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A worker assembles a Bell Canada billboard

Kevin Van Paassen/Kevin Van Paassen/ The Globe and Mail

The CRTC has decided to plunge more than $700-million into consumer rebates and an expansion of wired broadband Internet networks into remote rural areas.

By doing so, the Canadian Radio-Television and Telecommunications Commission, which announced the decision on Tuesday, has appeased consumer groups that wanted funds collected from overcharges to flow back to the consumers. But the regulator, by mandating wired networks as carriers increasingly push wireless technology, has laid the groundwork for a tense set of hearings in October, when the industry will gather to debate whether high-speed Internet should be a "basic service," like basic phone and dial-up Internet.

In total, roughly $311-million will go to consumer rebates - which will range from $25 to $90 for urban phone customers - and $422-million will fund companies to build networks in remote areas, which companies often neglect because there is little profit there. The money came from the CRTC's deferral account, which collected about $1.6-billion in excess revenue from high prices mandated to subsidize competition.

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Michael Janigan of the Public Interest Advocacy Centre called the decision "a reasonable conclusion to a flawed regulatory adventure."

The middle way proposed by the CRTC is not surprising. More importantly, perhaps, is the CRTC rejection of BCE Inc.'s proposal to provide rural service with its advanced wireless network, a decision that may have ramifications beyond this ruling. The regulator said the service's download capacity, speed and price were not equal to those Bell provides in urban areas, and were thus unacceptable.

Mirko Bibic, BCE Inc.'s senior vice-president for regulatory affairs, slammed the decision, saying the regulator was "incapable of being forward-looking" by ignoring future wireless network upgrades and sticking consumers with old, non-upgradeable DSL (Digital Subscriber Line) Internet service. "It's just a very poor technological choice," Mr. Bibic said. "Regulators should not be choosing technologies, the market should."

Canada's big telecom providers face a huge challenge ahead: They must balance the technological and financial challenges of providing advanced services to a vast, sparsely populated nation, while simultaneously navigating the shifting political winds in Ottawa, where their sector's regulations are forged. Providing service to rural areas, which will cost hundreds of millions of dollars, has become a point of contention between companies and the CRTC, which is chaired by Konrad von Finckenstein, ahead of this fall's crucial regulatory hearings.

A decision that wireless isn't good enough would be a blow to the technological evolution companies see before them. "It is possible that the CRTC does not value wireless and satellite as much, even though wireless is seen as the future and satellite is getting broadband stimulus," said Michael Hennessy, Telus Corp.'s senior vice-president for regulator and government affairs. "There is a disconnect from our perspective. We shall see how much in the fall hearings."

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