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Telecom Decision CRTC 2006-70
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Ottawa, 2 November
2006 |
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Final 2006 revenue-percent charge and related matters
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Reference:
8695-C12-200603391 and 8695-C12-200603440 |
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In this
Decision, the Commission approves on a final basis, effective
1 January 2006, a 2006 contribution collection revenue-percent charge of
1.03 percent and the 2006 subsidy per residential network access service
(NAS) for the territories of the large incumbent local exchange carriers
(ILECs), Société en commandite Télébec (Télébec), and the former
TELUS Communications (Québec) Inc. (TCC Québec).1 |
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The Commission
approves on an interim basis, effective 1 January 2007, a 2007
contribution collection revenue-percent charge of 1.03 percent, the
subsidy per residential NAS for the territories of the large ILECs,
Télébec, and TCC Québec, and continued supplemental funding for
Northwestel Inc. |
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The Commission
directs the large ILECs and the competitive local exchange carriers
operating in the former territory of Bell Canada in Ontario and Quebec
to report their NAS to the Central Fund Administrator separately for the
new territories of Bell Canada and Bell Aliant Regional Communications,
Limited Partnership,2
in Ontario and Quebec, effective January 2007. |
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Background
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1. |
In Changes to
the contribution regime, Decision CRTC 2000-745, 30 November 2000
(Decision 2000-745), the Commission introduced a national revenue-based
contribution collection mechanism (the contribution regime) and a new
methodology for the calculation of the subsidy requirements. This
calculation is based upon residential network access service (NAS) in
high-cost serving areas (HCSAs) in the territories of the large
incumbent local exchange carriers (ILECs), Société en commandite Télébec
(Télébec), and the former TELUS Communications (Québec) Inc. (TCC
Québec).3
The carriers referred to as large ILECs are Bell Aliant Regional
Communications, Limited Partnership (Bell Aliant),4
Bell Canada, MTS Allstream Inc. (MTS Allstream), Saskatchewan
Telecommunications (SaskTel), and TELUS Communications Company (TCC),
excluding TCC Québec. |
2. |
Under the
contribution regime, telecommunication service providers (TSPs) with
annual Canadian telecommunications service revenues equal to or greater
than $10 million are required to contribute towards the subsidization of
residential local service in HCSAs. This contribution is collected
through a revenue-based mechanism where a revenue-percent charge is
applied against a TSP's contribution-eligible revenues.
Contribution-eligible revenues are calculated based upon a TSP's
Canadian telecommunications service revenues less certain specific
deductions including retail Internet and retail paging revenues. The
revenue-percent charge is calculated using the ratio of the national
subsidy requirement to the total estimated contribution-eligible
revenues of all TSPs who are required to contribute. |
3. |
The national
subsidy requirement is comprised of Canadian Portable Contribution
Consortium Inc. (CPCC) and Central Fund Administrator (CFA)
administrative and operational costs, supplemental funding for
Northwestel Inc. (Northwestel), subsidies for the small incumbent local
exchange carriers (SILECs), and estimated HCSA subsidy requirements for
the territories of the large ILECs, Télébec, and TCC Québec. |
4. |
In Restructured
bands, revised loop rates and related issues, Decision CRTC
2001-238, 27 April 2001, as amended by Decision CRTC 2001-238-1 dated 28
May 2001 and Decision CRTC 2001-238-2 dated 7 August 2001, the
Commission established the costing rules to be used for the
determination of the subsidy per residential NAS for the territories of
the large ILECs. This included the adoption of a uniform approach to
identifying HCSAs and a consistent set of costing methodologies by which
the large ILECs were to determine their base average primary exchange
service (PES) costs. The base average PES costs excluded annual
adjustments for inflation and a productivity offset, and the cost
recovery of the revenue-percent charge established in Decision 2000-745. |
5. |
In Final 2005
revenue-percent charge and related matters, Telecom Decision CRTC
2005-68, 10 November 2005, the Commission set, on an interim basis for
2006, a revenue-percent charge of 1.03 percent, and the subsidy per
residential NAS for each HCSA band in the territories of the large
ILECs, Télébec, and TCC Québec. |
6. |
The Commission has
received the information necessary to determine the estimated national
subsidy requirement for 2006, the final revenue-percent charge for 2006,
and the interim revenue-percent charge for 2007. |
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2006 National subsidy requirement
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CPCC/CFA administrative and operational costs
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7. |
On 12 April 2006,
the CPCC advised the Commission that the CPCC and CFA administrative and
operational costs would be approximately $0.865 million for 2006. |
8. |
The Commission
notes that the 2006 CPCC/CFA administrative and operational costs are
slightly less than they were in 2005. |
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Supplemental funding for Northwestel
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9. |
In Decision
2000-745, the Commission determined that any supplemental funding for
Northwestel would be added, as a separate amount, to the national
subsidy requirement. |
10. |
In Review of
regulatory framework for Northwestel Inc., Telecom Public Notice
CRTC 2006-1, 17 January 2006 (Public Notice 2006-1), the Commission
initiated a proceeding to consider, among other things, whether any
changes were required to the methodology used to determine the level of
funding required for Northwestel from the National Contribution Fund
(NCF). The regulatory framework established for Northwestel in that
proceeding will be effective in 2007. |
11. |
In Northwestel
Inc.– Supplemental funding requirement for 2006, Telecom Decision
CRTC 2006-10, 24 February 2006, the Commission approved final 2006
supplemental funding of $9.8 million for Northwestel. |
12. |
The Commission
considers that $9.8 million continues to be an appropriate amount for
the interim supplemental funding for Northwestel until a final
determination has been made with respect to Public Notice 2006-1. |
13. |
In light of the
above, the Commission approves on an interim basis the continued
use of $9.8 million as the annual supplemental funding for Northwestel
for 2007 until a final determination has been made with respect to
Public Notice 2006-1, and directs the CFA to remit, on an interim basis,
effective 1 January 2007, monthly subsidy payments to Northwestel
equivalent to one-twelfth of the annual supplemental funding. |
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Subsidies for the SILECs
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14. |
In Revised
regulatory framework for the small incumbent local exchange carriers,
Telecom Decision CRTC 2006-14, 29 March 2006, the Commission determined
that the SILECs would receive fixed subsidy amounts for each of the
years 2006 through 2009, totalling $23.046 million. The Commission also
directed the CFA to make the related monthly subsidy payments, on a
final basis, for each of the years 2006 through 2009. |
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Subsidy requirements for the territories of the large ILECs,
Télébec, and TCC Québec
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15. |
In Regulatory
framework for second price cap period, Telecom Decision CRTC
2002-34, 30 May 2002, as amended by Telecom Decision CRTC 2002-34-1 dated 15 July 2002 (Decision 2002-34), the Commission directed the large
ILECs to adjust the PES cost component of their subsidy per residential
NAS calculations to account for inflation, a productivity offset of 3.5
percent, any estimated service improvement plan (SIP) costs, and the
cost recovery of the revenue-percent charge. The Commission also
directed the large ILECs to file revised subsidy per residential NAS
calculations by 31 March of each year. |
16. |
In
Implementation of price regulation for Télébec and TELUS Québec,
Telecom Decision CRTC 2002-43, 31 July 2002 (Decision 2002-43), the
Commission established a new regulatory framework for Télébec and TCC
Québec that included subsidy per residential NAS calculations similar to
those established for the large ILECs. |
17. |
By letters dated 28
March, 31 March, and 4 April 2006, respectively, (a) SaskTel,
(b) Bell Aliant, Bell Canada, MTS Allstream, and Télébec, and (c) TCC
(including TCC Québec) filed their HCSA band subsidy calculations. |
18. |
In TELUS
Communications Company – Application to decrease the capital cost of its
service improvement plan and related matters, Telecom Decision CRTC
2006-63, 28 September 2006 (Decision 2006-63), the Commission approved
revised 2006 per-NAS SIP funding adjustments for TCC of: 0.00 in Alberta
Band E; (0.01) in Alberta Band F; 0.08 in Alberta Band G; 0.05 in
British Columbia Band E; (0.04) in British Columbia Band F; and 0.28 in
British Columbia Band G. The Commission has adjusted TCC's subsidy
calculations to include the approved SIP adjustments. |
19. |
The Commission has
reviewed the subsidy calculations for the large ILECs, Télébec, and
TCC Québec, and, with the inclusion of the approved TCC SIP adjustments,
finds them to be in accordance with the directives set out in Decisions
2002-34 and 2002-43. |
20. |
In light of the
above, the Commission finds that, based upon the 2005 year-end NAS per
HCSA band, the 2006 total subsidy requirement for the large ILECs,
Télébec, and TCC Québec is approximately $207.3 million. |
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National subsidy requirement
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21. |
Based on the above,
the Commission finds that the estimated 2006 national subsidy
requirement is $241.0 million, and is comprised of the following: |
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$ million |
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CPCC/CFA
administrative and operational costs |
0.9 |
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Northwestel |
9.8 |
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SILECs |
23.0 |
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Large ILECs,
Télébec, and TCC Québec territories |
207.3 |
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Total |
241.0 |
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Final 2005 and interim 2006 revenue-percent charge
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22. |
The Commission
notes that the following NCF adjustments occurred during 2006: |
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i) In MTS
Allstream – Application to review and vary part of Telecom Decision CRTC
2005-52, Telecom Decision CRTC 2006-20, 24 April 2006, the
Commission approved an MTS Allstream review and vary application that
resulted in MTS Allstream receiving a one-time subsidy payment of $9.893
million from the NCF. |
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ii) In
Northwestel Inc. – Disposition of 2005 revenue deferral account balance,
Telecom Decision CRTC 2006-32, 24 May 2006, the Commission approved
Northwestel's proposal to remit the $1.384 million balance in its 2005
deferral account to the NCF. |
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iii) In Decision
2006-63, the Commission directed TCC to repay the NCF $731,430 in excess
SIP funding that it had received. |
23. |
The Commission
notes that after the above adjustments are taken into account, the
estimated total amount to be collected during 2006 becomes $248.8
million. |
24. |
The Commission
notes that, based upon the 2005 contribution-eligible revenues and the
growth in contribution-eligible revenues during the first half of 2006,
the estimated contribution-eligible revenues for 2006 will be
approximately $24.4 billion. |
25. |
Based on the
Commission's consideration of the information provided, the Commission
finds that a final 2006 revenue-percent charge of 1.03 percent would be
appropriate. The Commission also finds that an interim 2007
revenue-percent charge of 1.03 percent, effective 1 January 2007, would
also be appropriate. |
26. |
Therefore, the
Commission approves a final 2006 revenue-percent charge of 1.03
percent, effective 1 January 2006, and an interim 2007 revenue-percent
charge of 1.03 percent, effective 1 January 2007. |
27. |
Based on a final
revenue-percent charge of 1.03 percent, the final 2006 subsidy per
residential NAS for each HCSA band in the territories of the large
ILECs, Télébec, and TCC Québec are set out in the tables below. |
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Table A |
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Territory |
Final 2006 monthly subsidy per residential NAS
by HCSA Band |
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Band E ($) |
Band F ($) |
Band G ($) |
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Bell Aliant |
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– New Brunswick |
5.88 |
0.00 |
n/a |
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– Newfoundland |
6.46 |
7.48 |
12.31 |
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– Nova Scotia |
1.25 |
0.08 |
n/a |
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– Prince Edward Island |
5.24 |
6.60 |
n/a |
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Bell Canada |
5.24 |
2.97 |
23.44 |
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MTS Allstream |
21.44 |
15.70 |
66.60 |
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SaskTel |
22.60 |
15.32 |
33.21 |
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TCC |
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– Alberta |
6.09 |
2.07 |
6.86 |
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– British Columbia |
26.30 |
13.76 |
23.24 |
28. |
The Commission
approves on a final basis, effective 1 January 2006, and on an
interim basis, effective 1 January 2007, the monthly subsidy per
residential NAS for each HCSA band for the territories of the large
ILECs as shown in Table A above. |
29. |
The Commission
directs the CFA to adjust the distribution of monthly subsidy per
residential NAS, to reflect the final subsidy per residential NAS,
effective 1 January 2006. The Commission also directs the CFA to
distribute the monthly subsidy per residential NAS, on an interim basis,
effective 1 January 2007. |
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Table B |
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Territory |
Final 2006 monthly subsidy per residential NAS
by HCSA Band |
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Band E ($) |
Band F ($) |
Band G ($) |
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Télébec |
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- 1 January to 31 July |
18.14 |
6.41 |
16.78 |
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- 1 August to 31 December |
17.90 |
6.23 |
16.57 |
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TCC Québec |
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- 1 January to 31 July |
15.45 |
3.78 |
48.87 |
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- 1 August to 31 December |
15.26 |
3.63 |
48.53 |
30. |
The Commission
approves on a final basis, effective 1 January and 1 August 2006,
respectively, the monthly subsidy per residential NAS for each HCSA band
for Télébec and TCC Québec as shown in Table B above for the periods 1
January to 31 July and 1 August to 31 December. The Commission also
approves on an interim basis, effective 1 January 2007, the monthly
subsidy per residential NAS for each HCSA band for Télébec and TCC
Québec as shown in Table B above for 1 August to 31 December. |
31. |
The Commission
directs the CFA to adjust the distribution of monthly subsidy per
residential NAS, to reflect the final subsidy per residential NAS,
effective 1 January 2006. The Commission also directs the CFA to
distribute the monthly subsidy per residential NAS, on an interim basis,
effective 1 January 2007. |
32. |
The Commission
notes that, with the establishment of Bell Aliant in July 2006,
residential high-cost NAS were transferred from Bell Canada's territory
in Ontario and Quebec to Bell Aliant and that it is possible that,
starting in 2007, the Bell Canada and Bell Aliant subsidy per
residential NAS in HCSAs in Ontario and Quebec could be different. |
33. |
Therefore, the
Commission directs the ILECs and competitive local exchange carriers
operating in the former Bell Canada territory in Ontario and Quebec to
report their high-cost NAS separately to the CFA for the new territories
of Bell Aliant and Bell Canada in Ontario and Quebec, effective January
2007. |
34. |
The Commission
approves on an interim basis, effective 1 January 2007, the subsidy
per residential NAS for Bell Canada, as set out in Table A above, as the
subsidy per residential NAS for Bell Aliant in Ontario and Quebec, and
directs the CFA to distribute subsidy, on a monthly basis, based upon
the approved subsidy per residential NAS amounts times the number of
residential NAS reported. |
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Secretary General |
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This document is
available in alternative format upon request, and may also be examined
in PDF format or in HTML at the following Internet site:
http://www.crtc.gc.ca |
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Footnotes:
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