In a Telecom ruling handed down today, the CRTC says it will open up Canada’s North to local telephone competition starting next May.

The federal regulator says residents in many parts of the Yukon, Northwest Territories and Nunavut will have the option to choose from competing telephone service providers as of May 1, 2012.

Currently local telephone service, along with long distance, Internet and wireless service, in the three northern territories - Yukon, Northwest Territories, and Nunavut - is provided by Northwestel.

The company is the only provider of local telephone services in its serving territory and, as such, the rates for these services are regulated by the Commission. The rates for most other telecommunications services offered by Northwestel are not regulated.

To facilitate competition, the commission has directed Northwestel to upgrade its network in order to provide number portability in larger northern communities including Fort Nelson, Inuvik, Iqaluit, Whitehorse and Yellowknife within six months of a competitor’s request to offer local service in these locations. The Commission expects that Northwestel will implement number portability in its other communities as it upgrades its network.

“Competition will be introduced as soon as possible to bring choice and innovative options to Canada’s North.” said CRTC Vice Chair Leonard Katz.

In its ruling , the CRTC has also denied Northwestel’s request to raise by $2 the rates for residential and business local telephone service. The commission says the increase is unjustified at this time because the company has simply been using increases in the past few years to increase profits rather than to re-invest in the company’s aging infrastructure.

Since 2007, Northwestel has received over $20 million in annual subsidy for the provision of service in remote communities and its annual income from operations has nearly doubled to $69.3 million in 2010.

The CRTC says that despite the massive subsidies the lack of proper maintenance is affecting the quality and reliability of its service and is demanding that Northwestel provide the commission with a plan by next May detailing how it will modernize its network.

“We are disappointed that Northwestel, which has until now been the sole provider of local telephone service in the North, has not made a greater effort to improve its services,” Mr. Katz added. “Many communities have been plagued by service outages and certain features are not widely available to customers. Northern residents deserve to have access to reliable and high-quality services comparable to those offered in the rest of the country.”

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