Canada's incumbent telcos must pay rebates to urban users

Canada's incumbent fixed line operators, including Bell Aliant (Toronto: BA-UN.TO), Bell Canada (NYSE: BCE), Telus (Toronto: T.TO) and MTS Allstream, must pay back residential phone customers located in urban areas who were charged too much between 2002 and 2006--a total amount of CAD $311 million ($295 million) the CRTC (Canadian Radio-television and Telecommunications Commission) ruled Tuesday.

The overpayments were part of a program created by telecom regulators in 2002 that kept incumbent operators' residential phone rates artificially high to entice new, lower-priced competitors to enter the market. In a scheme which conjures up images of a recent beer commercial with two dapper gents yelling "Brilliant!" at each other, premiums imposed by the CRTC on these rates were collected and funneled off into funds to support various communications initiatives, reports.

After the program ended in 2006, operators, consumer groups and the CRTC battled over the remaining funds in the surplus account.

Under the ruling, the operators must rebate phone customers in urban areas up to CAD $90 ($85) each. In addition, the incumbents will spend millions more dollars to deploy broadband networks across the country. Bell Aliant will bear the brunt of the repayment and broadband expansion--paying nearly CAD $250 million ($237.1 million) in rebates and taking on 55 percent of the broadband deployment, which adds up to 112 communities in Ontario and Quebec at a cost of CAD $306 million ($290.2 million).

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