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Supreme Court Orders Phone Companies To Rebate About $300 Million In Fees

Most telephone customers in Canada will be getting rebates of about $10 after the country’s top court ruled carriers must refund subscribers $300 million from an unspent broadband expansion account.

The Supreme Court of Canada ruled Friday that Canada’s telecommunications regulator did have the right to tell Bell (TSX:BCE), Telus Corp. (TSX:T) and MTS Allstream (TSX:MBT) how they must spend money collected above their directed fee schedule.

In doing so, the court unanimously rejected appeals by both the carriers – who wanted to keep what remains of about $650 million to finance technological changes – and from consumer and anti-poverty advocacy groups who wanted all the money refunded.

“The CRTC did exactly what it was mandated to do,” the court said.”

“It had the statutory authority to set just and reasonable rates, to establish the deferral accounts, and to direct the disposition of the funds in these accounts.”

The case dates back to 2006 when the Canadian Radio-television and Telecommunications Commission approved about $350 million in projects for expansion of broadband services to remote areas and about $32 million for accessibility improvements.

The remainder, about $300 million, must be returned to customers, the CRTC had ordered.

An appeal by the Consumers Association of Canada and the National Anti-Poverty Organization held back projects, however. They argued that the CRTC order in effect charged one set of customers – phone users – for benefits to be received by another set of customers – broadband Internet users.

According to a previous estimate from Telus, the the rebate would amount to about $5 per customer in urban areas. Consumer advocates believe the rebate from Bell could be as high as $20.

Bell’s chief of regulatory affairs Mirko Bibic would not estimate the rebate value to individual customers, but said about $150 million of the money collected by Bell would be returned.

He said Bell would work out with the CRTC how the money would be rebated.

“We had preferred to use all the money in the deferral account for broadband so we can offer Internet services in small communities who don’t have Internet,” he said.

Michael Janigan of the Public Interest Advocacy Centre disagreed with the decision, saying he believes the telecom act should be amended.

“We accept the court’s decision but that just highlights the need for reform, because it was never intended that the commission would have government-like powers to tax and spend,” he said.”