SaskTel given 18 months to fully prepare for return to federal telecom regulation

The CRTC has set the parameters that will permit prairie telco SaskTel to move from provincial jurisdiction to federal regulation. The provincially owned company, which has been regulated by its parent for the past seven years, will fall back under the CRTC's authority on June 30. But it will have 18 months to fully prepare for the transition to federal regulation. "We're very satisfied. I think it reflects the amount and degree of harmonization that has occurred here over the last five or six years," says John Meldrum, SaskTel's VP corporate counsel and regulatory affairs. "We're often portrayed as sort of the black hole of competition in Canada, but I think this vindicates us that that description was very inaccurate." Harmonizing its contribution rate with other ILECs will be a priority for SaskTel over the next 18 months. The telco had asked to freeze its rate, which it estimates will be $0.0184/minute/end at the end of June. This could drop to $0.0125/minute/end if the provincial government approves local rate increases. The CRTC rejected the idea of a rate freeze, asking instead that SaskTel move towards adopting the $0.003/minute/end rate used by other ILECs. A similar order was issued for direct connection charges. SaskTel offered to unbundle its switching and aggregation rate of $0.017/minute/end, replacing it with a charge of $0.0007/minute/end. The CRTC notes that other major carriers have established $0.003/minute/end as their rate. The regulator ordered the provincial telco to file its interconnection agreements not previously approved by the CRTC and its provincial E-911 service agreements and relay services agreements. The company has until June 30 to submit the material. The ruling isn't a major concern for Meldrum. "There may be some issues still to be sorted out in terms of contribution rates," he says, "but it probably just reflects the complexity of the rate. I think the 911 reflects the fact that we haven't yet incorporated wireless in the 911 fees and we need to do that over the next few weeks." As expected, the CRTC granted forbearance on the issue of terminal equipment. "The commission considers that the terminal equipment market in Saskatchewan exhibits the characteristics of a competitive market," the regulator writes. "There are numerous competitive suppliers, low barriers to entry, aggressive pricing and customers are able to easily switch equipment suppliers in both the single-line and multi-line segments of the market." However, the commission is requiring SaskTel to inform customers they may provide their own jacks and use their own telephones. Approximately 79 per cent of businesses and 65 per cent of homes rent at least one telephone set from the telco. Forbearance of Internet services was also granted, on the grounds of an "intensely" competitive market. "The cable companies have a large share of the Internet services market, particularly in the major centres in the province," the CRTC notes. "In Regina and Saskatoon, the cable companies are the largest service providers." This move to the federal sphere raises questions about the future of SaskTel's public ownership. As the last major publicly owned telco and a strategic player in western Canada, Saskatchewan's NDP government is holding a very coveted asset. A senior analyst with The Yankee Group in Canada predicts the privatization of SaskTel is inevitable. "At some point in time, that's going to happen," Mark Quigley told Network Letter. "Whether it's a short term or long term sort of thing is anybody's guess." He suggests incumbents like Bell Canada or Telus would be the most likely suitors for the provincial phone firm. Meldrum isn't convinced SaskTel's privatization will happen any time soon, if at all. "Certainly any possible sale would tend to be a fairly long process, because of the public ownership," he states. Saskatchewan's limited market size is another consideration, he adds. "There are two major cities but after that the population is pretty sparse in relation to the golden triangle."

SaskTel given 18 months to fully prepare for return to federal telecom regulation

News | May 23, 2000

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