Teleglobe Canada Inc, subsidiary of Montreal-based Memotec Data Inc and Canada’s long-distance telecommunications carrier, has had a mixed bag of rulings imposed on it by the Canadian Radio-television and Telecommunications Commission, CRTC, including tariff reductions and instructions to tread carefully in dealings with its parent company. The Telecommunications Commission has ordered the carrier to reduce its rates by an average of 6.9% for its international telephone, data, private line and broadcast services, while the company’s Globetel service – the direct outgoing international service which bypasses the user’s local carrier – will fall in price by 9.7%. The reductions mean that Teleglobe will earn a projected $70m less in the 1991 financial year, than if rates had been kept at existing levels, and the cuts are greater than the carrier had requested. Teleglobe had asked for tariff reductions which would have given it a return on equity that was 1.5% higher – return on equity being the basis on which calculations were made – but this was ruled to be excessive. The carrier has also been instructed to tighten up its dealings with its parent company, Teleglobe Inc. The Commission had already expressed reservations about the security of cash advances the carrier had given to its parent, and has now decided that Teleglobe Inc must provide Teleglobe with a third-party letter of credit satisfactory to the Commission. If this is not done, the advances must be retrieved and no further advances made. On the brighter side for Teleglobe, however, a new agreement has been reached with Telecom Canada – the consortium that provides domestic services – which reduces the amount Teleglobe must pay for the local leg of calls. It is estimated that this will save Teleglobe $34m in the current financial year and $55m next year. The rulings are part of wider discussions between the carrier and the Commission on what form regulation should take since the four-year transition period following Teleglobe’s privatisation ended December. A public meeting was held last August to discuss the issue, but the Commission wasn’t able to decide on its approach because Teleglobe had not come up with its own proposals. Teleglobe expects to bring a concrete proposal before the Commission by next year.
