OTTAWA — The national communications regulator has turned down a request by three of Canada's largest telephone providers to raise home phone rates in exchange for dropping connection charges on new customers or those who move.

The Canadian Radio-television and Telecommunications Commission said Friday it's not appropriate to allow Bell Canada (TSX:BCE), Bell Aliant Regional Communications (TSX:BA.UN) and Telus Corp. (TSX:T) to charge all their customers extra to eliminate the $55 to $100 installation charge on new or moving customers.

It noted that changes announced in early April gave phone providers more scope to compete, including targeting promotions to attract new, and win back old, customers.

"The government's recent direction on forbearance removes the CRTC's restrictions over promotions and winback,'' the regulator noted.

"Telephone companies are free to apply at any time to reduce or eliminate their connection charges, and the commission will deal with their requests expeditiously.''

Bell Canada and Bell Aliant had proposed to raise the monthly rates for all their residential customers in Ontario and Quebec by 80 cents to eliminate the $55 connection charge. Telus had proposed increases ranging from 58 cents to $1 for its customers in British Columbia and Alberta to make up for eliminating connection charges that range from $35 to $100.

The requests were opposed by several public interest groups and about 2,600 phone users, who argued that the increases would discriminate against those who did not move and had already paid connection charges. As well, the additional charges, which would cost $9.60 to $12 a year, would remain in perpetuity.

The companies said removing the connection charge would eliminate the economic barrier to obtaining phone service and would benefit lower-income Canadians who tended to move more often than higher-income individuals.