Dear CRTC:

     The request by Aliant Telcom, parent company of MTT, Island Tel, New Tel and NB Tel to increase basic phone rates to urban customers in line with inflation, and to rural customers by a whopping 20 per cent is a blatant act of brigandage against 39 per cent of its customers.

     There isn't any reasonable economic argument, regardless of how Aliant rigs the statistics to try and make its presentation seem justified, for charging its rural customers MORE for receiving a lesser quality of service than that received by their urban neighbors.  Quality of service is most definitely the pertinent factor regardless of Aliant's attempt to de-emphasize its significance.  Not surprisingly, Aliant wants to avoid any consideration of quality of service in its calculation of costs.

     If one were to have applied this logic when this country was being formed, there would undoubtedly be large tracts of rural land in this province, indeed this country, that would today be denied essential services.  Fortunately, sanity prevailed and this was not the principle on which this country was built.  And now is not the time to start implementing such a ridiculous policy.

     Obviously, profitability is not an argument Aliant can safely make either.  Because it made a 17.4 per cent rate of return on shareholders' equity last year from regulated phone service rates, and 16.6 per cent the previous year.  Not too shabby!

     That represents a 50 per cent additional rate of return over what the regulators has deemed reasonable when they approved the current rates structure four years ago.  Profits were not even declining but, in fact, increasing.  Perhaps, instead, the direction of the rates should be downward considering the excess profits now being realized!

     Furthermore, if Aliant is making an argument that it cost more to service rural areas, conversely, it must then cost less to service the urban areas even under the present rates structure given the reported rate of return to shareholders which, and this needs to be restated, exceeded by about 50 per cent the current amount that was deemed reasonable by the regulators.  Consequently, a more reasonable argument can instead be made that there isn't any pressing urgency to increase the phone rates at all.

     Notwithstanding, Aliant must not be allowed to make this an issue of rural versus urban rates.  Because, to do so would permit Aliant to now calculate costs of doing business differently simply to further increase the excess profits it already enjoys by gouging an even higher service rate from its rural customers who are presently less well serviced when compared to their urban neighbors.

     The fundamental reason for the current rates structure is based upon the fact the phone service is an interactive network which requires ideally as many as possible to be hooked up in order to maximize the total utility of this service while simultaneously enhancing the shareholders' rate of return.  Therefore, the more people with phone service, the more valuable each phone service becomes, and vice versa.  That's why the basic phone service eventually becomes a level cost.  Hence, the argument for maintaining the basic rate the same throughout the province because it costs the same.

     But, if the company is going to be permitted now to radically re-structure its rates based on a calculation that will permit two different rates structures based solely on geography rather than the more reasonable interactive network approach to determining rates structure, this will be tantamount to the CRTC sanctioning this company's cash grab.

     The rationale for the current rates structure is that customers should only be required to pay reasonable comparable rates for reasonable comparable services.  The sad reality in this issue is that if the regulator grants this change to the company, rates will go up substantially for some of its customers who are currently receiving a poorer quality of service compared to its urban phone customers.  Thus, the comparable service is non-existent at the existing rates for rural customers.  There is no justification to then charge rural phone users more on top of the existing inequality of service.  Aliant simply has no economic argument to seek this differential in rates based solely on its repackaged data of higher rural costs as a distinct and separate market.  Aliant's strategy is simply to inflate its costs by including the total market area costs for calculating the urban rates, but then change the formula and only include the rural market costs that is designed to arrive at a separate and higher rural rate for service.  In other words, Aliant wants to have its cake and eat it, too.  However, the existing rates structure has demonstrated that the company has been more than generously rewarded from charging the same basic rate throughout the province while providing a two-tiered service.  In reality, it is its rural customers who are being shortchanged, not the company. 

     This is a stupid and unfair request by Aliant because it is based on faulty logic.  The CRTC must not grant this greedy request for an unearned cash grab from its rural customers.

Submitted by:  Charles W. Sampson

                         42 Hayden Road

                         Sydney Forks, N.S.

                         B1L 1A2