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The joint application by Bell Canada and Bell Aliant Application for a 100-per-cent increases in payphone rates is a cash grab that would ‘destroy’ usage, consumer groups argue.Randall Moore/The Globe and Mail

A controversy is erupting over a proposal by Bell Canada and Bell Aliant Inc. to hike their payphone rates.

The companies are jointly asking the Canadian Radio-television and Telecommunications Commission to approve payphone price increases of up to 100 per cent. The plan has raised the ire of consumer advocates who argue the increase amounts to a cash grab that would disadvantage the poor.

Specifically, the companies' application asks to raise the maximum price of a local call made with coins from 50 cents to $1. The rate for a non-cash local call, such as one made with a plastic payment card, could rise from $1 to $2, if the change is approved.

Consumer groups, including the Public Interest Advocacy Centre, and Canada Without Poverty, say the price increases would "destroy" payphone use and enable the companies to wriggle out of their obligations to provide the service.

"PIAC/CWP therefore contend that a 100-per-cent price increase in payphone rates and in particular in coin payphone rates will disproportionately affect lower income Canadians who are least able to afford sudden large increases in their expenses," the groups argue in an intervention filed with the CRTC late Friday.

For their part, the phone companies argue they need more flexibility to raise payphone rates because they face "significant capital expenditures" over the next three years to upgrade payphones to accept the new one dollar coins that the Royal Canadian Mint is introducing this year.

"The new one dollar coins will have different characteristics than the current ones and so will not be recognized by the current coin validation systems," the companies' application says. Permitting the firms to recover the costs associated with upgrading the payphones would also slow the decommissioning of the phones, as profitability would be more likely, the application states.

The companies argue they need more help recovering costs because payphone usage continues to decline as more and more Canadians flock to wireless phones.

About 76 per cent of Canadians had cellphones at the end of 2011, with more than 26 million subscribers in Canada, according to Convergence Consulting Group Ltd.

PIAC and CWP question whether the companies are exaggerating the cost of upgrading payphones.

That`s partly because the companies have not publicly disclosed those estimates or any other key financial information, such as how much it costs to keep payphones in service, their average annual revenue declines or even the total number of payphones in operation.

While the companies have filed the information to the CRTC on a confidential basis, those figures are not part of the public record.

Telus Corp., meanwhile, has recently told the CRTC that it is "not interested" in increasing its payphone rates, which are 35 cents per local call in Alberta and British Columbia, according to the company's website.

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