Clearly, massive artificial subsidies simply can’t co-exist with competition.
Competition has brought market-based pricing to long distance services and now,
with reductions in available subsidies, we must move basic service prices closer tu
true costs.

In preparing this application, we examined all our options. We looked at the social,
economic, regulatory, and market factors. We attempted to balance the interests and
needs of our customers, our shareholders, and our regulators.

Our last general change in local rates occurred in 1985 with a 3% increase. Since
that time, we have managed to avoid any general increase in local rates while at the
same time reducing our long distance rates by an average of more than 37%.
However, BC TEL continues to face legislative, regulatory and financial restrictions
on our ability to compete.

We need a new vision for telecommunications in Canada -- one which balances the
social needs of citizens with the needs of businesses competing in the global
marketplace. We hope this vision will be facilitated this year by the enactment of
the proposed new Telecommunications Act and streamlined regutation.

The printed page of a letter does little to help create an understanding of how

BC TEL has served British Columbians over the past 100 years nor does it allow me
to describe fully the challenges we now face in continuing to provide quality service
to your community. I realize there are many questions which remain unanswered.

We have established a "1-800" number to help answer those questions. If the

people in your community would like more information, we suggest they call
1-800-661-7202.

For your interest, I am attaching additional background information. If you, your
staff, or your council would like to discuss this iss* with us please call Corporate
Communications Manager Norm Blain ai 663-5027. A BC TEL representative
would be pleased to address this subject or attend a council meeting.

Thank you for your time and consideration of these matters.

Yours truly,

E.L. Patterson
EXECUTIVE VICE-PRESIDENT
& CHIEF OPERATING OFFICER

ELP/sg P

Attachment ITEM | PAGE.

2A