Phone companies lose appeal, must pay rebate

Fri Sep 18, 2009 3:52pm EDT
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OTTAWA (Reuters) - Canadian telephone companies will have to write rebate checks to customers after the country's Supreme Court dismissed their appeals on how they should use extra cash they were ordered to collect by the telecommunications regulator.

In 2002, the regulator ordered Telus Corp and BCE Inc's Bell Canada subsidiary, the dominant phone companies, to charge customers more than the regulated amount for four years. The idea was to encourage competition by allowing smaller competitors to underprice the majors.

The extra funds were collected in "deferral accounts", which by 2006 totaled C$650 million.

In 2006, the regulator, the Canadian Radio-television and Telecommunications Commission (CRTC), ruled that the companies should use the special funds to expand broadband coverage and provide special services for disabled people. Any money left over should go to customers as a one-time credit, it said.

In 2008, there remained C$300 million in the accounts, which the CRTC said should be returned to customers.

Bell and Telus appealed that decision, arguing against the customer rebate, and an anti-poverty organization appealed the decision to allow the companies to finance their broadband networks with the money.

A Federal Court dismissed the appeals. The Supreme Court later agreed to hear the case, and it also dismissed the appeals.

Rebate amounts will be small, media reports said, likely about C$10 per customer.

($1=$1.07 Canadian)

(Reporting by Louise Egan; editing by Peter Galloway)