Supreme Court ruling supports urban phone users over equal broadband access for rual users
SCOC orders phone customer rebates from broadband expansion surplus account
September 18, 2009 - Canadian Press Julian Beltrame
OTTAWA - Most telephone customers in Canada can expect a rebate on the phone bill after the country's top court ruled companies must refund surplus funds from a high-speed Internet expansion account.
The rebates may not be large, but it is better than letting the carriers to keep all the money, said Michael Janigan of the Public Interest Advocacy Centre which estimated the rebates could range from a few bucks to as much as $20.
Officials with Bell (TSX:BCE), Telus Corp. (TSX:T) - the two biggest of several companies included in the judgment - said it was difficult to say exactly how much individual customers will receive.
The ruling Friday by the Supreme Court of Canada ended a stalemate that had existed since 2006 when the CRTC ordered $650 million in overcharges collected by the companies be spent on extending high-speed Internet to rural communities and improving services to the handicapped.
The roughly $300 million estimated to be left over was ordered returned to customers.
"The CRTC did exactly what it was mandated to do," the court said in a unanimous judgment."
"It had the statutory authority to set just and reasonable rates, to establish the deferral accounts, and to direct the disposition of the funds in these accounts."
In the decision, the court rejected appeals of the carriers - who wanted to keep what remains of about $650 million to finance technological changes - and from consumer and anti-poverty advocacy groups who wanted all the money refunded.
The Consumers Association of Canada and the National Anti-Poverty Organization objected because the CRTC order in effect charged one set of customers - urban phone users - for benefits to be received by another set of customers - rural broadband Internet users.
The decision was a vindication for the CRTC.
The commission said the carriers can now proceed with rebating customers and about $350 million in broadband projects. About $32 million is earmarked for improving telecom services to the handicapped.
Both Bell and Telus disputed the suggestion they had lost the case, saying the companies can now proceed to expand services to remote and rural customers and to the disabled.
"It comes down to a draw," said Bell's chief of regulatory affairs Mirko Bibic. "(But) we had preferred to use all the money in the deferral account for broadband so we can offer Internet services in small communities who don't have Internet."
He agreed the remainder, which he said for Bell would amount to about $150 million, would be refunded. He said Bell would work with the CRTC to determine how and when to offer the rebates.
Telus executive Ted Woodhead would not estimate how much of the firm's surplus fund, worth about $140 million, would need to be rebated.
He said the exact amount would depend on new costing to extend services to about 220 rural communities in British Columbia, Alberta and eastern Quebec, but suggested if any of the fund is left over, the amount would be small.
"We're glad that this saga has come to an end and the funds in our deferral account are unfrozen, and we look forward ... to assessing the broadband opportunities," Woodhead said in an interview.
Neither of the carriers had an estimate on when rebates would be issued.
Janigan said the court ruling extends the power of the regulator beyond what he believes the telecom act intended.
"We accept the court's decision but that just highlights the need for reform, because it was never intended that the commission would have government-like powers to tax and spend," he said."
Janigan said all the funds should have been returned to customers, saying about $1.6 billion had been collected since 2002, much of which he said the carriers "frittered away."