over IP telephone technology to talk online, Flaherty said. It will see Northwestel lose $1 million in revenue over 2006.

That loss in revenue will mean less money will be available to put toward maintaining the costly infrastructure needed to provide the North's remote communities with local phone lines, he said.

'Clearly, Northwestel cannot absorb these significant costs in its rate base without totally undermining both the reasonableness and sustainability of rates.'

Northwestel is already forced to charge its customers at rates 18 per cent higher than the national average, he said.

'To not subsidize these facilities seriously puts in jeopardy the entire toll connect network,' he said.

The reality is Northwestel actually needs more than the $40-million subsidy it is requesting, he said. It illustrates the challenges the company has in trying to balance its own costs with providing Northerners with reasonably comparable services and rates to those in the South.

Whatever the CRTC panel decides, it will have implications for all of the North, said Flaherty, and will be felt for many years to come.

'Hopefully, we're successful in having the commission understand the unique situation.

'There is no other company in Canada like ourselves. We have 40 per cent of Canada's land mass and 0.4 per cent of the population.

'We have a very unique circumstance and we need people to understand through the commission the importance of that and hopefully not trade off so much that deteriorates the ability to provide service in the North.'