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NLIS 3 February 21, 2002 (Government Services and Lands) Minister Noel asks for hold on proposed Cable TV rate increases Walter Noel, Minister of Government Services and Lands and Minister Responsible for Consumer Affairs, is questioning the need for proposed Cable TV rate increases announced by Rogers Cable for three speciality channel packages and the basic rate in Corner Brook. The company maintains the increases are justified but the minister says neither he nor consumers have seen evidence to substantiate that position. Minister Noel said: "I have asked Rogers to suspend any increase until my officials have an opportunity to assess this situation. The amount of increase per customer, per month might not appear large but the total annual revenues to the company and the cost to consumers will be significant." The minister has written to Rogers Vice-President Ken Marshall and CRTC Chair Charles Dalfen regarding his concerns. He has asked Rogers to meet with him to demonstrate the need for the increases and show that the concerns of consumers were fully considered. The text of the letters to Mr. Marshall and
Mr. Dalfen follows: Media contact: Rick Callahan, Communications, (709) 729-4860. Mr. Ken Marshall Dear Mr. Marshall: RE: Rate Increases - March 1, 2002 As the minister responsible for consumer affairs in our province, I must advise you of my concern about your recent notification of cable TV rate increases to be implemented March 1, 2002 for three speciality channel packages, in addition to an increase of 25� per month on the basic rate for Corner Brook. While you have indicated that these increases are necessary to "meet increased costs and maintain service levels", I am not aware any documentation has been made available to substantiate that. I understand that most of the increases you plan relate to discretionary packages which the CRTC does not regulate, while the regulated basic service increase will only apply to a minority of your customers. I realize the price increase per customer, per month appears to be modest, but it will substantially increase corporate revenues, and consumer costs, on an annual basis. Would you please be good enough to advise me of the gross revenues expected to result from the increases, and the basis for your contention that "rates here in Newfoundland are actually quite low"? Such increases are always for a small amount per customer/month, but accumulated increases have made cable companies very valuable assets over the years. Regulated industries must not impose unnecessary costs on consumers, or require operations subject to restrictive competitive conditions to subsidize others which function in a more competitive environment. I would like the opportunity to meet with you to discuss these proposed increases, and the pricing of such services generally. In the meantime, I ask that you suspend any increase until additional time and information has been provided to enable citizens and government to evaluate the situation more thoroughly. The cable industry developed in our country through public regulation, and generally operates in circumstances discouraging competition. The infrastructure currently employed was financed under regulated price controls. While these particular increases may primarily relate to discretionary packages, they are delivered through the same infrastructure. Competition remains restricted. The industry tries to minimize certain aspects of regulation, but insists on protection from foreign and other competitors. That appears to be seeking the best of both worlds. It might be desirable if it is in the public interest, but might not be justifiable to assist particular corporations. I realize the case for deregulation of pricing is being made on the basis of increasing competition from satellite operators, however, I am not convinced the level and nature of competition is sufficient to ensure public interests are properly served. You make the case for increasing revenues to provide adequate levels of return for your owners, but perhaps they have been more than sufficiently compensated for their investments. We see many prices for technological products declining in recent years, while yours have been consistently increasing. We see increasing returns being justified on the basis of the amount of capital invested, but perhaps that has been excessive. Cable company owners have been well rewarded in our country. Perhaps cable companies have paid more than they should to expand through eliminating competition. As minister responsible for consumer protection, I would appreciate an opportunity to review these issues with you. Because of the nature of this matter, I know you will understand my making a copy of this letter available to the Chairman of the CRTC, and advising the media of this action. Yours sincerely,
Walter Noel Mr. Charles Dalfen Dear Mr. Dalfen: RE: Rogers Cable Inc. - Rate Increases, March 1, 2002 Congratulations on your appointment as Chairperson of the Commission. It is a challenging time to be assuming such responsibilities. You are dealing with dynamic industries which have significant economic and social consequences for all Canadians. Please find enclosed a copy of a letter I have written to Mr. Ken Marshall, Vice-President Atlantic Region, Rogers Cable Inc., regarding proposed rate increases in our province. It indicates concerns I have about this particular initiative, and the pricing of cable services generally. I want to make you aware of these views, and request that the Commission take them into account in dealing with the issues. I would appreciate any documentation or assistance you may be able to provide which could indicate the increases are justified. Yours sincerely,
Walter Noel enclosure 2002 02 21 12:20 p.m. |
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