No More Cheap Calls Via the US

CANADIAN long-distance rates - double those in the United States - look as if they will stay pricey after a ruling by a federal regulator.Just as Canadian consumers head south in search of cheaper gasoline and groceries, Canadian business is routing telephone calls south to take advantage of lower long-distance charges. It is cheaper to skip across the continent on the American side and divert calls north after bypassing almost all of the Canadian long- distance lines and charges. Now telephone resellers in Canada will not be allowed to reroute calls through the US. Here's how Bell Canada compares to American Telephone & Telegraph Company on a coast to coast call dialed direct at peak times during the week: Montreal to Vancouver costs 43 cents (US) a minute; a call from New York to Los Angeles is just 24 cents a minute. A wide variety of discounts are offered in both countries, especially to business customers. So it is cheaper to route a Vancouver-Montreal call down into Washington state, zap it across AT&T lines to New York state, and then push it over the border into Canada where dedicated lines owned or leased by the reseller take it to Montreal. This is now a no-no, according to the Canadian Radio-television and Telecommunications Commission (CRTC). And the Canada-US Free Trade Agreement doesn't include telephone calls. "Bypassing of Canadian facilities by resellers and companies with private networks results in our domestic carriers losing revenues, which undermines the strength of the Canadian telecommunications system," said CRTC chairman David Colville. In spite of the ruling, the practice may be impossible to stop. "This is a tricky thing to police," says Elisabeth Angus, executive vice president of Angus Telemanagement, a Toronto consulting firm. "There already is an agreement between Bell Canada [the largest Canadian phone company] and AT&T that calls should go one way and not back again. But it is almost to impossible to tell when calls are being rerouted over private and leased lines." THE government ban on routing calls through the US came after Teleglobe Canada - which has the monopoly on handling overseas calls from Canada - made a request that the practice be stopped. Resellers could also save money routing calls through the US to overseas destinations. The rules governing telephones and long distance are up for review. Unitel, a firm that has many of its own fiber optic telephone lines within Canada, is also challenging Bell Canada and other Canadian telephone firms for the right to compete more vigorously in long-distance service. One reselling firm, Fonorola, says charges are already dropping in Canada because of domestic competition. "We offer volume users savings of up to 34 percent in Canada and from 25 to 50 percent over Bell Canada for calls to the United States," says George Tkachuk of Fonorola in Toronto. He says his firm does not offer bypassing, but lowers costs by leasing lines from Bell Canada or Unitel, reselling them at a discount. Even the CRTC chairman wants more competition. "We recognize that the effective long-term solution for reducing bypass is to lower Canadian long-distance rates," said Mr. Colville. But Canadian business says it is being hurt by higher Canadian operating costs, including long-distance charges. One Montreal banker whose firm uses telephone resellers denounced the government ruling saying, "It only hurts Canada's competitive position to regulate higher long-distance charges."