TO: Secretary General, CRTC

RE: Application of Aliant Telecom to increase residential rates in high-cost

areas.

The proposal to increase telephone rates in so-called high-cost areas raises

a fundamental issue re: the kind of society we wish to create in Canada. Do

we want to fashion a community in which all citizens have equal access to

essential goods and services, or do we want to create a community in which

access depends on where you live and how much your income is?

Under the first scenario, we would average out the costs of providing

essential goods and services to everyone, and then charge each person the

same per unit of service, no matter where they live, or fund such services

through the tax system so that everyone is taxed according to their ability

to pay into the communal fund from which such services are provided equally

to all.

Under the second scenario, we would let unfettered free market forces take

over, with everyone being charged according to the cost of producing the

units of goods and services they happen to consume; the result would be that

those who happen to be in the right place at the right time, and can afford

it, pay less for each unit of the services they purchase, while those who

are geographically less fortunate or happen to fall into a lower income

bracket will have to pay more or, in some cases, be unable at all to afford

some of the services they need.

For reasons of basic principle and personal values, I would endorse the

first scenario and reject the second, since I believe a world in which

everyone is able to live a full and fulfilling life is more beautiful than

one dominated by competitive maximizing of personal gain, whose inevitable

consequence is that some win and some lose in the contest to garner the

goods necessary for a successful life. Given the communications requirements

of living a full life in our society, a telephone is surely an essential

service. From this perspective, I would propose extending service to all

residents (including the unserved 1 precent) and averaging the total cost

among all customers across the whole province or region. Let's not rest on

our laurels, congratulating ourselves that more people have telephones here

than in the US!

Despite the claim that differential pricing of services would bring the

telephone industry into line with other industries, what we have now in the

marketplace is really a mixed bag. Canada Post, for instance, charges me the

same to send a letter two blocks down the street as across the country, and

little more to send a parcel from NS to Vancouver than to Toronto. The

retail price of many nationally advertised goods is the same countrywide, or

at least regionwide, despite the differences in actual shipping costs from

central warehouses to local retailers, since such costs are averaged for the

whole country or region. In the petroleum industry, on the other hand, a CBC

investigation a few years ago found that the price of gasoline at the pumps

of the Maritime's major oil company was highest at the service station

closest to the regional refinery (located in the second or third largest

city in the region)! So the more accurate question is: Which current model

do we want telephone service to follow?

In fact, the telephone company's proposal, too, would still result in a

mixed bag. For, presumably, the cost of providing services within cities and

large towns would vary to some degree among residents (not only as a result

of distance from central offices but as a consequence of varying volumes of

use); this would be true to an even greater degree among residents of less

populated areas. If only two rates are charged, a city/town rate and a rural

rate, there would still have to be averaging of costs among all urban

residents on the one hand and all rural residents on the other. This would

hardly amount to charging each customer only what their personal service

actually costs. It is entirely arbitrary to average out costs over urban or

rural areas, but not over a whole province or region (or, over the entire

country, for that matter).

The company also wants to make residential rates across the Atlantic region

'consistent' with Nova Scotia's current rate. This raises a number of

questions. Does 'consistent' mean the SAME as Nova Scotia's rate? If so,

does that mean that actual costs in NB, PEI and NFLD are now really the same

as Nova Scotia's? Or is the company using this as an excuse to make more

money by bringing other rates up to the NS level? Or giving other provinces

a break by bringing their rates down to the NS level? Or do they propose

averaging everything out around NS rates? If averaging, why average in this

fashion and not between rural and urban?

On the other hand, if rural prices are to go up in order to reflect real

costs, then shouldn't urban costs come comparably down in compensation

rather than remaining the same, since the current residential rate is

presumably an averaged rate across the whole province? If urban rates stay

the same while rural rates go up, it has all the appearance of a revenue

grab in which urban rates will now be greater than costs. (One is reminded

of the recent revenue grab Bell Canada was unsuccessful in pulling off with

rotary telephone users.)

A question also arises re: which costs of providing services are really

greater for different areas. The cost of cables, posts, etc. will obviously

be higher per customer for low-density areas than for high-density areas.

But once that and other hardware is in place and paid for, does it really

cost more to send electronic pulses to and from low-density areas than

around high-density areas? To the untechnical layperson, that conclusion is

not obvious. Once the rural infrastuctural hardware is fully in place and

paid for, will rural rates come down to reflect only the company's operating

costs?

The company claims its proposal would still leave telephone service

affordable to everyone. But according to the statistics of average family

incomes I have seen, even $5.00 per month (ie 20 percent) more for a

telephone is likely to put other essential goods and services out of reach

for many people. According to Statistics Canada figures reported in

MACLEAN'S magazine in August 2000, in 1998 the average pretax family income

for the lowest 20 percent of Canadian families (excluding payments from

government sources) was only $8,627.

The telephone rate issue also has implications for regional economic

development. The current model of development tends to unhealthily

concentrate populations and economic activity in a few urban areas, leaving

large areas of most regions sparsely populated and economically

underdeveloped, with all the attendant problems of crowding, traffic jams,

pollution, etc. Whenever wages and prices favour urban areas, the problems

of overconcentration are only further exacerbated, since more people end up

being drawn there. Maintaining the same telephone rates across the region

would be one small, though by itself insufficient, way of beginning the

process of decentralizing population and economic activity towards a more

balanced pattern.

My conclusion is that the circulated proposal is really a way for the

company to increase revenue in the endless corporate game of endless profit

growth, with a view to endlessly growing the price people are willing to pay

for their shares. The occasion of the current proposal gives them and the

CRTC an opportunity of setting an example to other corporations by pursuing

a different economic model, based on ensuring that all citizens have access

to all necessary goods and services, indefinitely into the future. It is a

minor issue, but one with large implications for the kind of communities we

create together.

Yours sincerely,

Maurice G. Allen

(902) 678-6234