CRTC sets speed target for broadband Internet and maintains obligation to provide basic home telephone service.

The Canadian Radio-television and Telecommunications Commission (CRTC)
today set a target for broadband Internet access services across Canada.
By the end of 2015, the CRTC expects all Canadians to have access to
broadband speeds of at least 5 megabits per second (Mbps) for downloads
and 1 Mbps for uploads.

“A well-developed broadband infrastructure will serve as a gateway for
Canadians to participate in the digital economy,” said Konrad von
Finckenstein, Q.C., Chairman of the CRTC. “The target we have established
is the minimum speed we believe consumers in rural and remote areas should
be able to receive. The industry is actively responding to market demands
and we have every confidence in its ability to meet the target.”

The CRTC anticipates that this target will be reached through a
combination of private investments, targeted government funding and
public-private partnerships. The launch of new satellites and advances in
wireless technologies will make it possible to provide Canadians in rural
and remote regions with reliable broadband connections at reasonable rates
and higher speeds than those available today.

Despite Canada’s unique geography, 95% of households currently have access
to Internet download speeds of at least 1.5 Mbps through telephone, cable
or fixed-wireless networks. Over 80% of households already have access to
download speeds of 5 Mbps or higher.

The CRTC will closely monitor the industry’s progress in reaching the
target.

Local telephone service

Given that competition is flourishing in 80% of residential telephone
markets, the CRTC has lifted the requirement to meet the basic service
objective in these deregulated areas. The CRTC determined, however, that
large telephone companies must continue to offer residential subscribers a
basic telephone line at a reasonable rate. Companies will have the
flexibility to gradually increase rates for this service over the next
three years, to a maximum of $30 per month.

In regulated areas, the CRTC is maintaining the obligation to provide
basic residential telephone service and to meet the basic service
objective. Most incumbent telephone companies will continue to receive a
subsidy to ensure basic telephone service is offered to all consumers in
rural and remote areas and to help offset higher costs.

  The CRTC will phase-in a new formula over the next three years, which will
reduce subsidies available to companies in regulated areas. To offset lost
subsidies, companies will have the option of gradually raising rates to a
maximum of $30 per month by 2013.

“Some companies in rural and remote areas charge their customers much less
than what it actually costs them to provide this service and, as a result,
their rates are lower than in urban areas. The new price ceiling will make
for a more consistent and reasonable rate across Canada and reduce the
reliance on subsidies,” said Mr. von Finckenstein.

Local competition

Finally, the CRTC will continue to encourage greater consumer choice in
the residential telephone market for Canadians in rural and remote areas.
The CRTC has decided to maintain its existing framework for competitors
wishing to enter territories served exclusively by smaller telephone
companies.

To ensure that the smaller companies are able to provide reasonable access
to residential telephone service, the CRTC has introduced the following
measures:

   Smaller telephone companies will continue to receive subsidies for their
   subscribers until competitors can offer service to 75 per cent of the
   market.

   Smaller telephone companies will be able to claim half of the subsidy they
   would normally receive for subscribers that switch to a competitor during
   the first three years of competition.

     New entrants will be required to pay the start-up costs in markets where
   the smaller telephone company has fewer than 3,000 subscribers. Start-up
   costs can include those associated with ensuring that consumers are able
   to keep the same telephone number when changing providers (number
   portability) or connecting the competitor’s network with that of the
   smaller telephone company.

Telecom Regulatory Policy CRTC 2011-291
http://www.crtc.gc.ca/eng/archive/2011/2011-291.htm

The CRTC

  The CRTC is an independent public authority that regulates and supervises
broadcasting and telecommunications in Canada.

Reference document:

Telecom Notice of Consultation CRTC 2010-43
http://www.crtc.gc.ca/eng/archive/2010/2010-43.htm

 - 30 -

Media Relations: http://support.crtc.gc.ca/CRTCSubmissionMU/forms/Mediarelations.aspx?lang=e
MediaRelations, Tel: 819-997-9403, Fax: 819-997-4245

General Inquiries:
   Tel: 819-997-0313, TDD: 819-994-0423, Fax: 819-994-0218
   Toll-free # 1-877-249-CRTC (2782)
   TDD - Toll-free # 1-877-909-CRTC (2782)
   Ask a question or make a complaint
   http://www.crtc.gc.ca/RapidsCCM/Register.asp?lang=E  

These documents are available in alternative format upon request.

--------------------------------------------------------------------------------

Additional information on basic residential telephone services

In 1999, the Canadian Radio-television and Telecommunications Commission
(CRTC) established a basic service objective that reflected the level of
telecommunications service available to Canadians at that time. The
objective applied to the large telephone companies that had built
extensive networks to reach the majority of the population, namely: Bell
Aliant, Bell Canada, MTS Allstream, SaskTel, Telebec and Telus. It also
applied to Northwestel and the smaller telephone companies that operate
mostly in rural and remote areas.

Over the last decade, competition in the provision of home telephone
service has grown steadily in Canada. The CRTC has deregulated 80% of home
telephone lines in markets where consumers have access to competing
providers. As a result, the former monopoly companies operating in those
markets no longer need to obtain the CRTC’s approval to set local
telephone rates or introduce new services and packages.

Given these developments, the CRTC has reviewed three measures related to
the basic services that the large companies must offer to Canadians in
regulated and unregulated markets. They are:

1.  The requirement to serve existing customers as well as new customers
    requesting telephone service, known as the obligation to serve.

  2.  The basic service objective, which is a minimum target for residential
    service that includes the following features:

      local service on an individual telephone line
      access to low-speed Internet at local rates
      operator and directory assistance services
      access to the long-distance network
      enhanced calling features, and
      a copy of the current local telephone directory.

  3.  The regulatory regime that gives subsidies to companies providing local
    telephone service to residential customers in rural and remote areas.

  In addition, the CRTC has reviewed its local competition framework in the
markets served by smaller telephone companies.

Obligation to serve and basic service objective

i) Deregulated markets

The CRTC will maintain the obligation to provide basic residential
telephone service in deregulated markets—that is to say, a telephone line
without any optional features such as call waiting or call answer.
Companies will have the flexibility to meet this obligation using the
technology of their choice. The basic service objective has been lifted in
these markets since there is sufficient competition to protect the
interests of consumers.

The CRTC has also decided to maintain the safeguard of a price ceiling for
basic residential telephone service. The ceiling will gradually increase
to $30 per month by 2013. Telephone companies whose monthly rates are
below $30 have the option of either maintaining them at their current
level or raising them over the next three years until they reach the
ceiling.

Starting on June 1, 2014, the price ceiling will be increased annually by
the rate of inflation.

ii) Regulated markets

  In regulated markets, the CRTC is preserving the obligation to provide
basic residential telephone service and the basic service objective. At
the same time, the requirement to mass-distribute print copies of the
white pages directory has been eliminated. Similar to the current practice
in deregulated markets, telephone companies will only have to provide a
print copy upon request.

Subsidy regime

Many Canadians live in rural and remote areas where it is more expensive
to provide basic residential telephone service. Companies operating in
these areas receive a subsidy from the National Contribution Fund to help
offset the costs of providing such a service and keep prices reasonable.
Canadian telecommunications companies with annual revenues over $10
million must contribute to the Fund.

Although the subsidy regime is still required in rural and remote areas,
the amount available to companies will be reduced by approximately 20% by
2013. This will be achieved in part by eliminating subsidies in high-cost
areas that are no longer regulated, effective June 1, 2011.

The CRTC will also introduce a new formula to calculate the subsidy
amounts in regulated areas where a company’s monthly rates are below $30.
In most instances, the new formula will be based on the difference between
the costs to provide basic residential telephone service and a rate
ceiling that will be phased-in over the next three years. The rate ceiling
will gradually increase to the lesser of $30 per month or the amount
required to eliminate the subsidy.

In addition, companies have realized significant productivity improvements
in rural and remote areas. The CRTC will no longer reduce the companies’
costs when calculating the subsidy for providing basic telephone service.

Local competition

Smaller telephone companies operate in rural and remote areas in Ontario,
Quebec and British Columbia. They have traditionally held a monopoly in
their home markets for the provision of home telephone service.

The CRTC previously established a framework to permit local competition in
the markets of the smaller telephone companies, but has proceeded
cautiously given their unique operating circumstances. To date, only three
markets have been opened to competitors.

The CRTC will continue to allow competitors to enter the smaller telephone
companies’ home markets. To mitigate the impact of local competition, it
has introduced the following measures:

   Smaller telephone companies will continue to receive subsidies for their
   subscribers until competitors can offer service to 75 per cent of the
   market.

   Smaller telephone companies will be able to claim half of the subsidy they
   would normally receive for subscribers that switch to a competitor during
   the first three years of competition.

     New entrants will be required to pay the start-up costs in markets where
   the smaller telephone company has fewer than 3,000 subscribers. Start-up
   costs can include those associated with ensuring that consumers are able
   to keep the same telephone number when changing providers (number
   portability) or connecting the competitor’s network with that of the
   smaller telephone company.