Canadian Telcos Threaten to Either Double Cost of Payphones or Destroy Them

Bell Canada and Bell Aliant want to increase the cost of using a payphone by a startling 100%. And if they’re not allowed to, the two telecommunications companies say they’ll dismantle up to 25% of their units in Canada.

The controversial threat seems to be a no-win situation for the Canadians who still use payphones or at least expect them to be available for emergencies (smartphones die quickly, after all): either they face a steep 100% rate hike or they lose a quarter of their access points.

The Canadian Radio-television and Telecommunications Commission rejected Bell’s rate hike suggestion earlier this year. But now that the telco has come back with renewed ammunition, the CRTC must reconsider its options.

Bell Canada and Bell Aliant warn in new CRTC filings that “if they do not get approval for the opportunity to experiment with alternative rate levels that could be as high as the maximum levels requested in their application, then they plan to change their practice and will proactively start removing their most unprofitable pay telephones.”

Local calls paid for with cash would cost $1, up from 50 cents, if Bell has its way. Calls made with payment cards would cost $2, up from $1.

“Pricing flexibility would make our overall payphone business more sustainable and having the flexibility to adjust prices supports the investment needed to upgrade our payphones to accept the new dollar coin,” Jacqueline Michelis, a spokeswoman for Bell Canada’s parent BCE, told the Globe and Mail. “Without this pricing flexibility, it does not make good business sense to invest in retrofitting older payphones which means at some point, we would have to start removing those older payphones.” Bell can remove payphones without CRTC approval, she notes.

Quoth the Globe and Mail:

The intensifying battle over payphone rates comes at a time when the explosive popularity of smartphones and other wireless devices has put payphone usage in steady decline. Phone companies, eager to add more customers to lucrative mobile-phone service plans, are challenging the CRTC’s commitment to protecting an inexpensive and convenient communication service. As a result, the regulator’s decision in this case could mark the final tipping point that sends the payphone on a course to extinction.

Average annual revenue per payphone has plunged to just $700 according to a CRTC report. It was more than $1,000 in 2008.

In 2007, Bell raised their rates by 100% from 25 cents to 50 cents. Credit card rates went from 50 cents to $1. This move triggered a dramatic drop in usage.

According to Bank of Canada inflation statistics, paying $1 for a phone call in 2012 is 60% pricier than the five cent rate launched in 1946 and 56% more expensive than the 25 cent rate introduced in 1981.