Long distance service providers are required to pay independent telephone companies a subsidy on all long distance minutes entering or exiting the independents’ territories. This subsidy allows the independents to recover the difference between the amount a customer pays for their local telephone service and the actual cost of providing that service.

The Commission believes the independent companies should 1) reduce their reliance on subsidies provided by the long distance service providers; and 2) ensure that the rates they charge for services recover a reasonable amount of the costs.

By bringing local rates closer to costs (i.e. increasing local rates), the subsidy that competitive long distance providers must pay to the independents will decrease.

By reducing the amount of subsidy that long distance service providers pay to the local service provider, the Commission is establishing the conditions to encourage competitive long distance service providers to offer their services in the independents’ territories.

Accordingly, the local subscriber rates of Hurontario Telephone Limited, Nexicom Telecommunications Inc., Nexicom Telephones Inc., North Renfrew Telephone Company Limited, People’s Telephone Co. of Forest Inc., South Bruce Rural Telephone Company, Westport Telephone Company Limited, and Wightman Telephone Limited will be increased as of January 1^st, 2001.

Hurontario Telephone Limited, Nexicom Telecommunications Inc. and People’s Telephone Co. of Forest Inc. requested that local rates be increased in order to establish extended local calling areas in their respective territories. The Commission has denied the three requests because none of the proposed links meet the EAS criteria.