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CRTC chair Jean-Pierre Blais says it will ensure Northwestel's $233-million modernization plan brings significant upgrades to its customers in Canada's North over the next four years. (Adrian Wyld/Canadian Press)

Bell Canada’s northern subsidiary, Northwestel, may be forced to lower its internet rates in Yukon, Northwest Territories and Nunavut as part of the modernization plan ordered by the CRTC two years ago.

The Canadian Radio-television and Telecommunications Commission has ordered Northwestel to submit its current rate schedule for approval.

"They are finally going to make Northwestel justify prices charged for retail internet, the services you are buying at home, at higher rates,” says Rick Steele, a Yukon telecommunications analyst.

He says Northwestel’s rates are among the highest in the world: at least three times what Canadians in southern Canada are paying.

“I don't expect to have the same rates as Vancouver, but to be three to four times the national average? I think they might have a problem justifying that to the CRTC.”

The CRTC made the request when it released a decision Wednesday to approve Northwestel’s $233-million plan to upgrade its services in the North. The CRTC demanded the plan after it found two years ago that Northwestel had insufficiently invested in its network despite its strong financial performance. 

The CRTC says it will ensure customers see significant improvements over the next four years, but says that won’t mean services in the North will be comparable to those in southern Canada.

“I know you are frustrated; we heard it from the interveners, but we've pushed things considerably,” says CRTC chair Jean-Pierre Blais.

Blais says Northwestel rates must be affordable.

"Will they necessarily be the same as the south? They certainly want them more affordable and we know there are significant barriers," he said. "I can't guarantee you it will happen by this, that or another date. That's why we talked about laying a really significant foundation."

Northwestel has until March 31 to submit a revised plan, including its rate schedule, as well as further details on the company’s investment in fibre networks.

CRTC plans inquiry into satellite services

The CRTC also says it will launch an inquiry in 2014 to look at satellite services in Northern Canada.

Nunavut relies almost entirely on satellite for its telecommunications, as do remote communities in the Northwest Territories and Yukon. CRTC says upgrades are needed, but it recognizes that Northwestel cannot do it alone.

“A digital divide exists within Northwestel’s vast service territory,” said Blais. “Without action, this digital gap will not be closed, and may in fact worsen.”

The CRTC inquiry will explore how infrastructure investments in the North could be funded.

The regulator has also made moves to encourage more competition in the North.

It extended a price cap on Northwestel's services and directed the company to offer land-line internet and voice services separately, a move that may make it easier for new competitors to emerge.

With files from The Canadian Press