CRTC phasing out local voice subsidy in favour of internet-first approach by 2021

It's all about internet


Canada’s telecom regulator will phase out its local voice service subsidy over three years, from January 1st 2019 to December 31st 2021, through semi-annual reductions.

The move, announced earlier this week, comes as the Canadian Radio-television and Telecommunications Commission (CRTC) shifts its emphasis away from wireline voice services and towards internet access in accordance with a 2016 policy shift.

The local voice subsidy regime was established to subsidize residential local telephone service in high-cost serving areas — mainly rural or northern locations — on a monthly basis.

Funds for the subsidy come through the National Contribution Fund (NCF), which collects contributions from telecoms that have $10 million or more in annual revenues. In 2017, it stood at nearly $116 million, according to the Financial Post.

Instead of subsidizing voice, the CRTC is establishing a $750 million funding mechanism for projects to build or upgrade broadband internet access in under-served areas or places that don’t have internet at all.

Not all regulated high-cost servicing areas are losing the voice subsidy, however. The Commission does not intend to remove the local service subsidy unless reliable broadband internet service is available.

Still, companies and groups including SaskTel, Shaw, Telus and the Public Interest Advocacy Centre opposed phasing out the subsidy, or at the very least the CRTC’s plan. In response, the CRTC launched a process for those companies to once again put forward counter-arguments.

In the meanwhile, incumbent local exchange carriers (the dominant voice operators in an area) that are located in high-cost serving areas deemed no longer eligible for the voice subsidy will need to file applications with regards to those exchanges within 30 days. The locations that are no longer eligible for the subsidy are located in Newfoundland, Quebec and Ontario.

In a nutshell

Some rural areas will lose subsidies for landline telephone service and instead gain support for internet services. This will doubtless lead to less investment in landline services for telecoms that used the subsidy — but if you’re a landline lover, don’t panic just yet.

Even if carriers eventually stop offering landline service, there are VOIP or wireless home phone replacements that can replace legacy equipment while still looking and acting like your old landline. Carriers who cut out landline service will likely offer that instead. Additionally, an added focus on building internet infrastructure will help keep rural areas in-step with the rest of Canada.

Source: CRTC Via: Financial Post

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