|
Telecom Decision CRTC 2002-34
|
|
Ottawa, 30 May 2002 |
|
Regulatory framework for second price cap period
|
|
Reference:
8678-C12-11/01 |
|
Table of content
|
Paragraph
|
|
|
|
|
|
|
|
The introduction of price cap regulation
The initial price cap regime
Review of the price cap regime
Scope of the present proceeding
The proceeding
|
1
4
13
17
28 |
|
|
|
|
The form of regulation
The state of local competition
Balancing stakeholder interests
Quality of service
Earnings sharing
Objectives of the next price cap regime
Price cap period
|
38
44
65
72
75
83
100 |
|
|
|
|
Definition and Classification
Mark-up on Category I Competitor Services
Follow-up processes
|
109
197
247 |
|
|
|
|
Introduction
General conclusions regarding the basket structure and the application of a
productivity offset
Basket structure and pricing constraints: specific conclusions
Specific requests made by Aliant Telecom, MTS, SaskTel and Bell Canada
Classification of services
Other issues
Implementation issues
|
255
374
390
459
483
504
569 |
|
|
|
|
Background
Inflation index
Productivity offset (X-factor)
Exogenous factor
Other matters
|
581
585
591
647
685 |
|
|
|
|
The current regime
Positions of parties on the need for changes to the regime
The Commission's conclusions regarding the need for change
Classification of services for a quality of service mechanism
Form of quality of service mechanism
Rate adjustment plan for residential and business customers
Rate adjustment plan for competitors
|
690
695
706
709
719
731
749 |
|
|
|
|
Consumer bill of rights
Billing policy issues
|
787
801 |
|
|
|
|
Background
Unserved premises
Underserved customers
Implementation
SIP cost recovery
|
807
818
870
915
928 |
|
|
|
|
Background
The calculation of the TSR
The timing of the annual updates to the TSR
Monitoring and adjustment of the revenue-percent charge
|
940
943
964
970 |
|
|
|
|
Phase III/SRB and intercorporate transaction reports
Reliability and verification of Phase II costs
Other reporting requirements
|
979
999
1011 |
|
|
|
|
Opportunity to file further evidence declined
Objections to evidence
|
1020
1023 |
|
Appendix 1 -
Competitor Services |
|
|
Appendix 2 -
Classification of Services |
|
|
Appendix 3 - Retail
Quality of Service Adjustment Plan |
|
|
Appendix 4 -
Competitor Quality of Service Adjustment Plan |
|
|
Summary |
|
This summary provides highlights of the price
regulation regime that will be applicable during the next four years to
TELUS, SaskTel, MTS, Bell Canada and Aliant Telecom (the "ILECs"). |
|
The regime has been designed to meet the
following objectives: |
|
- to render reliable and affordable services of high quality,
accessible to both urban and rural area customers;
|
|
- to balance the interests of the three main stakeholders in the
telecommunications markets (i.e., customers, competitors and incumbent
telephone companies);
|
|
- to foster facilities-based competition in Canadian
telecommunications markets;
|
|
- to provide incumbents with incentives to increase efficiencies and
to be more innovative; and
|
|
- to adopt regulatory approaches that impose the minimum regulatory
burden compatible with the achievement of the previous four objectives.
|
|
To further these objectives, the Commission
is adopting a price regulation regime that differs from the initial regime in
a number of important ways. |
|
First, the next price regulation regime
includes a greater number of baskets and service groups – eight in total –
thereby permitting the Commission to more finely tune its pricing constraints
to implement the objectives. |
|
In particular, the revised basket structure
and focused pricing constraints ensure that the benefits of productivity
gains are more evenly distributed across the various types of services and,
hence, are enjoyed by a greater range of customers. They also indirectly help
foster local competition by ensuring that the ILECs cannot reduce prices in a
competitive market and recoup the lost revenues by raising prices in a market
where competition is weak or absent. |
|
Second, the Commission is imposing a number
of service-specific rate element constraints in order to provide customers
with additional price protection where local competition is expected to
develop slowly. |
|
Third, the Commission has refined the
treatment of services in the Competitor Services group by establishing two
categories of such services. The first category comprises services in the
nature of an essential service. The pricing of these services has been
revised and made subject to pricing constraints to ensure that competitors
have access to the relevant services at rates which will foster the
development of facilities-based competition. The second category comprises
those services developed for use by competitors other than those in the
nature of an essential service and are priced on a case-by-case basis. In
addition, the Commission is requiring the ILECs to introduce a competitor
Digital Network Access service and price it in the same way as services in
the nature of an essential service. |
|
Fourth, the Commission is introducing quality
of service mechanisms which provide for rebates to customers and competitors
if the ILECs fail to meet the Commission mandated quality of service
indicators. These new mechanisms are being introduced on an interim basis and
will be finalized in follow-up proceedings. The Commission has also decided
to initiate a proceeding in the near future to examine the establishment of a
"consumer bill of rights". |
|
Fifth, the Commission has approved the
Service Improvement Plans of all of the ILECs, except SaskTel, subject to
certain adjustments. These plans will extend service to unserved customers
and upgrade service to underserved customers. |
|
Sixth, in keeping with the ongoing effort to
streamline and improve the efficiency of regulation and in light of the
structure of the next price regulation regime, the reporting requirements of
the ILECs have been revised to eliminate the filing of Phase III/Split Rate
Base reports, as well as intercorporate transaction reports. In addition, the
Commission has decided to review the Phase II costing approach and develop an
updated Phase II manual. |
|
Finally, with respect to contribution issues,
the Commission has set the productivity offset for the national subsidy fund
calculation at 3.5%. The Commission has also clarified certain aspects of the
subsidy calculation. |
|
The Commission will conduct a review of the
regime commencing in the fourth year of its term. |
|
The Basket Structure and Pricing Constraints
|
|
The price regulation regime for the next four
years includes eight baskets or groups of services: residential local
services in high cost serving areas (HCSAs); residential local services in
non-high cost serving areas (non-HCSAs); business services; other capped
services; Competitor Services; services with frozen rates; public payphones;
and uncapped services. Each of these baskets or service groups is subject to
pricing constraints tailored to meet the circumstances of the relevant
services. |
|
The individual basket constraints rely on an
inflation factor, a productivity factor and an exogenous factor, as
appropriate. The Commission has selected the chain weighted GDP-PI published
by Statistics Canada as the inflation measure and it has set the productivity
offset at 3.5%. |
|
In addition to basket constraints, a variety
of rate element constraints are imposed on specific services in light of
competitive circumstances and related considerations. These rate element
constraints provide customers with additional price protection. |
|
The basket and service group structures and
key pricing constraints are as follows: |
|
- A basket of residential local services has been created for
non-HCSAs. This basket is divided into two sub-baskets: basic residential
services and residential optional local services. The basket is subject to
a constraint of inflation less a productivity offset given that little
competition is anticipated in residential local services in most locations
over the next four years. However, in order to avoid the possibility that
the operation of the constraint might force price reductions which would
have a negative impact on the development of local competition, this basket
is subject to a deferral account mechanism. The disposition of the deferral
account will be reviewed annually.
|
|
- In order to provide additional pricing protection to customers, the
sub-basket of basic residential services in non-HCSAs is subject to a
constraint of inflation less a productivity offset, provided that
productivity does not exceed inflation. If productivity does exceed
inflation, the constraint will be set at zero. Services in this sub-basket
are also subject to a rate element constraint which limits increases in any
service rate element to 5% per year. The second sub-basket, which contains
residential optional local services in non-HCSAs, is not subject to a
basket constraint. However, some services in this sub-basket are subject to
a constraint which limits price increases to $1 per feature per year.
|
|
- A basket has been established for residential local services in
HCSAs. This basket is subdivided into two sub-baskets: basic residential
services and residential optional local services. No constraint is imposed
on the basket. However, the sub-basket of basic residential services is
subject to a constraint of inflation less a productivity offset, provided
that productivity does not exceed inflation. If productivity exceeds
inflation, the constraint will be set at zero. Services in this sub-basket
are also subject to a rate element constraint which limits increases in any
service rate element to 5% per year. Some residential optional local
services in the second sub-basket are subject to a constraint which limits
price increases to $1 per feature per year.
|
|
- Single-line and multi-line business local exchange services are
grouped in a single basket and subject to a constraint set at inflation. No
productivity offset is imposed. These services are also subject to a rate
element constraint limiting individual rate increases to 10% per year.
|
|
- Most services that were included in the other capped services basket
in the initial price cap regime continue to be assigned to a separate
basket which will also include non-forborne Competitive Segment services.
This basket is subject to a constraint of inflation less a productivity
offset. In addition, these services are subject to a rate element
constraint limiting rate increases to 10% per year.
|
|
- Services that are in the nature of an essential service or are
primarily used by competitors are assigned to the Competitor Services
basket. No constraint is imposed on this basket as a whole. However, the
basket is divided into two service groups which are subject to pricing
constraints: Category I Competitor Services (i.e., services in the nature
of an essential service) and Category II Competitor Services (i.e., other
competitor services).
|
|
- Services in the Category I Competitor Services group are generally
to be priced at Phase II costs plus a 15% mark-up. They are also subject to
a rate element constraint limiting rate increases to inflation less a
productivity offset, except for a limited number of services that are
already priced to reflect productivity gains. The rates for services in
Category II Competitor Services are capped at existing levels.
|
|
- Services which were grouped together and subject to frozen rate
treatment in the initial price cap regime (e.g., 9-1-1 service, Message
Relay Service) will continue to be subject to the same treatment in the
next regime.
|
|
- Public and semi-public pay telephones are placed in a separate
category and their rates are frozen until the Commission conducts a policy
proceeding on this service.
|
|
- All tariffed services not in one of the previous baskets or service
groups are classified as uncapped services and are not subject to any
upward pricing constraints.
|
|
|
|
The introduction of price cap regulation
|
1. |
In Review of regulatory framework,
Telecom Decision CRTC 94-19, 16 September
1994 (Decision 94-19), the Commission developed a regulatory framework for
the telecommunications industry intended to allow all Canadians, over time,
ubiquitous and affordable access to an increasing range of competitively
provided telecommunications services. The Decision 94-19 framework
encompassed a wide range of regulatory issues, including a new approach to
the regulation of the rates of the incumbent telephone companies, as well as
a framework for the introduction of competition into the local services
market. |
2. |
The framework for rate regulation
involved three key, interrelated initiatives: |
|
- the replacement of earnings regulation with price regulation. This new
method of regulation provided the incumbent telephone companies with
greater incentives to improve efficiency and introduce network and service
innovations;
|
|
- the splitting of the rate bases of the incumbent telephone companies
into competitive and utility segments, effective 1 January 1995, to
facilitate the transition to price regulation. The utility segment relates
mainly to the local and access operations of the companies (the Utility
Segment); and the competitive segment refers to services subject to varying
degrees of competition (the Competitive Segment). Earnings regulation was
maintained for the Utility Segment for the period 1995 to 1997; and
|
|
- a significant reduction in the subsidy of local access services paid by
users of long distance services. Ensuring that the rates for local access
services more closely reflected the costs of these services was necessary
to produce the benefits of price regulation, including increased incentives
to reduce costs.
|
|
These initiatives were implemented
via a number of Commission decisions, the most important for present purposes
being Price cap regulation and related issues, Telecom Decision CRTC
97-9, 1 May 1997 (Decision 97-9). |
3. |
In Decision
97-9, the Commission established the form of
price regulation that would apply to the major incumbent local exchange
carriers (ILECs). At that time, these companies were: BC TEL, Bell Canada,
The Island Telephone Company Limited (Island Tel), Maritime Tel & Tel Limited
(MTT), MTS NetCom Inc. (now MTS Communications Inc.) (MTS), The New Brunswick
Telephone Company, Limited (NBTel), NewTel Communications Inc. (NewTel), and
TELUS Communications Inc. (TELUS (Alberta)). The Commission notes that
subsequent to Decision 97-9, TELUS Alberta
and TELUS Communications (B.C.) Inc. (formerly BC TEL; hereinafter TELUS
(BC)) merged into TELUS Communications Inc. (TELUS). The Commission also
notes that Island Tel, MTT, NBTel and NewTel subsequently merged to become
Aliant Telecom Inc. (Aliant Telecom). |
|
The initial price cap regime
|
4. |
Decision
97-9 established a four-year price cap
regime for the Utility Segment, with a review to be initiated in the last
year of the regime. |
5. |
The Commission's price cap regime
was designed to achieve the following objectives: |
|
a) to render reliable and affordable
services of high quality, accessible to both urban and rural area customers; |
|
b) to foster competition in the
Canadian telecommunications markets; |
|
c) to provide incumbents with
incentives to increase efficiencies and to be more innovative, and with a
reasonable opportunity to earn a fair return for their Utility Segments; and |
|
d) to implement a price cap regime
that is simple, straightforward, easy to understand and reduces the
regulatory burden to the greatest extent possible. |
6. |
The structure and pricing
constraints in the initial price cap regime reflected both the state of
competition in various services, as well as the expectation for the
development of competition over the course of the price cap period. |
7. |
Under the price cap regime, certain
of the ILECs' Utility Segment services were grouped into a single basket of
capped services (Capped Services) subject to the price cap formula. This
formula has determined the maximum allowable aggregate change in prices, on
an annual basis, for the Capped Services. Aggregate rate changes for Capped
Services were limited to the rate of inflation minus a productivity offset of
4.5%. The productivity offset reflected the assumption that the ILECs could
become more productive, through, for example, reductions in input costs. The
price cap formula also took into account the financial impact of limited
exogenous factors arising from events beyond the ILECs' control. |
8. |
The single basket of Capped Services
was divided into three sub-baskets subject to additional pricing constraints.
For the first sub-basket, Basic Residential Local Services, average annual
rate increases could not exceed the rate of inflation. Additionally, no
individual rate element within the sub-basket could increase in smaller
telephone exchanges by more than 10% in any year. For the second sub-basket,
Single and multi-line local business services, individual rate elements for
single-line business services in smaller telephone exchanges could not
increase by more than 10% in any year. Finally, for the third sub-basket,
Other capped services, average annual rate increases could not exceed the
rate of inflation. |
9. |
Certain Utility Segment services
(Uncapped Services) were excluded from the Capped Services basket, including
optional local services. In addition, the Commission determined that certain
services required by local and toll competitors (Competitor Services) would
not be included in the Capped Services basket. However, Competitor Services
were required to be priced to recover their incremental costs and to make an
appropriate contribution to fixed common costs. |
10. |
In Implementation of price cap
regulation and related issues, Telecom Decision CRTC
98-2, 5 March 1998 (Decision 98-2), the
Commission determined implementation issues in connection with the price cap
regime, including the appropriate Utility Segment rates at the outset of the
regime (going-in rates). |
11. |
Saskatchewan Telecommunications
(SaskTel) was not subject to the first price cap regime, as it only came
under federal regulation on 30 June 2000. In SaskTel – Transition to
federal regulation, Decision CRTC
2000-150, 9 May 2000 (Decision 2000-150), the Commission approved a
transitional regulatory framework for SaskTel. The Commission determined,
among other things, that Utility service rates could not increase above the
levels established on 30 June 2000. The Commission also indicated that the
company would likely be included in the upcoming review of the initial price
cap regime. |
12. |
As noted above, in Decision
97-9, the Commission indicated that it would
conduct a review of the initial price cap regime in the fourth year of the
price cap period. In order to conduct that review in as effective a manner as
possible, the Commission initiated a proceeding in 2000 to determine the
scope of the review. |
|
Review of the price cap regime
|
13. |
In Proceeding to determine the
scope of the price cap review, Public Notice CRTC
2000-99, 14 July 2000 (PN
2000-99), the Commission requested comments on the scope of the upcoming
review of the price cap regime. Issues raised by the Commission included (a)
whether price cap regulation or the current price cap regime can permit
sustainable competition to evolve; (b) the criteria to measure the success of
the current price cap regime in achieving its goals and objectives; and (c)
the issues that should be considered in the proceeding to review the price
cap regime. |
14. |
After the close of the record of the
PN 2000-99 proceeding, the
Commission was informed that representatives of various stakeholders,
including ILECs, competitive local exchange carriers (CLECs), long distance
service providers, and consumer and public interest advocacy groups, had
initiated a series of consultations. The parties hoped to issue a joint
proposal to the Commission regarding the regulatory regime that should follow
the initial price cap regime. |
15. |
In light of these consultations, the
Commission postponed finalizing its conclusions with respect to the scope of
the price cap review. Ultimately, the parties were unable to reach consensus
on a proposal and notified the Commission of this fact. |
16. |
On the basis of the input from the
PN 2000-99 proceeding, as well
as Decision 97-9 and related decisions, the
Commission issued Price cap review and related issues, Public Notice
CRTC 2001-37, 13 March 2001
(PN 2001-37), to establish an appropriate regulatory regime to go into effect
in 2002. |
|
Scope of the present proceeding
|
17. |
In PN
2001-37, the Commission
indicated that it would consider whether the current form of price cap
regulation continues to represent an appropriate basis of regulation to
balance the interests of the three main stakeholder groups – consumers, ILECs
and competitors. |
18. |
The Commission also sought proposals
from parties as to the elements that should be included in the new regulatory
regime, including: |
|
a) the components of a price cap
formula, including the appropriate measure of inflation, the level and
applicability of a productivity factor, and the treatment of any exogenous
factors; |
|
b) the definition and treatment of
Capped and Uncapped Services; |
|
c) the service basket structure; and |
|
d) the length of the price cap
period. |
19. |
The Commission also invited
proposals on any changes to the current treatment of Competitor Service
rates; on the appropriate treatment of rates in high-cost serving areas
(HCSAs); and on the upward pricing constraints on the basic toll schedules. |
20. |
In addition, the Commission invited
comments on the appropriateness of including a quality of service component
in the price regulation regime, or other methods, such as targeted refunds to
customers, to address inadequate service quality. Further, the Commission
sought input on other benchmarks for consumer service, such as billing
policies, and on a consumer bill of rights. |
21. |
With respect to monitoring and
information reporting requirements, the Commission indicated that any
proposed changes should take into account the role such information plays in
ensuring the need for and effectiveness of competitive and consumer
safeguards. |
22. |
The Commission also stated that it
would review the major ILECs' service improvement plans (SIPs), filed
pursuant to Telephone service to high-cost serving areas, Telecom
Decision CRTC 99-16, 19 October 1999
(Decision 99-16). The purpose of the SIPs is to extend service to unserved
customers, and to upgrade service levels to underserved customers to achieve
the basic service objective as defined in Decision
99-16. |
23. |
Finally, the Commission stated that
while it had outlined a number of specific issues on which it sought comment,
parties could also submit comments on other issues or alternative proposals
relevant to the proceeding. |
24. |
In Public Notice CRTC
2001-37 – Price cap review and
related issues: Requests for clarification of issues and
determinations on public disclosure of information and on further responses
to interrogatories, Decision CRTC
2001-582, 10 September 2001, the Commission addressed requests for
clarification of issues made by TELUS and Bell Canada. Among other things,
the Commission confirmed that the issue of the mark-up on Competitor Services
would be considered in the context of possible changes to the current
treatment of Competitor Services rates. Accordingly, the Commission made the
record of the follow-up proceeding to Restructured bands, revised loops
and related issues, Decision CRTC
2001-238, 27 April 2001 (Decision 2001-238), regarding whether the
mark-up on local loop costs should be reduced from 25% to 15%, part of the
record of the present proceeding. |
25. |
In Public Notice CRTC
2001-37 – Price cap review and
related issues: Follow-up to Decision CRTC
2001-582, re requests for clarification of issues and determinations on
deficiencies and confidentialities, Decision CRTC
2001-618, 28 September 2001 (Decision
2001-618), the Commission addressed further requests for clarification, and
requests from Aliant Telecom, Bell Canada, MTS, and SaskTel (collectively,
the Companies), and TELUS that certain evidence be ruled outside the scope of
the proceeding. Among other things, the Companies stated that they were
unclear as to whether and to what extent the Commission intended to
re-examine the fundamental framework put in place for local competition. The
Companies stated that they prepared their evidence based on the assumption
that the Commission had already made certain key determinations in Local
competition, Telecom Decision CRTC
97-8, 1 May 1997 (Decision 97-8). The Companies also stated that the
fundamental framework was based on the view that local competition should be
facilities-based, with competitors relying increasingly on use of their own
facilities, and made fundamental distinctions between the pricing rules for
specified essential services and all other services. TELUS asked whether the
Commission intended to vary Decision 97-8. |
26. |
The Commission confirmed its view
that, while local competition, in the long term should be facilities-based
with competitors relying increasingly on use of their own facilities,
significant reliance on resale and unbundling would continue to be necessary
on a transitional basis. |
27. |
The Commission also confirmed that
the definition of "essential service" contained in Decision
97-8 and the current classification of
certain services as "essential" were not under consideration in the
proceeding. With respect to whether pricing rules for essential services were
under consideration, the Commission noted that services found to be essential
services in Decision 97-8 are also
Competitor Services (see Decision 98-2).
Therefore, the Commission stated that, insofar as pricing rules for
Competitor Services were clearly within the scope of the proceeding, policy
issues and evidence relating to the pricing of essential services were also
within the scope. |
|
The proceeding
|
28. |
The following companies were made
parties to this proceeding and directed to file evidence: Island Tel, MTT,
NBTel, NewTel, Bell Canada, MTS, SaskTel and TELUS. |
29. |
The Commission also invited evidence
and submissions from interested parties. A total of 53 individuals,
municipalities, provincial governments, corporations and other organizations
registered as interested parties. |
30. |
The following interested parties
filed submissions, interrogatory responses, comments and/or arguments: |
|
|
|
- Action Réseau Consommateur, the Consumers' Association of Canada,
Fédération des associations coopératives d'économie familiale, and the
National Anti-Poverty Organization (ARC et al.)
|
|
- AT&T Canada Corp. Inc. and AT&T Canada Telecom Services (AT&T Canada)
|
|
- BC Old Age Pensioners' Organization, BC Coalition for Information
Access, Consumers' Association of Canada (BC Branch), Council of Senior
Citizens' Associations of BC, Senior Citizens' Association of BC, Tenants
Rights Action Coalition, West End Seniors Network (BCOAPO et al.)
|
|
|
|
- Consumers' Association of Canada (Manitoba), Manitoba Society of
Seniors (CAC(Man.)/MSOS)
|
|
- Call-Net Enterprises Inc. (Call-Net)
|
|
- City of Calgary (Calgary)
|
|
- Commissioner of Competition, Competition Bureau (the Commissioner of
Competition)
|
|
- Consumers' Association of Canada (Alberta) (CAC Alta)
|
|
- Distributel Communications Limited (Distributel)
|
|
- Futureway Communications Inc. (Futureway)
|
|
- GT Group Telecom Services Corp. (Group Telecom)
|
|
- Microcell Telecommunications Inc.
|
|
- Manitoba Keewatinowi Okimakanak Inc. (MKO)
|
|
|
|
- Paytel Canada, Inc. (Paytel)
|
|
- Primus Telecommunications Canada Inc.
|
|
- Rogers Wireless Inc. and Rogers Communications Inc. (RCI)
|
|
|
|
- Shaw Cablesystems GP (Shaw)
|
|
|
|
|
|
- Bell Canada, Aliant Telecom, MTS, SaskTel (the Companies)
|
31. |
ARC et al. submitted evidence
jointly with the following parties: BCOAPO et al., CAC (Man.)/MSOS, MKO and
Calgary. Testimony from expert witnesses on a variety of subjects was
included in these various joint submissions. For simplicity, references in
this Decision to these joint submissions are attributed to ARC et al. |
32. |
A total of 1,935 letters and e-mails
(3,876 signatures) were received by the ILECs and the Commission. The
breakdown by ILEC was as follows: TELUS - 1,086; Aliant Telecom - 388; Bell
Canada - 357; MTS - 38; and SaskTel - 9. The remaining 57 letters and e-mails
were general comments not directed at a specific carrier. |
33. |
Of the correspondence addressed to
TELUS, 360 letters express disagreement with the approach used for its SIP
and with having to pay to provide service to those who chose to live in
remote areas. Six letters related to quality of service, while the rest
objected to the rate increases. |
34. |
Most of the 388 letters and e-mails
(representing 1,847 signatures) sent to Aliant Telecom objected to the
company's proposal to increase rates. |
35. |
Bell Canada received 357 letters and
e-mails; 55 related to its SIP, while the remainder generally disagreed with
any kind of rate increase. |
36. |
An oral hearing was held from
1 October to 22 October 2001 before Vice-Chairman David Colville (chairman of
the hearing), and Commissioners Barbara Cram, Jean-Marc Demers, Stuart
Langford, David McKendry, Andrée Noël, and Ronald Williams. |
37. |
The oral hearing began with comments
from the general public, followed by cross-examination of the evidence by the
parties. Written comments from the general public were filed up to 15 October
2001, and oral argument by parties was presented on 22 October 2001. Written
arguments were filed on 22 October 2001 and written reply arguments on
31 October 2001. |
|
|
|
The form of regulation
|
38. |
In this proceeding, parties
addressed whether price cap regulation of the ILECs should continue; whether
the initial price cap regime met the objectives established in Decision
97-9; and whether the form of price cap
regulation applied to the ILECs should be modified and, if so, in what ways. |
39. |
The Companies were of the view that,
despite some weaknesses, the initial price cap regime was a major improvement
over rate of return regulation. TELUS submitted that price regulation was a
superior regulatory regime that provided incentives for efficiency and
investment which closely emulated those of a competitive marketplace. |
40. |
AT&T Canada was of the view that the
objectives of the initial regime were appropriate and should be carried
forward into the next regime, although greater focus should be given to
fostering sustainable competition. RCI submitted that while the initial price
cap regime was not successful in all respects, the general approach and
objectives continued to be in the public interest. ARC et al. supported the
continuation of a price-based form of regulation. ARC et al. submitted that
there was value in regulatory consistency for all parties, and that
significant change at this time would increase uncertainty about the form of
the next regime and increase regulatory risk unnecessarily. |
41. |
Overall, there was a broad consensus
that the initial price cap regime provided better incentives for improved
efficiency and innovation than rate base/rate of return regulation. In
particular, the evidence in the present proceeding indicated that the ILECs
have achieved productivity gains well beyond the productivity offset of 4.5%
established in Decision 97-9. In light of
these results, the general view of parties was that price cap regulation
during the initial period had been an improvement over traditional rate
base/rate of return regulation, and that the Commission should continue to
apply price cap regulation to the ILECs. |
42. |
The Commission agrees that price
regulation remains more effective than rate base/rate of return forms of
regulation in fulfilling the objectives of the Telecommunications Act
(the Act). In particular, price regulation provides the ILECs with stronger
incentives to minimize costs, to operate more efficiently, and to be more
innovative in the provision of services. Accordingly, the Commission has
decided to continue to apply price regulation to the ILECs. |
43. |
However, it was evident from the
record of this proceeding that there were a number of concerns regarding
certain aspects of the initial price cap regime. In particular, a number of
parties highlighted the unequal distribution of the benefits from
productivity gains and also commented on quality of service issues. There
were also concerns about the interrelationship between the state of local
competition and the structure of the initial regime. |
|
The state of local competition
|
44. |
According to the Report to the
Governor in Council: Status of Competition in Canadian Telecommunications
Markets and Deployment/Accessibility of Advanced Telecommunications
Infrastructure and Services, September 2001 (GIC Report) (filed in this
proceeding as CRTC Exhibit No. 5), by year end 2000, competitors served
771,000 business lines, or approximately 10.3% of the business market.
Competitors served 30,000 residential lines, or about 0.2% of the residential
market. |
45. |
On its face, the GIC Report
indicates that local competition is in its early stages. With respect to the
residential market, the GIC Report indicates that competition is almost
non-existent. |
46. |
Parties were generally agreed that
local competition was developing slowly. CLECs have focused on serving the
downtown cores of large urban areas, with occasional entry, mostly via resale
of ILEC facilities, into medium-sized urban areas. Based on evidence filed by
parties during the proceeding, CLECs have attained market shares of around
10% in the local business sector overall, and market shares of up to 16% of
the local business market in some large urban centres. The evidence also
indicates that in the residential market, competitors have achieved a market
share of approximately 0.2%. |
47. |
Overall, the evidence filed by
parties in this proceeding reinforced the perspective provided by the GIC
Report. Facilities-based local competition is generally limited to the
business market in large urban areas. There is some resale-based competition
in the business market in other areas. There is little, if any, local
competition of any type in the residential market. |
48. |
In the Commission's view, a number
of factors have contributed to the slow growth of local competition,
particularly of facilities-based competition. For example, CLECs incurred
significant start-up and on-going costs. They were required to lease services
or facilities from the ILECs in order to serve many of their customers, at
the same time incurring costs for co-location in ILEC central offices. In
addition, CLECs continued to face challenges gaining access to multi-dwelling
buildings, non-carrier support structures and obtaining municipal
rights-of-way on acceptable terms. While CLECs could address these
difficulties, in part, through resale of ILEC services, or through unbundled
local loops, both of these alternatives resulted in reduced margins. |
49. |
As far as the future is concerned,
the ILECs stated that they expect continued entry and market share growth by
wireline competitors, including ILEC affiliates, wireless carriers and cable
companies using Internet protocol telephony or other technologies. The
Companies forecast that by 2005, CLECs would serve approximately 23% of
business network access services (NAS) in the Companies' territories; while
TELUS estimated a market share loss of 20% of business NAS in its territory
by the same year. |
50. |
The ILECs expected slower market
share gains by CLECs in the residential market, but anticipated that the
cable companies would offer local service over cable facilities in the 2003
to 2005 period. The ILECs noted that Eastlink Limited (Eastlink) had gained
significant market share in Nova Scotia. In addition, they noted that
Call-Net was re-entering the local residential market in Alberta and Toronto.
TELUS projected that by 2005 or 2006, cable companies would provide local
service to about 10% of NAS in its territory. The ILECs also expected that
some wireline users would switch to wireless services, principally as an
alternative to a second landline and, to a limited extent, as the only access
to the telephone network. |
51. |
AT&T Canada and Call-Net submitted
that there were still barriers to entry to the local market, noting that the
ILECs could have a cost advantage over CLECs with their size, scale economies
and a ubiquitous network. Call-Net stated that, in addition, the ILECs have
numerous incumbency advantages, such as depreciated networks, low customer
acquisition costs and close to 100% market share. |
52. |
AT&T Canada expected that
competitors would serve 12.8% of business lines in Bell Canada's territory,
and 11% in TELUS' territory by 2005; and that competitors would serve 2% of
residence lines in Bell Canada's territory, and 1.8% of residence lines in
TELUS' territory. |
53. |
Group Telecom was of the view that
the present regulatory framework for local competition was generally
appropriate, and submitted that change should focus on two key areas. First,
under certain conditions, CLECs should be permitted to provide service to
customers who are now under long-term contracts to the ILECs. Second, the
Commission should oversee more closely the activities of ILECs' affiliates in
the ILECs' home territories, to prevent the avoidance of regulatory
obligations through inappropriate use of affiliates. |
54. |
RCI submitted that cable companies
were currently focused on converting their networks to digital video, and
that RCI expected to enter the local market only in the period 2003 to 2005.
In RCI's view, local telephony provided over cable facilities would not have
a significant impact on competition in the local market during the next price
cap period. |
55. |
ARC et al. submitted that current
wireless services were not a good substitute for wireline services, because
wireless carriers rated their services by minutes of use and did not permit
multiple extensions to one line. ARC et al. observed that the ILECs'
predictions of market share losses to new technologies during the initial
price cap period had not materialized. ARC et al. also observed that ILECs
would likely be among the bigger players using any new technology. |
56. |
The Commissioner of Competition
submitted that due to pricing, coverage, suitability for data services,
service quality and battery life issues, wireless services were not a
substitute for wireline services at this time. |
57. |
Based on current trends, the
Commission believes it is likely that competition in the business market will
continue to increase over the next few years. The Commission also considers
that, in the business market segment, the ILECs' market power is reasonably
limited in areas where competitors have facilities or are otherwise present
through the resale of ILEC services, notably through Centrex resale. |
58. |
In the residential market, however,
virtually no competition developed during the initial price cap period, with
the limited exception of some areas in the Maritimes. Overall, competitors
achieved minimal market share in residential basic local exchange services. |
59. |
In addition, there was no evidence
to suggest that competitors had made any inroads into the market for
residential optional local services. On the contrary, the ILECs were able to
increase revenues from these services through rate increases without
experiencing a significant reduction in demand. |
60. |
The Commission considers that
competitive entry into the residential market will continue to be limited in
the foreseeable future. Based on the record of the present proceeding, it is
unlikely that the larger cable companies will enter the residential market in
the near future on any significant scale. |
61. |
The Commission is also of the view
that investment to construct new facilities to serve residential customers
will be limited during the next price cap period given the current financial
state of the industry and the significant costs involved. |
62. |
Finally, given the close link
between local exchange service and optional local services, the Commission
considers it unlikely that competitors will have much success selling
optional local services to residential customers who receive their local
exchange service from the ILECs. Consequently, in the Commission's view, the
lack of competition in residential local exchange service will continue to be
accompanied by a lack of competition in residential optional local services. |
63. |
Accordingly, the Commission does not
anticipate that competition will be sufficient to discipline the ILECs'
residential local exchange and residential optional local service rates
during the next price cap period. |
64. |
In light of the current state of
local competition and its projected development over the next several years,
the Commission has decided it is necessary to introduce a variety of
adjustments to the price regulation regime applicable to the ILECs. These
changes are detailed in Parts III, IV and VI of this Decision. |
|
Balancing stakeholder interests
|
65. |
A number of parties pointed out that
there was a significant disparity in the distribution of the benefits of
price regulation during the initial price cap period. For example, while the
price of local business services dropped significantly in some areas,
residential local service rates (both basic and optional) rose in virtually
all locations. Also, while the ILECs enjoyed significantly improved returns
on their Utility Segment services, the financial health of competitors - who
relied on ILEC services in order to compete – deteriorated seriously. These
developments were considered problematic by some parties for several reasons. |
66. |
First, when considered together, the
increases in residential local service rates, the financial weakness and the
limited market penetration of competitors, and high returns achieved by the
ILECs, raised concerns about whether an appropriate balance had been struck
in the initial regime between the interests of the different stakeholders
(customers, ILECs and competitors). |
67. |
For example, ARC et al. and BCOAPO
et al. argued that the Commission should attempt to ensure that some of the
productivity gains generated by the industry under price cap regulation
accrue to residential customers. For their part, AT&T Canada, Call-Net and
RCI each argued that the Commission should give greater emphasis to the needs
of competitors in order to foster local competition. |
68. |
Second, the disparity between the
benefits flowing to business and residential customers was significant.
Between 1998 and 2000, business rates in urban areas declined in every
province except Saskatchewan. SaskTel was not subject to price cap regulation
during the initial price cap period. On average, business rates in urban
areas declined by 15% in Ontario and Quebec, 11% in British Columbia, and 5%
in Alberta. In contrast, during this same time period, rates for residential
local services (basic and optional) rose in all ILEC territories. |
69. |
The fact that these two classes of
customers (i.e., business and residential) received such widely different
rate treatment under the initial price cap regime reinforces the view that
the interests of different groups were not equitably balanced. |
70. |
Third, the downward trend in ILEC
local business rates squeezed the margins available to competitors and
therefore acted as an impediment to competitive entry. The Commission
considers that, if this situation were to continue, it would have a
significant adverse effect on the development of local competition – to the
detriment of both customers and competitors. The effect would initially be
manifested in the business market where the price reductions occur. However,
over the longer term there would likely be an impact on competitive entry
into the residential market as well, since CLECs would have difficulty
achieving economies of scope and scale on the same basis as the ILECs. |
71. |
In light of these developments, the
Commission is of the view that adjustments are necessary to the basket
structure and pricing constraints of the price cap regime applied to the
ILECs. These modifications are discussed in detail in Part IV of this
Decision. |
|
Quality of service
|
72. |
During the initial price cap period
the ILECs, with the exception of SaskTel, filed quality of service reports,
as required by Quality of service indicators for use in telephone company
regulation, Telecom Decision CRTC 97-16,
24 July 1997 (Decision 97-16). Those reports indicated that quality of
service problems occurred during much of the period for each of the ILECs. |
73. |
From 1998 to 2000, all of the ILECs
who filed reports had substandard performance for many months each year.
Despite some improvement for several companies in 2000, compared to earlier
years, the number of months of substandard performance was unacceptably high.
For example, in 2000, Bell Canada failed to meet the required monthly
standards 48 times across all indicators, while TELUS (BC) and TELUS
(Alberta) each had substandard performance 42 times. In 2001, only Bell
Canada consistently met all indicators. |
74. |
The ILECs' unsatisfactory quality of
service record during the initial price cap regime indicates that measures
must be put in place to ensure that customers receive reliable services of
high quality. Furthermore, the Commission is not persuaded that competitive
pressures in either the retail or competitor services markets will be
sufficient to ensure that ILECs will meet approved service quality standards
during the next regime. Consequently, the Commission has concluded that
regulatory changes are required to address this concern. These changes are
discussed in detail in Part VI of this Decision. |
|
Earnings sharing
|
75. |
An adjustment to the price cap
regime that was discussed in the present proceeding was earnings sharing. An
earnings sharing mechanism involves setting an earnings threshold which, when
reached, triggers the sharing of additional revenues with customers – either
through rebates or via other rate adjustments. |
76. |
ARC et al. suggested earnings
sharing should be considered if the Commission felt there was a significant
risk of setting the productivity target either too high or too low. Under ARC
et al.'s proposal, ILECs would be allowed to choose from a number of
alternatives ranging from a high productivity offset with no earnings
sharing, to a low offset with significant earnings sharing. ARC et al. noted
that most jurisdictions have had sufficient confidence, beyond the first
round of price cap regulation, to establish a productivity target without
earnings sharing. |
77. |
The ILECs opposed the introduction
of an earnings sharing overlay to the price cap regime. |
78. |
The Companies submitted that the
most costly consequence of earnings sharing would be a reduction in
incentives for infrastructure investment due, in part, to greater uncertainty
regarding the stream of financial returns from large-scale investments. |
79. |
The Companies also submitted that,
if an earnings sharing mechanism were implemented, the ILECs' administrative
burden would be even greater than under rate of return regulation. A price
cap/earnings sharing regime would require the production, monitoring and
analysis of Utility Segment financial results on an annual basis and the
determination of an allowable rate of return – as is required under rate of
return regulation – as well as demonstrated compliance with the pricing
constraints associated with the price cap formula. |
80. |
TELUS submitted that a regulated
firm would have little incentive to improve efficiency if it believed the
regulator would take any savings and pass them on to consumers in the form of
lower rates. Similarly, TELUS argued that large-scale investments in
infrastructure modernization would not be attractive if the regulator could
appropriate the returns from such investment. TELUS also argued that, under
pure price cap regulation, business and residential consumers would benefit
from more choice in suppliers and technologies, and lower prices overall,
than under any monopoly-style form of regulation. |
81. |
The Commissioner of Competition
submitted that the current price cap structure, with no earnings sharing
overlay, should be maintained in order to ensure continuity and reduce
uncertainty for consumers, industry participants and investors. |
82. |
In the Commission's view, an
earnings sharing mechanism would re-introduce a number of significant
elements of earnings regulation and thereby diminish the advantages of price
regulation. The approach proposed by ARC et al. could alleviate, to some
extent, the disincentives typically associated with earnings sharing, since
the ILECs would have input on the extent of earnings sharing that would apply
to them. However, this approach would increase administrative requirements
for both the ILECs and the Commission due to the additional process involved
in calculating and tracking the earnings sharing overlay. Permitting the
ILECs to operate under different regimes would also likely create confusion
and uncertainty in the industry. Overall, the Commission considers that the
disadvantages of such an approach would outweigh its benefits. Consequently,
the Commission has decided that the next price cap regime will not include
earnings sharing. |
|
Objectives of the next price cap regime
|
83. |
In light of the state of local
competition and the concerns identified above, the Commission considers it
necessary to assess whether the objectives of the initial price cap regime
should be carried forward to the next regime, or whether some modifications
to those objectives are necessary. |
84. |
Most parties who commented on the
objectives of price regulation were generally of the view that the four
objectives identified in Decision 97-9 for
the initial price cap regime continue to be relevant and should guide the
Commission in its determinations for the next regime. |
85. |
The Companies stated that their
proposal had been fashioned to meet the objectives that a) telephone service
prices should continue to remain affordable, b) the benefits of
facilities-based competition be widespread, and c) the environment be
conducive to investments being made in the telecommunications industry. |
86. |
AT&T Canada submitted that the
objectives of the upcoming regime should not be any different than the
objectives of the initial price cap regime. To achieve these objectives, AT&T
Canada argued, the upcoming regime should correct an imbalance in the initial
regime and focus more closely on fostering sustainable competition. |
87. |
Group Telecom suggested that the
overriding objective of the next regime should be the removal of existing
barriers to facilities-based competition and the maintenance of balanced
incentives for entry on a facilities basis. |
88. |
RCI submitted that the objectives
for the initial price cap regime continued to be in the public interest on a
going forward basis. However, in RCI's view, not all of these objectives were
satisfied by the initial price cap regime and certain adjustments were
required in the next price cap period to correct this imbalance. |
89. |
ARC et al. argued that in addition
to the objectives of affordability, competition, and investment, as put
forward by the Companies, other critical objectives included reliability and
quality of service, rural/urban equity, creating incentives for greater
efficiency and innovation, and ensuring just and reasonable rates for both
retail and wholesale customers of ILEC Utility Segment services. In ARC et
al.'s view, the next price cap regime should balance the interests of
stakeholders by ensuring fair rates for competitors and end-users and
providing an opportunity for ILECs to earn a fair return. |
90. |
The Commissioner of Competition
submitted that the primary goal of price cap regulation is to replicate, as
nearly as possible, a dynamically competitive market for telecommunications.
The Commissioner of Competition also suggested that the price cap regime
should meet the multiple objectives of fostering increased reliance on market
forces with the introduction of local competition, rendering affordable
telecommunications services, allowing pricing flexibility to the ILECs, and
protecting competitors from anti-competitive pricing. |
91. |
Most parties also agreed that the
interests of the three main stakeholders – customers, ILECs and competitors –
should be balanced under the regime. |
92. |
In light of these comments and the
matters discussed above, the Commission considers it appropriate to modify
the objectives of the initial price cap regime for the purposes of the next
regime. |
93. |
First, given the importance of
balancing the interests of customers, ILECs and competitors, the Commission
believes this goal should be identified as an additional, explicit objective. |
94. |
Second, with respect to the
objective of fostering competition, most parties who commented on this point
emphasized that the goal should be the fostering of facilities-based
competition. The Commission is of the view that facilities-based competition
is the most appropriate way to ensure high quality, affordable service, as
well as innovation and service differentiation. Accordingly, this objective
has been reworded. |
95. |
Third, the Commission notes that the
third objective for the initial regime made express reference to the
opportunity for the ILECs to earn a fair return for their Utility Segments.
This objective was implemented by conducting a revenue requirement review in
order to set going-in rates for the initial regime. |
96. |
In PN
2001-37, the Commission
indicated that it did not intend to conduct a revenue requirement assessment
of Utility Segment results unless an ILEC proposed rate increases to be
effective at the outset of the next price cap regime, other than increases
that would reduce the subsidy requirement in HCSAs. None of the ILECs
proposed that rates increase at the outset of the next regime. Instead,
parties focused on the price cap framework, including the basket structure
and the productivity offset. |
97. |
As discussed in greater detail in
Part X of this Decision, the concept of a Utility Segment no longer has
relevance in the next regime given the expanded scope of the pricing
constraints the Commission has decided to impose, as well as the introduction
of a Phase II-based subsidy requirement in 2002. |
98. |
Accordingly, the Commission has
concluded that it is neither necessary nor appropriate to retain a reference
to ILEC Utility Segment earnings in the objectives for the next price cap
regime since the focus of price cap regulation is prices, not earnings. The
wording of this objective has therefore been modified accordingly. |
99. |
In light of the above, the
regulatory framework set out in this Decision is designed to achieve the
following objectives: |
|
a) to render reliable and affordable
services of high quality, accessible to both urban and rural area customers;
|
|
b) to balance the interests of the
three main stakeholders in telecommunications markets, i.e., customers,
competitors and incumbent telephone companies; |
|
c) to foster facilities-based
competition in Canadian telecommunications markets; |
|
d) to provide incumbents with
incentives to increase efficiencies and to be more innovative; and |
|
e) to adopt regulatory approaches
that impose the minimum regulatory burden compatible with the achievement of
the previous four objectives. |
|
Price cap period
|
100. |
In Decision
97-9, the Commission noted that a longer
price cap period would provide a greater opportunity for the benefits of
price cap regulation to materialize, while a shorter price cap period would
reduce the cumulative effects of any error in setting the price cap
parameters. The Commission determined that a four-year period would result in
an appropriate balancing of these factors. |
101. |
In the present proceeding, the
Companies supported a second price cap period of at least four years,
assuming their proposed regulatory framework were adopted. They suggested
that the appropriate length of time for the new price regulation period would
depend on the nature of the pricing constraints and the other parameters
adopted for that period. The Companies argued that, if the period between
reviews were too short, the incentives associated with price regulation would
be blunted. In their view, a short period would not provide sufficient time
to assess whether the constraints and parameters chosen were allowing price
cap objectives, such as fostering the development of local competition, to be
attained. |
102. |
TELUS proposed a five-year price
regulation plan. TELUS was of the view that a shorter duration would dampen
incentives for infrastructure investment and cost-saving innovation, since
the ILECs would be unlikely to realize the full value of these measures in
less than five years. TELUS also submitted that new entrants would benefit
from a longer period since it would provide a stable, predictable regulatory
framework and rate structure, which are critical considerations when
companies are making long-term capital investments. TELUS argued that a
five-year plan would still be short enough so that any errors in setting the
parameters of the plan would not compound in perpetuity. TELUS also noted
that since this is the second price regulation plan, the Commission is now
more experienced with this form of regulation, and could move to a longer
duration of plan without fearing unforeseen detrimental effects. |
103. |
TELUS proposed that the initial
five-year plan automatically be renewed for successive three-year periods
unless, as a result of a Commission-initiated review, a determination was
made to end the plan. The company proposed that any end-of-term review, and
ongoing monitoring, should focus primarily on the development of competition.
TELUS also proposed that the Commission allow for the possibility of a
stakeholder-negotiated alternative to a review. |
104. |
A number of parties, including AT&T
Canada, Calgary and Call-Net, supported a term of four years. The
Commissioner of Competition, RCI and Shaw considered a period of four or five
years to be appropriate. CAC Alta supported a term of three years, proposing
that parties should also have the option of applying to the Commission for
longer or shorter terms. CAC Alta considered five years to be too long,
noting that the uncertain development of competition would be reason enough
for a shorter rather than longer term. |
105. |
The Commission considers that, going
into the next price cap period, there remains a need to balance the benefits
inherent in a longer plan with those offered by a shorter plan. A longer plan
provides a greater opportunity for the benefits of price cap regulation to
materialize, and also provides the stability of a predictable regulatory
framework for all stakeholders. A shorter plan has the advantage of limiting
the impact of unanticipated outcomes of the price cap regime that could
unfairly benefit one group of stakeholders at the expense of another. |
106. |
The Commission notes that extensions
or abridgements of the plan, if granted on a case-by-case basis, could result
in staggered price cap periods among the regulated companies. This could
favour some ILECs over others, depending on market conditions and other
factors present at the time of a particular review. As well, plan assessments
performed at different times would result in administrative inefficiency,
since end-of-term reviews would no longer be performed for all ILECs at the
same time. |
107. |
The Commission further notes that
most parties supported a minimum term of four years. The Commission agrees
that a four-year plan would allow the benefits of price cap regulation to be
further realized, while providing for the possibility of a timely adjustment
to correct the regulatory framework for any errors in its structure or to
reflect the evolution of competition over the price cap period. Accordingly,
the Commission has determined that the duration of the next price cap regime
will be four years. |
108. |
The Commission considers that a
review toward the end of the next price cap period offers the Commission the
best opportunity of examining how well the plan is working and to modify the
regulatory framework, as necessary. Accordingly, the Commission has
determined that a review of the next price cap regime will be initiated in
the final year of the plan. |
|
III Competitor services
|
|
Definition and Classification
|
|
Background
|
109. |
Competing local, long distance and
wireless carriers, as well as resellers, rely on a variety of ILEC services
in order to interconnect with the ILECs' networks, configure their own
networks and provide services to their end-users. The pricing of these ILEC
services has an important impact on the ability of the competing carriers to
succeed in the marketplace, as well as on the incentives for them to
construct their own facilities. |
110. |
In Decisions
97-9 and 98-2,
the Commission concluded that ILEC services, which were either in the nature
of an essential service or were used primarily by telecommunications service
providers, should be made available to competitors at rates based on Phase II
costs plus an appropriate mark-up. These services were grouped in a category
called Competitor Services and were not subject to the overall price cap
formula. Other ILEC services which might be used by competitors, but were
also used by retail customers, were included in either the Other Capped
Services sub-basket or the Competitive Segment. |
111. |
In PN
2001-37, the Commission sought
comments on possible changes to the treatment of Competitor Services. This
Part of the Decision addresses the assignment to and pricing of services in
the Competitor Services category. |
|
Position of parties
|
112. |
Almost all parties who filed
comments addressed issues related to Competitor Services. Most of these
comments envisioned that the Commission would continue the approach to
Competitor Services set out in Decisions 97-9
and 98-2, subject to possible adjustments.
However, AT&T Canada and Call-Net each filed major proposals which would
significantly change the treatment of Competitor Services. AT&T Canada and
Call-Net argued that implementing their respective proposals would be
critical to achieving sustainable competition. Given the scope and scale of
their proposed changes, these two proposals are discussed first. |
|
AT&T Canada's proposal |
113. |
AT&T Canada submitted that the
current approach to setting rates for Competitor Services was not
satisfactory. In AT&T Canada's view, there were problems associated with the
use of Phase II costs for rating purposes; namely, the inability to audit
Phase II studies, the extent to which the studies do not relate to each other
or to the financial statements of the ILECs, and the natural tendency of the
ILECs to be cautious and therefore to potentially overstate costs. In light
of these concerns, AT&T Canada argued that Phase II costing was not the
appropriate tool to determine competitively neutral rates for access to ILEC
network facilities. |
114. |
AT&T Canada proposed a significantly
different approach to Competitor Services. Under AT&T Canada's proposal,
among other things, a new category of services would be created comprising
all services in the existing Competitor Services category, as well as
other services used by competitors, including services such as Digital
Network Access (DNA), Centrex, switched trunks, Primary Rate Interface (PRI)
and Digital Exchange Access (DEA). |
115. |
AT&T Canada proposed that a CLEC be
entitled to a Facilities Based Carrier (FBC) rate. The FBC rate would grant a
CLEC a 70% aggregate discount from existing tariff rates for services in the
new Competitor Services category. That is, the CLEC's total bill for the
relevant services would be calculated according to tariffed rates and then
discounted by 70%. |
116. |
AT&T Canada argued that a 70%
discount would be appropriate since, in its view, this would approximate the
cost advantage enjoyed by the ILECs given their ability to self-supply the
relevant services. |
117. |
In order to arrive at the 70%
figure, AT&T Canada used its own on-net cost data for the services in
question. AT&T Canada argued that this approach was necessary because the
relevant cost data for the ILECs were not available. |
118. |
In calculating the resulting
savings, AT&T Canada assumed that: (a) its network effectively resembled an
ILEC network serving approximately the same number of customers, and (b) the
entire customer base could be served on the network. The second step involved
the comparison of the estimated on-net costs with AT&T Canada's actual cost
of serving the same customer base using a mix of AT&T Canada's own facilities
and ILEC facilities (i.e., the current mix of customers served on-net and
off-net). |
119. |
Based on the mix of network
facilities and services that it purchased from the ILECs in 2000,
AT&T Canada's cost analysis indicated that the ILECs enjoy a 70% self-supply
cost advantage relative to the 2000 tariff rates charged to competitors for
these same facilities and services. AT&T Canada argued that the ILECs' actual
cost advantage would likely be greater than 70% given that the ILECs would
enjoy greater economies of scale, density and scope than AT&T Canada. |
120. |
AT&T Canada emphasized that the 70%
discount would apply to the aggregate cost of a group of services rather than
a particular network element or service. Consequently, in AT&T Canada's view,
there would be no concern about a CLEC receiving a particular service below
cost. AT&T Canada argued that applying the 70% discount to a CLEC's aggregate
expenditures would ensure that the ILEC recovered both its incremental costs
of supplying this same set of services, as well as a contribution towards
fixed common costs. |
121. |
AT&T Canada stated that the
objective of the FBC rate was to neutralise the cost advantage the ILECs
enjoy as a result of their incumbency and ubiquitous network infrastructure.
According to AT&T Canada, its proposal would remove a significant economic
barrier to entry in the local market. |
|
Parties' comments on AT&T
Canada's proposal |
122. |
The Companies described the
conceptual framework of AT&T Canada's proposal as nonsensical. They argued
that an ILEC's cost of self-supply could not be measured using costs in a
competitor's network. They also argued that AT&T Canada's 70% discount had
nothing to do with the ILECs' cost of self-supply, or even with AT&T Canada's
own cost of self-supply. In their view, AT&T Canada was effectively proposing
that it should receive a discount so that its total expenditures would be
equivalent to what it would continue to pay ILECs, if AT&T Canada had its own
ubiquitous network. The Companies therefore argued that AT&T Canada would
continue to use $304 million worth of ILEC services but would not have to pay
for those services since it could theoretically self-supply those services,
even though it would not actually incur the costs of self-supply. |
123. |
The Companies also argued that AT&T
Canada had greatly understated the financial impacts of its proposal. They
submitted that AT&T Canada's estimate ignored the impact of providing the
discount to other companies that would qualify for the discount. The
estimates also ignored the potential for other Canadian carriers to register
as CLECs (and operate on some minimal scale) in order to receive the 70%
discount on other services (e.g., switching and aggregation which is required
only to provide long distance service). |
124. |
TELUS argued that AT&T Canada's
proposal was based on the implicit assumption that all its customers would
suddenly move from their physical location so as to be located on AT&T
Canada's current network topography, whereas, in reality, customers do not
move to networks; networks are built to the customer. TELUS argued that ILECs
incur a cost in serving customers; either by leasing facilities from other
carriers, or by incurring the costs of building a network and that, in
reality, networks are not free. In TELUS' view, no one would invest any
capital to build facilities if it could obtain such facilities at prices so
significantly below ILECs' costs. |
125. |
Both the Companies and TELUS argued
that rates based on Phase II costs permitted competitors to take advantage of
the ILECs' economies of scale and scope. In particular, competitors did not
pay the comparatively high price for access facilities based on their limited
volumes and service mixes, but instead enjoyed the same cost of network
access as the ILECs. |
126. |
With respect to AT&T Canada's FBC
rate proposal, the ILECs argued that it could lead to individual competitor
services being priced below incremental cost, resulting in a subsidy to the
CLECs. The ILECs argued that they would be disadvantaged because they would
have to recover fixed common costs associated with services used by
competitors from retail rates in other competitive markets. |
127. |
Group Telecom opposed AT&T Canada's
proposal on the grounds that it attempted to sustain a resale-based entry
strategy and discouraged investment in competitive facilities. In Group
Telecom's view, facilities-based new entrants could not compete against the
ILECs if their services and facilities were available at a 70% discount. This
would eliminate an important source of revenues for new entrants (i.e., the
lease of facilities to other competitors). The end result of AT&T Canada's
proposal, in Group Telecom's submission, would be to undermine the viability
of facilities-based competitors like itself and reinforce the ILECs'
facilities monopoly. |
128. |
While Distributel generally
supported AT&T Canada's proposal, it opposed AT&T Canada's suggestion that
the 70% discount only be available to CLECs. In Distributel's submission,
resellers played an important role in the market place. Distributel argued
that resellers would be driven out of business very quickly if their
competitors were entitled to the 70% discount and they were not. |
|
Call-Net's proposal |
129. |
Call-Net submitted that the core
principle of its proposal would be to reduce rates charged by the ILECs for
critical network services provided to competitors. Call-Net proposed that a
Carrier Segment be created that would include all regulated services
purchased by Canadian carriers from the ILECs. These services would be priced
at their Phase II costs without a mark-up. |
130. |
Call-Net noted that cost studies
would be required for any services in the Carrier Segment which were not
already priced based on their Phase II costs in order to establish their
rates. Since it would take some time for these cost studies to be developed
and assessed, Call-Net argued that the Commission should establish an interim
regime which would involve repricing the relevant services to their
incremental costs using the results of existing cost studies as proxies. |
131. |
Call-Net argued that, since the
ILECs acknowledged that they did not need to recover their fixed common costs
on a service-by-service basis, the lack of mark-up on the Phase II costs of
the services in the proposed Carrier Segment should not be problematic. Under
Call-Net's overall price cap proposal, ILECs would be permitted to keep both
the rollover effects of exogenous factors permitted during the initial price
cap regime, as well as their annual productivity gains. The associated
revenues would, in Call-Net's submission, ensure full recovery of the ILECs'
fixed common costs. |
132. |
Call-Net argued that, under its
proposal, competing Canadian carriers would be able to supplement their
networks and extend their reach on a "business case basis" that matched that
of the ILECs. In Call-Net's submission, this would help overcome the
historical advantage enjoyed by the ILECs as a result of their ubiquitous
networks. |
133. |
Call-Net also submitted that, if its
proposal were accepted, competitors would continue to have incentives to
build their own facilities in order to achieve the following objectives: to
derive scale and scope efficiencies, to realize the accounting benefit of
moving the cost from the expense category to the category of a capital
expenditure, to gain greater control over the costs of facilities and greater
control over the quality of service provided over the facilities and an
opportunity to differentiate on the basis of quality. |
|
Parties' comments on Call-Net's
proposal |
134. |
The Companies submitted that
Call-Net's proposal would permit high-cost companies to enter the market
successfully and that this result would be contrary to economic efficiency.
They also argued that the fact that ILECs might recover their fixed common
costs disproportionately across services did not imply that rates for
services used by competitors did not need to incorporate a contribution to
fixed common costs. |
135. |
TELUS argued that, if productivity
gains were used to offset the ILECs' foregone mark-up on Carrier Segment
services, as suggested by Call-Net, this would amount to taking productivity
gains twice. The productivity gains on non-Carrier Segment services would be
taken the first time by effectively moving them to the Carrier Segment, and
taken again through the real price reductions that competition would demand
in the market for the non-Carrier Segment services. TELUS argued that this
would not provide an ILEC with a reasonable opportunity to recover its costs
because reductions in competitor services rates would drive down retail rates
by an amount greater than the productivity gains that might be realized in
the provision of those services. |
136. |
The Companies and TELUS both argued
that Call-Net's proposal would make resale more attractive than
facilities-based competition, contrary to the Commission's express goal of
promoting facilities-based competition. |
137. |
Group Telecom argued that it would
be difficult for other carriers to compete with the ILECs with respect to
services in the Carrier Segment since these competitive carriers have fixed
common costs they must recover, but no alternative source of revenues of the
type proposed by Call-Net for the ILECs. Group Telecom also argued that the
Call-Net proposal would artificially sustain Call-Net's resale-based entry
strategy by mandating subsidized pricing for ILEC services. According to
Group Telecom, Call-Net's proposal would impede the development of
facilities-based competition. |
138. |
Distributel supported the general
thrust of Call-Net's proposal but opposed the suggestion that only Canadian
carriers be entitled to enjoy the benefit of the reduced rates for Carrier
Segment services. Distributel argued that resellers should be entitled to
comparable treatment since they play an important role in the competitive
market. |
|
Analysis of the AT&T Canada and Call-Net proposals
|
139. |
The Commission considers that the
AT&T Canada and Call-Net proposals give rise to concerns in regard to four
matters: i) their potential effect on retail prices; ii) their potential
effects on the wholesale market; iii) their implications for cost recovery;
and iv) the implications of the proposals for facilities-based competition.
Each of these concerns is discussed, in turn. |
|
Effect on the retail services
market |
140. |
In the Commission's view, the AT&T
Canada and Call-Net proposals would negatively affect the retail market in at
least two ways. |
141. |
First, if ILEC services used by
competitors were priced at incremental cost, as Call-Net proposes, or subject
to an effective 70% discount, as proposed by AT&T Canada, ILECs would need to
recover fixed common costs from other retail services. This would put upward
pressure on the prices for those services. However, ILECs would only be able
to raise prices in those situations where they did not face competition, and
then only to the extent permitted by any Commission-imposed pricing
constraints. The overall effect would be to distort the efficient functioning
of the retail market. |
142. |
Second, if competitors enjoyed lower
input prices, this would permit them to lower their retail prices. This would
put downward pressure on the ILECs' retail prices, despite the fact that this
pressure would not be based on the superior efficiency of competitors. Once
again, this would have a distorting effect on the retail market. |
143. |
Overall, the broader the range of
services and the deeper the price discount applied to those services, the
greater the distorting effect would likely be on the retail market. The
Commission concludes that the rates charged for Competitor Services must be
set at a level which would not distort the retail market. |
|
Effect on the wholesale market |
144. |
Carriers such as Group Telecom and
AT&T Canada compete in the wholesale market, supplying facilities and
services to other telecommunications service providers. The Commission agrees
with the submission of Group Telecom that the wholesale market is an
important source of revenue for facilities-based entrants, as well as a means
of reducing the risk of capital recovery. If a carrier serves both the
wholesale and retail markets, it has two opportunities to gain revenue from
an end-user: directly via retail services and indirectly via wholesale
services provided to the carrier that provides retail service to the
end-user. |
145. |
In the Commission's view, the
development of a wholesale market is important to the overall development of
facilities-based competition. Foreclosure of this market to new entrants
would seriously undermine the evolution of facilities-based competition. |
146. |
In the Commission's view, both the
AT&T Canada and Call-Net proposals would have a significant negative effect
on the wholesale market since it is unlikely any competitor could match ILEC
prices that were based either on incremental costs or on an effective 70%
discount. |
|
Implications for cost recovery |
147. |
To date, the Commission's general
approach to Competitor Services has been to price them on the basis of Phase
II costs plus a mark-up. Many of these services, such as those identified as
being essential and near-essential, have been priced at Phase II costs plus a
25% mark-up. Other services, such as Direct Connection (DC) service, have
been priced with higher mark-ups. |
148. |
AT&T Canada proposed that the
Commission abandon its Phase II costs plus a mark-up method and instead adopt
the FBC rate approach. AT&T Canada argued that the FBC rate approach would be
more representative of the real cost of providing these services on the
ILECs' networks. Call-Net suggested that the Commission modify its approach
by setting rates for essential, near-essential and some retail services used
by carriers at their Phase II costs without any mark-up. |
149. |
The ILECs, RCI and Group Telecom
recommended that the Commission retain its current rating approach for
Competitor Services. The Companies stated that adopting AT&T Canada's 70%
discount proposal would result in interconnection, and essential and
near-essential services being priced at 62.5% below cost. Even under
Call-Net's proposal, the relevant services would not contribute to fixed
common costs, resulting in a competitive advantage for competitors in the
end-user market. TELUS stated that pricing services used by competitors at
incremental cost would impose the burden of recovering the fixed common costs
entirely on the ILECs, which would have to recover these costs solely from
their retail services. |
150. |
RCI supported TELUS' view that it
would be consistent with recognized economic theory for interconnection rates
to reflect incremental costs plus an appropriate mark-up to cover fixed
common costs. |
151. |
The Commission is of the view that
services in the nature of an essential service should be priced so as to
permit ILECs to recover the appropriate service costs and to provide an
appropriate contribution, while at the same time giving competitors an
opportunity to compete effectively in the marketplace. |
152. |
Having reviewed AT&T Canada's
proposal and the relevant comments of parties, the Commission finds that AT&T
Canada's approach has the effect of giving AT&T Canada the benefit of the
ILECs' networks without providing for the recovery of the associated costs. |
153. |
The Commission considers that Phase
II costing does not raise comparable concerns, since the costs involved are
those of the ILECs themselves on a service by service basis. Moreover, Phase
II costs are intended to reflect economic costs. As discussed in Part X of
this Decision, the Commission intends to initiate a proceeding to review
Phase II costing in order to determine if any modifications would be
appropriate. |
154. |
As far as Call-Net's proposal is
concerned, the Commission considers that services provided to competitors
should generally be priced to recover Phase II costs and to provide an
appropriate contribution. Accordingly, the Commission is of the view that the
removal of the mark-up, as suggested by Call-Net, is not appropriate. |
|
Implications for facilities-based
competition |
155. |
The Commission's regulatory
framework is intended to foster facilities-based competition. The Commission
believes that fostering facilities-based competition is the most appropriate
way to ensure high-quality, affordable service, as well as innovation and
service differentiation. |
156. |
The Commission is concerned that
classifying all services used by a competitor as Competitor Services – or
subjecting them to pricing as proposed by AT&T Canada and Call-Net – could
introduce a significant disincentive to the construction of new facilities
and thereby impair the development of facilities-based competition. |
157. |
The Commission notes that both AT&T
Canada and Call-Net stated their intent to continue to build facilities even
if their proposals were granted. However, competitors would almost certainly
prefer to use and resell ILEC facilities and services if the margins were
comparable to or better than those achievable through self-provisioning.
There would be little, if any, incentive to take the risk of constructing
facilities in such a case. |
158. |
For example, under the AT&T Canada
proposal, a CLEC with a minimal local network could find it more profitable
and less risky to focus its primary efforts on the resale of an ILEC's
Centrex service. The arbitrage opportunity created by the 70% discount might
increase competition, but it would not be facilities-based. The resale
approach would require little capital, entail less risk and permit much
quicker roll-out of service. |
159. |
Similarly, the Commission is of the
view that a carrier would generally not find it advantageous to build a
network if it could obtain services at an ILEC's incremental cost as proposed
by Call-Net. |
160. |
The Commission considers that, in
order to foster facilities-based competition, mandated cost-based rates are
necessary for certain facilities and services. However, it is also important
to ensure that such pricing be justified on a case-by-case basis, and that
these services be priced at a level that does not create a disincentive to
the construction of facilities. In the Commission's view, AT&T Canada's and
Call-Net's proposals raise serious concerns in both regards. |
|
Conclusions regarding the AT&T
Canada and Call-Net proposals |
161. |
Based on the analysis above, the
Commission is of the view that neither the AT&T Canada nor the Call-Net
proposal would foster facilities-based competition. On the contrary, each
proposal would introduce disincentives for the construction of facilities.
They would also undermine the development of a wholesale market and likely
lead to significant distortions in the retail market. Finally, neither
approach would lead to just and reasonable rates. |
162. |
In light of these conclusions, the
Commission does not consider it appropriate to adopt either the AT&T Canada
or the Call-Net proposal for the classification and pricing of Competitor
Services, except as discussed below with respect to DNA service. |
|
Definition of Competitor Services
|
163. |
In Decision
98-2, the Commission concluded that it was
appropriate to assign an ILEC service to the Competitor Services category if
the service was in the nature of an essential service or was primarily used
by telecommunications service providers. Since Decision
98-2, a number of new services have been
added to Competitor Services, such as trunk-side wireless access
interconnection service and MTS' call forward busy service. |
164. |
In the present proceeding, TELUS,
Group Telecom and RCI did not consider it appropriate to change the criteria
for classifying a service as a Competitor Service. |
165. |
The Companies submitted that, in the
next price cap period, Competitor Services should include only
interconnection services, co-location services and services which provide
essential and near-essential facilities. The Companies argued that services
that can be self-supplied or are available from alternative sources of supply
or, in some cases, can use essential/near-essential services as a substitute,
should be excluded. |
166. |
The Commission considers that
restricting the composition of the Competitor Services basket, as proposed by
the Companies, would unduly limit the development of facilities-based
competition. |
167. |
The Commission has decided to
establish two categories within the Competitor Services basket in order to
clarify the pricing treatment of these services. The first category comprises
those services which are in the nature of an essential service and will be
known as Category I services. Services in the nature of an essential service
comprise interconnection and ancillary services required by Canadian carriers
and resellers interconnecting to the ILEC's networks, including essential
services as defined in Decision 97-8; and
near-essential services, such as those that were the subject of Local
competition Sunset clause for near-essential facilities, Order CRTC
2001-184, 1 March 2001 (Order
2001-184). This last group of services are critical inputs required by
competitors in light of the very limited competitive supply for these
services. |
168. |
Category I Competitor Services will
be priced on the basis of Phase II costs plus the mandated mark-up, with
certain exceptions as discussed below. |
169. |
The second group of Competitor
Services will be those services developed for use by telecommunications
service providers - other than services in the nature of an essential service
- and will be known as Category II Competitor Services. The pricing of these
services will be determined on a case-by-case basis. |
170. |
The assignment of Competitor
Services between Category I and Category II is set out in Appendix 1 to this
Decision. |
|
Proposed additions to Competitor Services
|
171. |
Distributel argued that Centrex tie
trunk terminations should be reclassified as a Competitor Service because
they are "primarily used by telecommunications service providers".
Distributel also proposed a regulatory mechanism to implement a revenue-based
interpretation of the phrase "primarily used". The Companies submitted that
Distributel's request was outside the scope of this proceeding. |
172. |
With respect to Distributel's
proposed revenue-based interpretation of "primarily used", the Commission
considers that revenue is not the only factor relevant to the identification
of an ILEC service as a Competitor Service. The Commission also considers
that implementing Distributel's proposal would impose an undue regulatory
burden. Accordingly, the Commission concludes that it is not appropriate to
adopt Distributel's proposal with respect to the interpretation of "primarily
used by telecommunications service providers". |
173. |
Centrex tie trunk terminations are a
component of Centrex service, a local exchange retail service, and are used
by competitors to compete in the local and long distance markets. The tie
trunk terminations are not a stand-alone service and were not designed
specifically for telecommunications service providers. Instead, they are one
component of Centrex service which is available to both business customers
and competitors. |
174. |
Resale of Centrex service, including
tie trunk terminations, is a means by which competitors provide service to
end-users, as evidenced by the fact that Bell Canada derives 78% of its tie
trunk termination revenues from competitors. However, as tie trunk
terminations are one component of Centrex service, this is not sufficient, in
the Commission's view, to warrant classification of tie trunk terminations as
a Competitor Service. Accordingly, Centrex tie trunk terminations will not be
classified as a Competitor Service. |
|
Digital Network Access service
|
175. |
The ILECs' DNA tariffs provide
customers, including competitors, with the digital transmission of
information from the customer's premises to another premises within the local
exchange at 1.544 Mbps (DS-1), or 44.736 Mbps (DS-3), or from the customer's
premises to the rate centre in the local exchange to connect with other
network services at transmission speeds of DS-0 (64 Kbps), DS-1 or DS-3. In
addition, companies, such as Bell Canada, offer a service that provides
transmission at 155 Mbps (OC-3) and 622 Mbps (OC-12) which is available
between two points in the same local exchange or to connect a customer's
location to a network service at a wire centre. |
176. |
The DNA tariff structure includes
four elements: the access, link, intra-exchange channel and a channelizing
feature. The access component of DNA service is the transmission facility
from the customer premises to the ILEC's serving central office. The
intra-exchange channel component provides transmission facilities between the
ILEC central offices that are within a local exchange. The link component
provides the connection between the access component and a competitor's
equipment or other ILEC services. The channelizing feature is used to
channelize a DS-1 service into DS-0 channels or a DS-3 service into DS-1
channels. |
177. |
In Decision
97-8 and in Order
2001-184, the Commission
provided for the unbundling of essential and near-essential Type A and Type B
loops and priced them at Phase II costs plus an appropriate mark-up (mandated
cost-based rates). Type C loops, which are a DNA service at a DS-1
transmission speed, were not part of the unbundling regime established in
Decision 97-8. Type C loops are, however,
included in the ILECs' unbundled loop tariffs, but are priced in accordance
with the DNA service rates. |
178. |
The similarities between Type A and
B loops and DNA service are: |
|
i) they all provide access from a
customer premise to the ILEC central office; and |
|
ii) they are all used as inputs in
the provision of end-user services such as local, toll and data. |
179. |
Call-Net argued that a DNA service
should be provided to competitive carriers at mandated rates. In support of
this proposal, Call-Net indicated that its expenditures on DNA service had
represented its largest expenditure on ILEC telecommunications services in
2000. Call-Net stressed the importance of DNA service as an input to the
services of both competitors and ILECs, including a wide variety of local,
toll and data services. Competitors also used DNA service to connect their
switches with those of the ILECs. AT&T Canada made similar points in support
of the proposal. |
180. |
The Companies opposed Call-Net's
proposal, arguing that a Type A-5 loop, a specific category of Type A loop,
combined with x-DSL technology, can be used by competitors to derive a
DNA-like DS-1 service. The Companies were of the view that this would
effectively lower the cost of DS-1 service for competitive carriers. |
181. |
Call-Net identified several problems
with using a Type A-5 loop to derive its own DNA-like DS-1 service. First,
Call-Net argued there was a significant difference in the ILECs' mean time to
repair (MTTR) for DNA service as compared to Type A loops. It stated that
ILEC customers had contracts for DNA service that quote an MTTR of four
hours, whereas competitors had an MTTR of 24 hours for Type A loops. Second,
Call-Net argued that there were certain technical restrictions in using a
Type A-5 loop as a DNA service. For example, provisioning a Type A-5 loop for
DNA service requires copper continuity, no loading coils, no bridged taps and
a limited distance from the ILEC central office. Costs and time required to
condition the Type A-5 loops were also raised by Call-Net, particularly given
the roll-out of new fibre technologies. Finally, Call-Net argued that it is
not possible to derive useful transmission speeds at the DS-3 level with a
Type A-5 loop. For these reasons, Call-Net concluded that the Companies'
proposed solution was not viable. |
182. |
The Commission agrees with
Call-Net's assessment of the difficulties of using a Type A-5 loop as a
cost-effective way of provisioning DNA service, and considers that the
reliance on such an approach would place competitors at a competitive
disadvantage. |
183. |
For this reason and with a view to
fostering facilities-based competition, the Commission concludes that there
is a need for the ILECs to develop a competitor-DNA service and that this
service should be assigned to Category I Competitor Services. |
|
Competitor-DNA service
|
|
Components of the service
|
184. |
As noted above, the DNA service
tariff has four components: access, link, intra-exchange channels and a
channelizing feature. The Commission has determined that the access component
and the link component should be included in a competitor-DNA service, as
provided for in the following paragraph. |
185. |
The access component of the
competitor-DNA service is to provide a transmission facility at DS-0, DS-1,
DS-3, OC-3 and OC-12 transmission speeds from an end-customer premise to a
competitor's switch within the same ILEC serving wire centre area or to the
ILEC serving wire centre, in which case it must terminate on the competitor's
co-located equipment. The link component, being an integral part of the
access, is to allow for connection at transmission speeds up to the OC-12
level. |
186. |
In order to avoid distortions in the
retail market for DNA service, a competitor may not engage in simple resale
of the competitor-DNA service. |
187. |
With respect to the intra-exchange
component is concerned and as far as the access component other than as set
out in the previous paragraph, the Commission is of the view that the record
is insufficient to establish whether they should be part of the
competitor-DNA service. The Commission does not consider that the
channellizing feature should be included in a competitor-DNA service. |
188. |
The Companies argued that
competitors can supply DNA service when it is used to provide the facilities
that link a CLEC's co-location site (in the ILEC's central office) and the
CLEC switch. TELUS also made reference to the fact that CLECs were
self-supplying connecting facilities between co-location sites and their own
switches in a significant number of cases. Group Telecom stated that all of
its 62 existing co-location sites were provisioned with its own fibre, as
would be the case for most of its planned co-location sites. |
189. |
The Commission recognizes there is
some self-supply by carriers of intra-exchange facilities. However, it is
unclear from the record the extent to which carriers can self-supply or have
competitive alternatives to intra-exchange facilities. Prior to making its
determination on this matter, the Commission requires additional information
from parties. The follow-up process for this purpose is addressed below. |
190. |
The creation of a competitor-DNA
service would result in a reduction in revenues for the ILECs. As discussed
later in this part of the Decision, it is appropriate to compensate the ILECs
for the reduction in DNA service revenues attributable to the introduction of
the competitor-DNA service. |
191. |
Accordingly, each ILEC is directed,
when it files its tariff for a competitor-DNA service, to submit an estimate
of the annual reduction in DNA revenues attributable to the introduction of
the competitor-DNA service, on the basis of 31 December 2001 demand from
competitors for DNA service. |
|
Interim competitor-DNA service tariff
|
192. |
In order to implement the
competitor-DNA service as expeditiously as possible, the Commission directs
each ILEC to issue an interim competitor-DNA service tariff no later than
14 June 2002. The interim tariff is to have the following terms and
conditions: |
|
- service is available only to competitors to provide access between an
end customer premise to a competitor's switch within the same ILEC serving
wire centre area or to the ILEC serving wire centre, in which case it must
terminate on the competitor's co-located equipment;
|
|
- a competitor may not engage in simple resale of the competitor-DNA
service;
|
|
- rates for the access component are to be set at the rate levels
currently approved for the access component of DNA service when it is
provided under a five-year contract term; and rates for the link component
are to be set at the rate levels currently approved for the link component
of DNA service, reduced by 40%;
|
|
- the service is to be provisioned on a monthly basis with an average
four-hour MTTR, determined on a monthly basis; and
|
|
- the link component is to be available solely for use in conjunction
with the access component of competitor-DNA service to connect to the
competitor's equipment.
|
|
Access Tandem service
|
193. |
The Commission has examined the
pricing of services in the Competitor Services category and finds that the
Access Tandem service rates require reassessment. The Access Tandem service
is similar in many respects to DC service which has benefited from
significant cost reductions over the past few years. It could be expected
that the costs of Access Tandem service would also have declined. The process
for the review of Access Tandem service rate is discussed below. |
|
Call-Net's proposal to waive loop order service charges
|
194. |
Call-Net proposed that the
Commission waive ILEC service charges associated with the provision of
unbundled loops for residential customers. Call-Net argued that waiving these
charges is necessary to "jump-start" local competition in the residential
market and to lower the costs of customer acquisition. |
195. |
The Companies and TELUS argued that
Call-Net's proposal would provide incentives for uneconomic entry and
compromise economic efficiency by sending incorrect price signals to the
marketplace. In their view, Call-Net's proposal would permit a CLEC to avoid
the full costs of acquiring a new customer, and CLECs otherwise marginally
too inefficient to compete would, by virtue of the subsidy, find it
profitable to enter the market. |
196. |
The Commission recently held a
proceeding to review loop service order charges that led to Interim
approval for revised unbundled loop-service order charge, Decision CRTC
2001-694, 16 November 2001. In that
decision, the Commission approved significant rate reductions. The Commission
notes that the service charge for loop orders is not avoidable and causes the
ILECs to incur various provisioning costs. Accordingly, the Commission
concludes that it would not be appropriate to waive the ILECs' loop order
service charges as Call-Net proposed. |
|
Mark-up on Category I Competitor Services
|
|
Background
|
197. |
In general, the services in Category
I Competitor Services have been priced on the basis of Phase II cost plus a
25% mark-up. In PN 2001-37,
the Commission invited comments on possible changes to the treatment of
Competitor Services, including the mandated mark-up. The Commission also
asked parties to provide their views on whether the mark-up for Competitor
Services currently tariffed with a 25% mark-up should be reduced to 15%. |
198. |
The possibility of reducing the 25%
mark-up to 15% was the subject of the follow-up proceeding to Decision
2001-238 which focused on the
appropriate level of mark-up for the ILECs' unbundled loop service. As noted
above, the record of the Decision 2001-238
follow-up proceeding has been made part of the record of the present
proceeding. For convenience, the Decision
2001-238 follow-up proceeding is referred to as the "Loop mark-up
proceeding" hereafter. |
199. |
The Commission notes that, as it is
addressing the appropriate level of mark-up in respect of virtually all
Category I Competitor Services in this Decision, with the exceptions noted
below, it will not be necessary for it to make a separate finding in the Loop
mark-up proceeding. |
200. |
The Commission notes that there are
three services in Category 1 Competitor Services for which the associated
rates do not include any mark-up. The Equal Access Start-up rate was designed
to specifically recover equal access start-up costs. Co-location construction
charges resulting from sub-contracted work, pursuant to Co-location,
Telecom Decision CRTC 97-15, 16 June 1997
(Decision 97-15), are flowed through to co-locators. The Billing and
Collection Accounts Receivable Management Discount service is rated on the
basis of an estimate of percentage of revenues billed that are uncollectible.
|
201. |
The Commission notes that the
determination of an appropriate level of mark-up for a given service's costs
is a decision related to pricing rather than costing. |
202. |
As indicated previously, for the
purposes of costing Competitor Services, the Commission will continue to
utilize the Phase II costing method. Phase II costs measure prospective
incremental costs of a particular service. These costs are based on the
present worth of future economic cashflows over a multi-year study period
associated with providing a service. The present-worth calculations rely on
time value of money principles and are determined based on a forward-looking
cost of capital. The approach is based on the principle that providing a
given service in order to meet the anticipated demand for that service causes
a company to incur additional costs to those that it would incur if it did
not provide the service. It is only those costs that are included. |
203. |
By design, therefore, Phase II costs
do not capture a company's fixed common costs, since those are not incurred
as a result of offering the service. Phase II costs are influenced by recent
technology developments and substitutions, recent operational developments
and solutions, and as discussed below, may bear little or no resemblance to
the embedded plant operations and costs. The phrase "embedded cost
differential" refers to the difference between embedded costs and Phase II
current costs. |
204. |
Historically, the level of mark-up
used in respect of rates for Category I Competitor Services has been
generally designed to provide a contribution to the recovery of two broad
categories of costs. The first category is fixed common expenses, such as the
ongoing corporate overhead costs that do not vary with the company's offering
of services and that are therefore not included in a Phase II cost study. The
second category is the embedded cost differential. These costs include
annualized capital costs not included in Phase II studies, such as service
start-up capital costs that are not incurred to provide a specific service or
changes in the costs of given equipment over time. In addition, this
differential reflects the fact that embedded costs reflect a mix of newer and
older technologies, whereas Phase II costs reflect growth technologies. This
differential is a sunk cost and is therefore not included in the Phase II
cost study. |
205. |
In Decision
92-12, the Commission stated that a mark-up
can be viewed as providing a contribution to common and access costs as well
as to the differences between Phase II current costs and Phase III embedded
costs (which generally exceed Phase II costs). While initially not allowing
for a mark-up on the network interconnection charge, the Commission
subsequently determined that pricing of the separate components should
generally include a 25% mark-up. |
206. |
The Commission stated in Decision
97-8 that essential facilities, and other
facilities to which mandated pricing is applied, should be priced to
recognize fixed common costs in addition to Phase II costs. These facilities
should also be priced so as not to unduly deter facilities-based competitive
entry. |
207. |
In Changes to the contribution
regime, Decision CRTC 2000-745,
30 November 2000 (Decision 2000-745), the Commission noted that: (a) in
pricing certain services, it has in the past applied a 25% mark-up on the
Phase II costs to contribute to the recovery of the company's fixed common
costs along with the embedded cost differential; (b) in the context of
calculating the total subsidy requirement, it is not appropriate to include
the embedded cost differential; (c) it expected that the ILECs' fixed common
costs will decline in a competitive environment as a result of increased
operational efficiencies; and (d) in the context of calculating the total
subsidy requirement, a mark-up of 15% would provide a sufficient level of
contribution to recognize the ILECs' fixed common costs. |
|
Positions of parties
|
208. |
The Companies submitted that a
mark-up of 25% reflects the balancing of different regulatory objectives and
that there is no need to lower the mark-up. In the Companies' view, such a
reduction would lead to competitive inequity and would hinder the development
of facilities-based competition. |
209. |
The Companies submitted in the Loop
mark-up proceeding that the overall mark-up for unbundled local loops should
include a mark-up to recover the embedded costs associated with local loop
plant, and a mark-up to recover the fixed common costs of the ILECs. |
210. |
Under the Companies' proposal, a
cost-based percentage mark-up would be determined based on average percentage
mark-ups required to recover (i) fixed common expenses and (ii) embedded
costs, weighted respectively by the proportions of expenses and capital in
the Phase II loop cost studies. Under this proposal, the percentage mark-up
required to recover the company's fixed common expenses would represent a
corporate average based on the ratio of the company's total functional
operating expenses (FOE) classified as fixed common costs over total company
Phase II expenses (which consist of demand or service-driven FOE adjusted to
capture the related variable common costs). By contrast, the percentage
mark-up required to recover embedded costs would be based on the ratio of
depreciation expense associated with the embedded loop plant to annual
depreciation expense associated with current loop capital expenditures. The
Companies calculated the mark-ups required under their proposals using the
costs specified in Decision 2001-238.
Based on these analyses, the total mark-up appropriate for unbundled loops
was estimated at 37.5% for Bell Canada, 33.6% for Aliant Telecom, and 44.9%
for MTS. |
211. |
With respect to other essential and
non-essential services, the Companies submitted that the same principles used
to develop the estimated mark-up for unbundled loops would be applicable.
However, due to the absence of data related to embedded capital, the
Companies submitted that the ILECs did not have specific service level data
available that would permit the identical approach to be followed in the case
of these services as proposed for unbundled loop services. |
212. |
The Companies submitted that the
incremental costs associated with non-loop essential and near-essential
services were in contrast to loops, predominantly non-capital related
expenses. The Companies noted that this meant that the fixed common expense
mark-up (estimated at 26.4%, 18.4% and 34.5% for Bell Canada, Aliant Telecom
and MTS, respectively) would have a greater weight in determining the mark-up
on non-loop essential and near-essential services than was the case for
loops. The Companies suggested that the capital costs associated with
non-loop related essential and near-essential services were primarily related
to electronic equipment, the costs of which have been falling over time,
implying that the mark-up associated with embedded capital costs for non-loop
related essential and near-essential services would certainly be positive.
Hence, the overall mark-up applicable to non-loop related essential and
near-essential services would be greater than a mark-up based only on the
fixed common expense mark-up. Thus, according to the Companies, a mark-up of
at least 25% would be justified for these non-loop related essential and
near-essential services. |
213. |
TELUS submitted that rates for the
services in question must be maintained at least at the level of Phase II
costs plus a mark-up of 25%. TELUS argued that its ability to recover its
embedded costs would be in jeopardy if the Commission decreased the level of
mark-up used to calculate rates for Competitor Services, as TELUS would be
required to include a mark-up of greater that 25% on remaining services
(other than rates for Competitor Services and residential services). |
214. |
TELUS submitted in the Loop mark-up
proceeding that the data and the terms required to determine mark-ups were
complex, and that it was essential to establish uniform definitions for costs
and mark-up. The mark-up should, in TELUS' view, allow for the recovery of
two broad categories of costs. The first category would include fixed and
common non-capital expenses, such as the expenses classified and defined as
fixed common costs in the Phase II manuals, as well as other expenses that
were not included in Phase II studies or in the fixed common cost category
such as Official Telephone Service. The second category would include
annualized capital costs not included in Phase II studies, such as start-up
capital that was not incurred to add to the network to provide any specific
service. Together, these two categories of costs, referred to by TELUS as
fixed and common costs, must in the company's view be included in the
mark-up, if it was to have a reasonable opportunity of recovering its total
Utility Segment current costs. TELUS further submitted that the difference
between embedded and current capital cost should also be recovered as an
additional and separate adjustment. |
215. |
TELUS did not support the adoption
of a service-specific mark-up. TELUS argued that, if a service-specific
mark-up were set without considering the mark-up for all other Utility
Segment services, there would be no way to evaluate whether the total Utility
service revenues would over or under-recover total Utility Segment costs. |
216. |
TELUS submitted that its evidence
fully supported the Commission's finding in Decision
97-8 that total Utility Segment Phase III
costs exceeded the Phase II costs by more than 25%. TELUS indicated that,
although it had stated on more than one occasion that it would accept a 25%
mark-up, the new evidence demonstrated that the required mark-up, regardless
of the approach used, was greater than 25% and that the required percentage
mark-up was different for each ILEC. TELUS argued that it was the
Commission's duty to set just and reasonable rates for each company
separately and, as the Commission now had before it evidence that
demonstrated that ILEC-specific mark-ups were required, it should establish
mark-ups on that basis. |
217. |
TELUS proposed two separate methods
to calculate the average percentage mark-up. Under the first approach, an
average percentage mark-up would be calculated by taking the ratio of the
fixed common costs associated with the Utility Segment services as a whole to
the total Utility Segment Phase II cost (sum of Utility Segment service Phase
II costs). Under the second approach, the difference between the total
Utility Segment Phase III cost and the total Utility Segment Phase II cost
would be calculated, and this difference would be divided by the total
Utility Segment Phase II cost. Under TELUS' two alternative approaches,
similar average percentage mark-ups for TELUS' Utility Segment, of 35.4% and
36.7% respectively, were obtained. |
218. |
TELUS submitted that the record of
the Loop mark-up proceeding also demonstrated the need for a broader Phase II
and mark-up review than TELUS had recommended in the past. In TELUS' view,
this review should include an audit of Phase II costs and current fixed and
common costs as well as an audit of the Phase II processes, methodologies and
implementation so that one consistent approach could be adopted nationally. |
219. |
In the Loop mark-up proceeding,
SaskTel submitted that it had provided data to support the need for a minimum
mark-up of 20.6% to recover its fixed costs. In SaskTel's view, a mark-up of
25% continues to be appropriate for the recovery of both fixed common costs
and shared costs. |
220. |
In the Loop mark-up proceeding,
Call-Net and AT&T Canada noted the high variability in the Companies' mark-up
estimates. They pointed out, for example, that Bell Canada had proposed a
mark-up of 163% for unbundled loops to recover embedded costs in its initial
submission, but in its final comments had submitted that a mark-up of 41% was
required. Call-Net and AT&T Canada submitted that, because the level of ILEC
output had increased substantially, the relative level of fixed common costs
must have decreased and would continue to do so. They further submitted that
the ILECs had over-estimated the differences between embedded and current
capital expenditures, over-estimated the amount of fixed common costs and put
forward proposals to shift disallowed Phase II costs into the mark-up. |
221. |
Call-Net and AT&T Canada argued
that, if accepted, the ILECs' proposals would thwart local competition by
raising the rates paid by entrants for unbundled loop facilities. Call-Net
and AT&T Canada submitted that the ILECs had failed to justify the continued
use of a 25% mark-up, and that a mark-up in the range of 8% to 10% would be
more than sufficient to allow the ILECs to recover their fixed common costs. |
222. |
Group Telecom argued that, despite
the many years of debate surrounding the issue of the appropriate mark-up, no
reliable cost justification for the 25% level of mark-up has ever been
provided or even attempted by the ILECs. Group Telecom noted that the ILECs
had for several years claimed that it was not possible to justify the level
of mark-up on the basis of costs. Group Telecom further submitted that the
ILECs had not made a case for the continued use of the 25% mark-up for
unbundled loops. |
223. |
Group Telecom commented on TELUS'
proposed methodology and noted that TELUS had relied on a ratio of annual
fixed common costs to annual total Phase II costs. Group Telecom submitted
that the aggregate Phase II costs calculated for TELUS' Utility and
Competitive Segments were not reliable because Phase II costs were not
available for all services, and argued that TELUS has made an arbitrary
adjustment to determine the Phase II costs of those services for which
costing information was not available. Group Telecom noted that not all of
the Phase II costs had been filed with the Commission in the context of the
tariff approval process. Group Telecom further noted that, even in the case
of the cost studies that had been filed, the degree of regulatory scrutiny
had varied. For example, in respect of the Phase II costs of retail services,
scrutiny through the imputation test was typically much reduced by comparison
with the scrutiny to which cost studies for essential and near-essential
services were subjected. As a result, Group Telecom submitted that the
Commission could not have sufficient confidence in the aggregate Phase II
costs for it to rely on these costs in establishing the required mark-up. |
224. |
Group Telecom recommended that any
attempt to determine a cost-based percentage mark-up to be applied to Phase
II loop costs should be based on an average of the components considered
necessary to recover fixed common expenses and any embedded cost
differential, weighted respectively by the proportions of expenses and
capital in the Phase II loop costing studies. Group Telecom further submitted
that the ILECs had provided no persuasive evidence to support their request
for a mark-up greater than 15%. Group Telecom argued that, in fact, a 15%
mark-up provided a significant contribution to the recovery of any excess of
embedded over Phase II capital costs, contrary to the Commission's
expectation in Decision 2000-745. Group
Telecom recommended that the Commission adopt a 15% mark-up in establishing
rates for unbundled loops on a final basis. |
225. |
Futureway submitted that Bell
Canada's expenses had significantly declined since the 25% mark-up had
initially been set, and that there were compelling reasons to reduce the
mark-up to a level lower than 15%. |
|
Commission determination on the mark-up
|
226. |
In the Loop mark-up proceeding,
Group Telecom submitted that a 15% mark-up on Phase II loop costs would
permit each ILEC to recover a corporate average percentage of fixed common
expenses, and would in addition provide a significant contribution towards
the recovery of the embedded cost differential. The Commission notes that
Group Telecom's analysis relied on the Companies' proposed cost-based
percentage mark-up method, which determines a blended average percentage
mark-up that considers the recovery of fixed common expenses and embedded
capital costs, weighted respectively by the proportions of expenses and
capital in the Phase II loop cost studies. Under Group Telecom's analysis, a
total mark-up of 15% was assumed as a starting point. The mark-up on Phase II
loop costs required to recover the corporate average percentage of fixed
common expenses was then determined and deducted from the 15%. The remaining
amount, if any, was assumed to contribute to the recovery of embedded capital
costs. |
227. |
Under this proposal, the percentage
mark-up required to recover the company's fixed common expenses represented a
corporate average based on the ratio of the company's total FOEs classified
as fixed common costs over total company Phase II expenses. In the
denominator, the total company Phase II expenses were assumed to be equal to
the demand or service-driven FOE adjusted to capture the related variable
common costs. In the case of Bell Canada and TELUS, Group Telecom estimated
the percentage mark-ups required to recover the company's fixed common
expenses to be 21.8% and 9.5%, respectively. When weighted by the respective
proportions of expenses in the loop cost study of 29% and 23.9%, the
percentage mark-ups on Phase II loop costs required to recover fixed common
expenses were estimated at 6.3% for Bell Canada and 2.3% for TELUS. Given
that these percentage amounts are clearly less than 15%, the remainder was
assumed to contribute to the recovery of embedded capital costs. While the
percentage mark-up amounts contributing to the recovery of the embedded
capital costs were lower than those implied by Bell Canada's and TELUS'
respective proposals, Group Telecom's analysis demonstrated that a 15%
mark-up would permit each ILEC to recover a corporate average percentage of
fixed common costs and would in addition provide a contribution towards the
recovery of the embedded cost differential. |
228. |
TELUS was the only ILEC that
commented on Group Telecom's approach. TELUS indicated that it generally
found Group Telecom's methodology to be sound, but noted that the proportion
of expenses had been applied to the wrong percentage mark-up required to
recover the company's fixed common expenses. TELUS submitted that, in
calculating the corporate average percentage of fixed common costs, Group
Telecom had erroneously included in the denominator TELUS' total operating
expenses instead of TELUS' total FOEs. TELUS noted that total FOEs would be a
lower amount than total operating expenses because some costs such as network
maintenance were not included in FOEs. TELUS submitted that as a result, the
embedded capital recovery implied in the 15% was also wrong. |
229. |
The Commission notes that the
Companies' proposed percentage mark-up method relied on each ILEC's total
operating expenses, including network maintenance expense, to calculate the
corporate average percentage of fixed common costs. The Commission considers
Group Telecom's calculation for the recovery of the fixed common expenses to
be correct. Moreover, even if the total FOE estimate was adjusted to exclude
TELUS' maintenance expense, TELUS' corporate average percentage of fixed
common costs would be such that a 15% mark-up would permit TELUS to recover
this revised corporate average percentage of fixed common costs and, in
addition, would provide a contribution towards the recovery of its embedded
cost differential. |
230. |
The Commission notes that the above
analysis is based on loop costs, for which the proportion of expense-related
costs is no greater than 30% of total service costs. Nervertheless, the
Commission anticipates that the same result will obtain in respect of
virtually all other Category I Competitor Services that are subject to
mandated cost-based pricing. |
231. |
Accordingly, the Commission finds
that a 15% mark-up on each ILEC's Phase II service costs for Category I
Competitor Services, that are subject to mandated cost-based pricing, will
provide sufficient contribution towards the recovery of that ILEC's fixed
common expenses and the embedded cost differential. |
232. |
The Commission notes TELUS' argument
that mark-ups should be ILEC-specific because each ILEC's costs are
different. The Commission also notes, however, that mark-ups have
historically been applied uniformly across ILECs' services as a matter of
policy. Moreover, as discussed above, the Commission considers that a mark-up
of 15% on each ILEC's Phase II costs for Category I Competitor Services
subject to mandated cost-based pricing will provide sufficient contribution
towards the recovery of each ILEC's fixed common expenses and the embedded
cost differential. |
233. |
In light of the above and having
regard to the objective of fostering facilities-based competition, the
Commission finds it appropriate to approve rates for these services based on
Phase II costs plus a 15% mark-up. |
234. |
As indicated earlier, rates for
Category I Competitor Services have generally been determined based on Phase
II costs plus a 25% mark-up. Accordingly, each ILEC is directed to reduce
Category I Competitor Service rates, the rates for which were based on this
principle, to Phase II costs plus 15%. In regard to the Category I Competitor
Service rates that currently have a mark-up greater than 25% above Phase II
costs, these are discussed in the section below. For those few Category I
Competitor Services, the rates for which mark-ups on Phase II costs are less
than 15%, the Commission will not require rate reductions. A summary of the
Commission's determinations regarding the rate adjustments to Competitor
Services is provided in Appendix 1 to this Decision. The specific filing
requirements are set out below. |
235. |
The Commission notes that this
pricing adjustment, as well as the creation of a competitor-DNA service, will
reduce the revenues the ILECs derive from the relevant services. Because
these changes result from policy consideration as opposed to cost reduction,
the Commission is of the view that the ILECs should be compensated for the
reduction in revenues. The Commission considers that these policy
considerations and the method of conpensation balance the interests of the
three main stakeholders. The method of compensation is discussed in Part V of
this Decision. |
|
Specific mark-up implementation Issues
|
|
Co-location floor space rates |
236. |
In Decision
97-15, the Commission concluded that, with
the exception of MTS, ILECs generally have vacant central office floor space
with no alternative uses, and accordingly, the Phase II costs associated with
the use of this floor space for co-location purposes are zero. The Commission
further noted that the competing interconnecting carriers would derive value
from the ILECs' floor space and should contribute towards the recovery of the
associated investment. With respect to MTS' proposed floor space rate, the
Commission considered that, given its practice of moving personnel into
vacant central office space, MTS would incur incremental costs in providing
floor space for co-location purposes. MTS' floor space rate was therefore
determined based on Phase II costs plus a 25% mark-up and was set at $16.20
per square metre. In determining floor space rates for the other ILECs, the
Commission considered MTS' floor space rate as a benchmark, to be adjusted
for the differences in the ILECs' embedded land and building costs. |
237. |
The Commission is of the preliminary
view that it would be appropriate to use the floor space rate of $14.90 per
square metre, based on MTS' Phase II costs plus a 15% mark-up, for each ILEC.
In the Commission's view, this rate would recover each ILEC's Phase II costs
and would provide sufficient contribution to aid in the recovery of each
ILEC's fixed common costs and embedded costs. The Commission also notes that
the floor space rates adopted in Decision 97-15
for TELUS included use of the required bay space. Accordingly, the Commission
is of the preliminary view that TELUS' half-bay floor space rates per square
metre should be revised to $12.95 for Category I, $10.36 for Category II, and
$6.48 for Category III. |
|
Direct Connection rates |
238. |
In Unbundled rates to provide
equal access, Telecom Decision CRTC 97-6,
10 April 1997 (Decision 97-6), the Commission adopted a uniform DC rate of
$0.007 per-minute per-end for each ILEC excluding SaskTel. |
239. |
Subsequent to Decision
97-6, on 9 March 2000, the Commission issued
a letter decision (the 9 March 2000 letter decision) that lowered the ILECs'
DC per-minute per-end rate of $0.007 to $0.003. In the proceeding leading to
this letter decision, the Commission received revised Phase II costs for the
DC service from each ILEC except SaskTel. The Commission noted that the ILECs
have in general reported significant cost reductions for the DC service, due
in part to reductions in the per-minute expenses. |
240. |
The Commission concluded in the
9 March 2000 letter decision that the proposed uniform $0.003 per minute
per-end DC rate recovers the service's revised Phase II incremental costs.
The Commission noted that it had established in Decision
97-6 mark-ups for the DC service that were
in excess of 25% to recognize, among other things, the differences between
the DC service's embedded and current costs. The Commission indicated in the
9 March 2000 letter decision that it found no evidence to demonstrate that
the mark-up included in the $0.003 rate does not provide sufficient
contribution to recover fixed common costs, including the recognition of
embedded costs. |
241. |
In Direct Connect rate approved
for SaskTel, Order CRTC
2000-1080, 1 December 2000, the Commission approved a DC rate of $0.005
per-minute per-end for SaskTel, based on Phase II costs plus a 25% mark-up.
In that decision, the Commission noted that SaskTel's cost to provide DC
service was $0.00382 per-minute per-end. The Commission concluded that a DC
rate of $0.005 per-minute per-end is appropriate for SaskTel to recover the
associated Phase II costs and to provide sufficient contribution to recover
fixed common costs. |
242. |
The Commission is of the preliminary
view that it would be appropriate to use the updated DC Phase II cost
estimates provided in the above proceedings plus a 15% mark-up to determine
each ILEC's revised DC rate. In the Commission's view, this revised DC rate
would recover each ILEC's Phase II costs and would provide sufficient
contribution to aid in the recovery of each ILEC's fixed common costs and the
embedded cost differential. The Commission is therefore of the preliminary
view that the following ILEC per-minute per-end DC rates should be adopted: |
|
NewTel |
$0.00131 |
|
MTT |
$0.00216 |
|
Island Tel |
$0.00219 |
|
NBTel |
$0.00267 |
|
Bell Canada |
$0.00128 |
|
MTS |
$0.00276 |
|
SaskTel |
$0.00439 |
|
TELUS (Alberta) |
$0.00214 |
|
TELUS (BC) |
$0.00185 |
|
Line-side wireless access service
and paging/telephone number access rates |
243. |
In Bell Canada Tariff Notice (TN)
5903, Bell Canada proposed that its line-side wireless access service (WAS)
rates be lowered to $0.06 per active telephone number and $0.02 per reserved
number, based on its updated service costs, plus a 25% mark-up. In Telecom
Order CRTC 97-1765, 27 November
1997, the Commission noted that the line-side WAS rates filed to support Bell
Canada TN 5903 only included the Phase II prospective incremental costs and
did not include past embedded costs of advancement of the 416/905 area code
split and costs for the advancement of the step-by-step switch modifications.
The Commission concluded that the interim rates of $0.14 per active telephone
number and $0.04 per reserved number would also provide an adequate recovery
of these costs. |
244. |
The Commission is of the preliminary
view that it would be appropriate to determine Bell Canada's line-side WAS
rates for the active and reserved telephone numbers based on the above Phase
II cost estimates plus a 15% mark-up. In the Commission's view, these revised
WAS telephone number rates would recover Bell Canada's Phase II costs and
would provide sufficient contribution to assist in the recovery of Bell
Canada's fixed common costs and the embedded cost differential. The
Commission is therefore of the preliminary view that Bell Canada's telephone
number rates, applicable to both the line-side WAS and paging/telephone
number access (TNA) tariffs, should be revised to $0.0593 for the active
number and to $0.0153 for the reserved number. |
|
TELUS' wireless service provider
enhanced provincial 9-1-1 network access service |
245. |
In TELUS TNs 327 and 4120, the
company proposed a rate of $0.03 per wireless telephone number per month,
rounded to the nearest cent. TELUS submitted that the rate was established
based on Phase II costs plus a mark-up in accordance with the Commission's
directives regarding the pricing of Competitor Services. |
246. |
The Commission notes that the rate
for this service, if based on Phase II costs plus a 15% mark-up, would be no
more than $0.0263 per wireless telephone number per month when rounded to the
fourth decimal place. The Commission is of the preliminary view that it would
be appropriate to adopt the rate of $0.0263 per wireless telephone number per
month for TELUS' wireless service provider (WSP) enhanced provincial 9-1-1
network access service in both Alberta and British Columbia. |
|
Follow-up processes
|
247. |
In addition to the interim
competitor-DNA tariff discussed above, the Commission also directs the ILECs
to file by 13 September 2002 proposed tariffs for final consideration, which
incorporate the following elements: |
|
- rates for the competitor-DNA service at DS-0, DS-1, DS-3, OC-3 and
OC-12 rates that reflect Phase II costs plus a 15% mark-up, with supporting
cost studies;
|
|
- rates for the access component of the competitor-DNA service, developed
using the rating model adopted for unbundled loops and the banding
structure approved in Decision 2001-238,
such that the prices for the number of access facilities do not vary with
the quantity provided; and
|
|
- identify the band to which each wire centre or exchange is assigned.
|
248. |
The ILECs are also directed to file
in the same time period modified DNA tariffs which identify the band to which
each wire centre or exchange is assigned. |
249. |
The Commission wishes to provide
parties with the opportunity to comment on whether the ILECs should make the
intra-exchange channel component of the DNA tariff and the access component
of that tariff, when used in circumstances other than those described in the
tariff, available to carriers through a competitor-DNA Tariff. The Commission
requests that parties filing comments include a discussion of the factors
influencing competitive supply of these facilities by non-ILECs and a
discussion of the factors influencing a competitive carrier's ability to
self-supply facilities between a competitors switch and an ILEC's switch and
those facilities that substitute for the intra-exchange channel of the ILECs'
DNA service. Parties are also requested to provide as much factual data on a
band-specific basis by incumbent territory as possible. |
250. |
The Commission establishes the
following process for the purpose of the follow-up proceeding. |
|
- All persons wishing to participate are requested to register with the
Commission by 17 July 2002.
|
|
- The Commission will publish a list of interested parties for the
purpose of this follow-up proceeding as soon as possible thereafter.
|
|
- Parties are to submit their comments by 13 September 2002.
|
|
- Parties may submit reply comments by 15 October 2002.
|
|
- Parties filing submissions are required to copy all parties on the list
of interested parties. Documents must be received, not merely sent, by the
date indicated.
|
251. |
The process for review of the Access
Tandem service rate is as follows: |
|
- ILEC Access Tandem service rates are made interim as of the date of
this Decision.
|
|
- ILECs are to file updated cost studies and revised rates for the Access
Tandem service by 17 July 2002.
|
|
- Interested parties may file comments by 21 August 2002.
|
|
- ILECs may file reply comments by 3 September 2002.
|
|
- Parties submitting comments and reply comments are required to serve a
copy of their comments on all interested parties. Documents must be
received, not merely sent, by the dates indicated.
|
252. |
In connection with the changes in
the Category I Competitor Services rates, each ILEC is directed to: |
|
- file by 6 August 2002 proposed tariff pages for approval which reflect
the Commission's determinations in this Decision for the Category I
Competitor Service rates, by rate element, as specified in Appendix 1 to
this Decision.
|
|
- file by 6 August 2002 the estimated revenue loss attributable to
the reduced mark-up, on an annualized basis, based on 31 December 2001
demand levels and excluding the revenue loss associated with the use by the
ILEC's Competitive Segment of Category I Competitor Services.
|
253. |
The Commission also establishes the
following process to provide parties with the opportunity to comment on its
preliminary views with respect to the above-noted revised rates for
co-location floor space, DC service, Bell Canada's line-side WAS/TNA
telephone number services and TELUS' WSP enhanced provincial 9-1-1 network
access service. |
|
- Parties to this proceeding may submit comments by 2 July 2002 and the
ILECs may submit comments in reply by 12 July 2002.
|
|
- Parties submitting comments or reply comments are required to serve a
copy of their comments on all other interested parties. Documents must be
received, not merely sent, by the dates indicated.
|
254. |
The Commission notes that, in
Part IV of this Decision, all tariffed rates were made interim, effective
1 June 2002. Consequently, the changes to the Category I Competitor Service
rates will be effective on that date. |
|
|
|
Introduction
|
255. |
In the initial price cap regime, the
Commission imposed an overall price cap constraint equal to inflation less a
productivity offset on revenues from a single basket of ILEC services. This
basket was divided into three sub-baskets that were also subject to
additional sub-basket, service or rate element pricing constraints: |
|
- Basic residential local services;
|
|
- Single and Multi-line Business local services; and
|
|
|
256. |
Services that were priced to
maximize contribution before the implementation of price caps, such as
optional local services, and services for which the Commission considered
that a price cap would be redundant, such as Special Facilities Tariffs
(SFTs), were generally not assigned to a capped services sub-basket.
Competitor Services, as defined in Decision 98-2,
were also not included in capped services. Rates for certain other services,
such as 9-1-1 service and Message Relay Service, were subject to a price
freeze over the four-year price cap period. |
257. |
In PN
2001-37, the Commission asked
for comments on what changes, if any, should be made to the structure of the
initial price cap regime. The Commission received a number of proposals for
change. |
|
Positions of parties
|
|
The Companies' proposals
|
258. |
The Companies' proposal assigned
Utility Segment services to the following categories: |
|
a) services subject to an upward
pricing constraint; |
|
b) services not subject to an upward
pricing constraint; and |
|
c) local payphone services. |
|
The Companies' proposal with respect
to local payphone services is discussed separately below. |
259. |
The Companies took the position that
a productivity offset should not apply to any basket or sub-basket of
services or to Utility Segment revenues as a whole. The Companies submitted
that a productivity offset should apply only to the costs for residential
local exchange service in HCSAs. |
|
Services subject to upward
pricing constraints |
260. |
The Companies assigned ILEC services
that would be subject to upward pricing constraints to the following service
groupings: Basic Residential Local Services, Other Residential Local
Services, Business and Other Capped Services, services with frozen rate
treatment and Competitor Services. |
|
a) Basic Residential Local
Services |
261. |
In non-HCSAs, the Companies proposed
that rates for residential individual line service (including Touch-Tone)
should be allowed to increase, on average, by the rate of inflation each
year. In addition, price increases would be capped at 10% per year at the
rate element level. The Companies stated that the proposed upward pricing
constraint was intended to ensure, through a price freeze in real terms, that
prices for these services would remain fair. |
262. |
In HCSAs, the Companies submitted
that the prices of residential local individual line and multi-party services
should generally be constrained by specified maximum annual increases. The
Companies therefore requested the flexibility to increase residential
individual line and multi-party service rates in HCSAs by an annual maximum
of $2, with a maximum monthly rate of $30 to be reached over the next price
cap period. |
263. |
SaskTel proposed not to increase
residential local service rates in 2002. SaskTel also indicated that, in
2003, it would eliminate excess mileage charges when it would implement the
$2 residential local service rate increase. |
264. |
Aliant Telecom proposed to increase
residential individual line service rates to $25 in 2002 across its
territory. MTS requested the flexibility to increase residential individual
line service rates in Band D (a non-HCSA) by $2 in each year of the next
price cap period. These requests are considered separately below. |
265. |
The Companies submitted that the
proposed pricing flexibility would provide the correct signals to the
marketplace and therefore would promote competitive entry in the residential
market. In support of their argument that the pricing flexibility sought
would result in affordable residential rates, the Companies provided
international rate comparisons, and evidence regarding the penetration rates
for telephone service and the percentage of household income spent on
telephone service. |
266. |
The Companies submitted that their
proposal would permit a gradual reduction in the subsidy requirement. The
Companies argued that, notwithstanding the pricing flexibility requested in
HCSAs, residential local rates would remain affordable. The Companies noted
that, if their proposal was approved, rates in HCSAs would be less than rates
currently approved for Télébec ltée (Télébec) and certain other independent
telephone companies at the end of the next price cap period. |
267. |
The Companies proposed to place a
ceiling on annual rate increases for multi-party service in HCSAs and further
proposed that the level of this ceiling should be determined on a
company-specific, and band or sub-band specific basis. |
268. |
Aliant Telecom stated that it
planned to discontinue residential two-party, four-party and multi-party
service within the next year in areas where facilities exist to upgrade to
individual line service. According to Aliant Telecom, fewer than 20 of its
party lines could not be upgraded. Aliant Telecom did not request the
flexibility to implement rate increases for these services in the next price
cap period. |
269. |
Bell Canada proposed to move rates
for residential multi-party service closer to residential individual line
rates over the next price cap period. Bell Canada argued that these rate
changes would narrow the gap between multi-party and individual line service
prices and encourage customers to migrate to individual line service. |
270. |
Bell Canada noted that the last time
customers of party line service experienced a rate increase was 1 January
1998. The company indicated that it still had approximately 34,000 four-party
line customers. Bell Canada noted that, with the completion of its Local
Service Improvement Program at the end of 2001, individual line service would
be available on demand throughout its territory. Bell Canada proposed to
grandfather, effective 1 January 2002, all four-party access lines that
remained in service. The company stated that, at that time, it would cease
offering four-party line service to new customers. |
271. |
Bell Canada and SaskTel provide
Exchange Radio Telephone Service (ERTS) within certain telephone exchanges
beyond where they have distribution lines. Bell Canada also offers individual
line service using Regional Communications Service (RCS) where it is more
economical to provision service using this technology. Bell Canada noted that
ERTS and RCS customers would be subject to the proposed rate increases for
HCSAs through the basic rate component of their monthly rate. Bell Canada
proposed to freeze the rate for the other rate components at their current
levels for the period from 2002 to 2005. |
272. |
Consistent with the Companies'
proposal for residential services in HCSAs, SaskTel proposed a maximum annual
increase of $2 for both ERTS and Northern Radio Telephone Service rates in
each of 2003, 2004 and 2005. |
|
b) Other Residential Local
Services |
273. |
The Companies proposed that the
Other Residential Local Services category would include basic residential
installation charges and Extended Area Service (EAS) and Community Calling
Plan (CCP) charges, where separately identified (i.e., in Newfoundland and
Saskatchewan). For these services, the Companies proposed to have the
flexibility to increase rates, on average, by no more than the rate of
inflation each year. In addition, price increases at the rate element level
would be capped at 10% per year. |
274. |
As an exception to the Companies'
proposal, Aliant Telecom requested the flexibility to increase EAS and CCP
charges in Newfoundland to a uniform rate of $5 per month over the next price
cap period. |
|
c) Business and Other Capped
Services |
275. |
The Companies proposed that average
price changes be constrained by the rate of inflation each year for those
services assigned to the business and other capped services group in respect
of which upward pricing constraints were still needed. The Companies also
proposed to impose an annual 10% limit on price increases for these services
at the rate element level. They argued that this pricing flexibility would be
required to further encourage the growth of local competition in the business
market. They also submitted that it would send the signal to competitors that
mandated rate reductions would no longer be required for these services. |
276. |
As an exception to the Companies'
proposal, SaskTel requested the flexibility to increase business rates in
HCSAs to $38 by 2005. SaskTel also indicated that it would eliminate excess
mileage charges for all business customers in 2003 when it would implement
rate increases for business customers in HCSAs. |
|
d) Services with frozen rate
treatment |
277. |
The Companies proposed to maintain
the approach taken in Decisions 97-9 and
98-2 whereby the Commission froze the rates
or terms of certain services. The Companies also proposed that the Commission
maintain the current rate treatment for 9-1-1 service during the next price
cap period. In addition, the Companies proposed to freeze rates for
residential unlisted number service, which the Commission capped at $2 in
Telecom Order CRTC 98-109,
4 February 1998. |
|
e) Competitor Services |
278. |
The Companies stated that the
current process for reviewing rates for Competitor Services is based on
evidence of a change in the underlying costs. The Companies initially
proposed that rates for Competitor Services should continue to be subject to
review on application by the ILECs, by the competitors or through a
proceeding initiated by the Commission. |
279. |
In their reply argument, the
Companies stated that they would not oppose the application of an inflation
factor less a productivity offset (I-X) to rates for services assigned to
Competitor Services, as defined by the Companies: that is, essential,
near-essential, interconnection and co-location services. The Companies
further submitted that periodic reviews of underlying costs should not be
undertaken if the prices of Competitor Services were governed by inflation
less a productivity offset. The Companies submitted that prices subject to
this approach would reflect assumed changes in underlying costs on a going
forward basis. |
|
Services not subject to an upward
pricing constraint |
280. |
The Companies submitted that a
service should not be subject to upward pricing constraints if any of the
following conditions were met: |
|
i) the service was subject to
sufficient competition to discipline pricing; |
|
ii) the service was discretionary;
|
|
iii) the service was already subject
to contractual arrangements that govern prices; or |
|
iv) the service was a substitute for
services whose rates are constrained by market forces or regulatory pricing
constraints. |
281. |
With respect to the first condition,
the Companies' proposal for a competitiveness test is described and
considered later in this Decision. |
282. |
For discretionary services, such as
optional local services, the Companies proposed that the pricing policy
established in Decision 97-9 should be
maintained and that an upward pricing constraint should not apply to
discretionary services. |
283. |
The Companies submitted that the
policy in Decision 97-9 had been established
on the basis that no public policy goal would be served by imposing pricing
constraints on these services. They noted that, because the rates for these
services had been set to maximize contribution, the residential local
exchange service rates were lower than they would otherwise be. Finally, the
Companies submitted that customers could tailor their consumption of such
services based on price. |
284. |
The Companies further submitted that
capping optional services would be inconsistent with the Commission's
determination in Decision 2000-745 that
a target contribution of $60 from optional services per residential access
line would be used in the calculation of the subsidy requirement for HCSAs. |
285. |
As far as services subject to
contractual arrangements were concerned, the Companies argued that it would
be redundant to place additional pricing constraints on services for which
rates were already constrained by factors independent of the price cap
framework. The Companies submitted that fixed-price contracts offered under
SFTs fall into this category. |
286. |
Finally, the Companies argued
against imposing upward pricing constraints on the rates of services that
were substitutes for other services whose rates were constrained by market
forces or through regulatory pricing constraints. For example, the Companies
submitted that rates for Centrex service, which would be a substitute for
business access services, should not be capped. |
|
TELUS' proposal
|
287. |
TELUS proposed that all Utility
Segment services except residential local service in HCSAs be uncapped and
placed into one of three categories: |
|
a) non-forborne services subject to
both an upper pricing constraint and a price floor; |
|
b) non-forborne services subject
only to a price floor; or |
|
c) forborne services that are not
subject to pricing constraints. |
|
TELUS noted that forborne services
were constrained by the terms and conditions on which forbearance was
granted. TELUS' proposal with respect to local payphone services is discussed
separately below. |
|
Non-forborne services subject to
an upper pricing constraint and a price floor |
|
a) Residential local exchange
service |
288. |
TELUS requested the flexibility to
increase rates for residential local exchange service (including EAS) by an
annual maximum of $3, to a maximum monthly rate of $35 to be reached over the
five-year price cap period proposed by TELUS. TELUS noted that the rate
increases in HCSAs would be offset by an equivalent reduction in
contribution. |
289. |
TELUS further submitted that the
imputation test would continue to apply to these services. TELUS submitted
that a monthly rate of $35 was affordable and had been deemed so by the
Commission when it approved the current rate for Télébec ($34.42). TELUS
argued that because the maximum rate would not change over the next price cap
period, it would, considering inflation, decrease in real terms and,
therefore, would be even more affordable at the end of the next price cap
period. |
290. |
TELUS argued further that any
proposal to limit price increases to residential services to a greater degree
than it proposed could limit competitive entry in non-HCSAs and would delay
these rates from reaching market levels. The company argued that competitors
would not find it attractive to provide competitive residential local service
until rates reached market levels. |
|
b) Business local exchange
service rates |
291. |
TELUS proposed that rates for
business local exchange services (including EAS) in bands where competitive
entry had not occurred should be subject to an upward pricing constraint of
10% per year. TELUS noted that the imputation test would continue to apply to
these services. The company was opposed to the application of an additional
pricing constraint to these services on the basis that doing so would further
limit the ILECs' pricing flexibility. |
|
c) Services with frozen rates |
292. |
TELUS proposed to freeze rates for
services with social welfare considerations and public safety concerns at
their current rates. These services include 9-1-1 service, Message Relay
Service, Call Display Blocking, Call Blocking for 900 service and
Toll Restriction. |
293. |
Individual line service (ILS)
charges are additional non-discretionary charges for residential and business
exchange service provided to customers in Alberta beyond a base rate area.
TELUS noted its intention to replace ILS charges during the next price cap
period and submitted that ILS charges should be frozen at their current
rates, thereby maintaining the affordability of ILS charges, until such time
as it submitted a proposal for Commission consideration. |
|
d) Competitor Services |
294. |
TELUS proposed that Competitor
Services be priced at Phase II costs plus an approved mark-up and that the
Commission should retain the current rules with respect to price changes for
these services. The company noted that unbundled loops would continue to be
subject to their own internal price cap mechanism. |
|
e) Installation charges |
295. |
TELUS proposed that service charges
for the installation of local exchange services should be priced at Phase II
costs plus an approved mark-up. |
|
Non-forborne services subject
only to a price floor |
296. |
TELUS proposed that rates for those
non-forborne Utility Segment services that were not included in the baskets
described above should be subject to a price floor to protect against
anti-competitive below-cost pricing. The Commission's current imputation test
would determine the price floor. |
297. |
TELUS opposed the application of a
pricing constraint to optional local service rates on the basis that these
services were discretionary and did not receive a subsidy. TELUS agreed with
Bell Canada's view that this would be inconsistent with the contribution
regime established in Decision 2000-745,
in which the Commission established a monthly contribution target of $5 per
residential NAS as an incentive for the ILECs. TELUS argued that placing an
upward constraint on price changes for residential optional local services in
the next price cap period would deny the ILECs the flexibility they required
to meet or exceed this target. TELUS argued that artificially constraining
prices for residential optional services would also have a dampening effect
on competitive entry in the local market. |
298. |
TELUS submitted that, if the
Commission wished to sustain the conditions under which implicit subsidies
could be used to support the ILECs' residential local service prices, it
should not impose any pricing constraints on residential optional local
services and should not impose an I-X offset on the revenues derived from
these services. |
|
Other parties' comments on the ILECs' proposals
|
299. |
AT&T Canada submitted that the
ILECs' proposals would preserve those elements of the current regime that
have allowed the ILECs to earn record profits and to stifle competition. AT&T
Canada argued that the ILECs' proposals incorporated new measures to ensure
even greater profitability in the future and removed all checks on the ILECs'
ability to increase profits at the expense of consumers and competitors. |
300. |
Call-Net submitted that while the
ILECs professed to be interested in providing a greater incentive for
competitive entry by letting prices move to market levels, in reality they
were requesting pricing flexibility to raise and lower prices at their
discretion in the narrowly defined markets where competition does exist. |
301. |
Call-Net submitted that what was
most troubling of all was that the ILECs proposed to keep their productivity
gains across all of their services, other than those on residential local
services in HCSAs. In Call-Net's view, the ILECs would either use these
revenues to frustrate competitive entry or to benefit their shareholders. |
302. |
Group Telecom submitted that the
long-run sustainable level for business and other rates would be determined
by the marketplace, and that these rates would change over time in response
to changes in the costs of providing service. Group Telecom suggested that
the Commission exercise care in substituting its judgement for that of the
marketplace, particularly in instances in which the regulatory regime being
considered could place downward pressure on retail rates. Group Telecom
argued that there was a risk that regulation could push prices below long-run
market levels and thereby compromise opportunities to recover investments. |
303. |
Group Telecom agreed with the
pricing constraints proposed by the Companies for business and other capped
services. AT&T Canada generally supported the pricing constraints proposed by
the Companies on residential, business and other capped services. |
304. |
RCI noted that one of the themes
running through the Companies' and TELUS' proposals was that increasing
prices would encourage more competition. RCI noted that prices for capped
services were above costs with the exception of residential rates in HCSAs.
The company submitted that increasing rates at a time when costs were falling
would not encourage competitive entry, as competitors would know that any
rate increases in the geographic locations where they competed would be
short-lived. |
305. |
RCI submitted that the ILECs'
proposal to encourage competitive entry by raising rates would potentially
result in huge revenue increases that would be used by the ILECs to do one of
two things: fund aggressive activity in markets as they became competitive,
or benefit the ILECs' shareholders. |
306. |
ARC et al. and BCOAPO et al. argued
that subscribers were entitled not only to affordable rates, but also to just
and reasonable rates. In their view, just and reasonable rates were
necessarily linked to costs and, by implication, to earnings. According to
ARC et al. and BCOAPO et al., subscribers should be entitled to their share
of direct financial benefits flowing from price cap regulation. |
307. |
ARC et al. and BCOAPO et al. also
submitted that residential rates must meet the criterion of affordability,
where affordability refers to a consumer's ability to pay. Calgary and ARC et
al. and BCOAPO et al. submitted that affordability was an issue for
low-income customers, but not for those with high incomes. They submitted
that affordability had a much more limited scope than the concept of "just
and reasonable rates", which was relevant for all ratepayers. |
308. |
ARC et al. and BCOAPO et al. also
argued that telephone service was an essential service that people could not
afford to be without, regardless of their financial circumstances. ARC et al.
and BCOAPO et al. submitted that the evidence of the Companies regarding
penetration rates did not provide an appropriate indicator of whether
residential local rates were affordable for low-income households. |
309. |
Noting that residential local
exchange rates were generally compensatory in non-HCSAs, ARC et al. and
BCOAPO et al. and the Commissioner of Competition submitted that the
Commission should not increase these rates to encourage competition. These
parties argued that if competitors were unable to compete against the ILECs
when the ILECs' prices were compensatory, then their entry was not desirable.
The Commissioner of Competition further argued that relaxing the price
constraints on the ILECs to increase margins for competitors would be
counterproductive. |
310. |
CAC Alta submitted that the
proposals of the ILECs were fundamentally unfair. It argued that consumers
should not be expected to underwrite either competition or excessive profits
to the ILECs or any combination of the two. CAC Alta argued that customers of
residential local service should share in the many benefits occurring in this
industry which could be used to lower rates without the caveat that prices
would have to go up before the benefits of lower rates could be delivered. |
311. |
The Commissioner of Competition
submitted that the evidence in this proceeding strongly suggested that the
ILECs continue to possess market power with respect to local exchange service
in most areas of Canada. He argued that ILECs were likely to retain that
market power for the foreseeable future. The Commissioner of Competition
submitted that it would be necessary for the Commission to continue to
protect consumer interests and to foster the competitive process. |
312. |
The Commissioner of Competition
submitted that the proposals of the ILECs appeared to be an overreaction to a
perceived design flaw of the initial price cap regime that resulted in
downward pressure on business rates. He noted that a contributing factor was
that residential rates were not sufficiently high, resulting in little, if
any, room to move residential rates downwards. |
313. |
The Commissioner of Competition
argued that the approach adopted by the Commission in Decisions
97-8 and 97-9
should be continued. In particular, he opposed proposals favouring a
productivity offset equal to zero. The Commissioner of Competition submitted
that proposals to prematurely remove pricing constraints on the ILECs were
not warranted and that removing these constraints would be inimical to the
efficient pricing and provision of local telecommunications services to
Canadians. |
314. |
AT&T Canada opposed any form of
pricing constraint that could potentially place downward pressure on
residential local rates in HCSAs, where rates were already below cost. AT&T
Canada submitted that rates in HCSAs should be allowed to increase during the
next price cap period in order to reduce the total subsidy requirement and to
establish greater equity in the subsidy requirement levels in each ILEC
operating territory. |
315. |
AT&T Canada noted that residential
rate levels in HCSAs varied significantly from one ILEC to another, ranging
from just over $20 to almost $30 per month. AT&T Canada submitted that a
common target rate for residential local service of at least $35 should be
established in HCSAs across all ILECs, noting that the Commission had already
approved residential rates of close to $35 in other parts of the country,
e.g., in Télébec's territory. AT&T Canada proposed that residential local
rates in HCSAs should be allowed to increase sufficiently in each year so
that each ILEC would be able to meet the target rate level by the end of the
next price cap period. |
316. |
ARC et al. and BCOAPO et al.
submitted that it was not necessary to rebalance the rates in HCSAs to the
extent proposed by the ILECs. These parties submitted that the HCSA subsidy
had been reduced in size to a sustainable level, and they argued that the
subsidy required would continue to diminish as costs declined. ARC et al. and
BCOAPO et al. argued that evidence in this proceeding clearly showed that
competitors were a long way from even indicating an interest in serving
residential customers in HCSAs, regardless of prevailing rate levels. |
317. |
The Commissioner of Competition
argued that the concern with existing rates in HCSAs stemmed not from
concerns about the exercise of market power, but rather from the economic
inefficiency associated with a policy that mandated retail prices below
costs. He submitted that implementing proposals to move rates to costs would
lead to an increase in economic efficiency and would greatly improve
prospects for competitive entry. The Commissioner of Competition supported
proposals made by the ILECs and AT&T Canada to increase rates and to reduce
the subsidy in HCSAs. |
|
RCI's proposal
|
318. |
RCI submitted that the fundamental
principles of the existing price cap regime should be maintained through the
application of the existing price cap formula, with an updated productivity
offset, to service baskets containing services that were not subject to
sufficient competition to warrant forbearance. RCI submitted that it was
necessary to reduce rates pursuant to the price cap formula. RCI argued that,
if excess revenues were left with the ILECs, the ILECs could use these
revenues to target business local markets and to subsidize rates for services
in other related telecommunications markets in which competition already
existed. |
319. |
RCI submitted that the price cap
index mechanism should be retained, with the modifications outlined below.
RCI proposed the following basket structure: (a) a basket composed of
Competitor Services and Other capped services sub-baskets; and (b) a basket
composed of the Residential services and Business services sub-baskets. |
|
Competitor Services and Other
capped services |
320. |
RCI submitted that a price cap index
should be applied to the rates for Competitor Services and Other capped
services, as currently defined, so that each of the rates in these two
sub-baskets would be reduced by the percentage change in the price cap index. |
321. |
Noting that rates for certain
Competitor Services included productivity increases in the development of the
rates, RCI submitted that it would not necessarily be inappropriate to
recognize productivity twice in setting these rates. |
|
Residential and business services |
322. |
RCI proposed that the revenue
reductions which would be required for the Residential and Business services
basket (the "offset revenues") be calculated as the percentage change in the
price cap index times the total capped revenues for these services after
deducting residential service costs in respect of HCSAs. |
323. |
RCI proposed that the ILECs apply
the offset revenues each year to reduce or eliminate the total subsidy
requirement for that year, thereby offsetting rate increases that would
otherwise be required to bring rates closer to costs in Bands E, F and G.
Once the subsidy has been eliminated, an ILEC should apply any residual
offset revenues to residential local services in non-HCSAs and to business
local services across the total revenues of the two sub-baskets. |
324. |
Subject to meeting this requirement,
RCI submitted that individual service and band rates should be permitted to
increase at the rate of inflation. RCI stated that its proposal would permit
the ILECs to increase local rates up to the rate of inflation, but that the
additional revenue would have to be used to further reduce the total subsidy
requirement. |
325. |
RCI noted that, once the subsidy has
been eliminated, individual rate increases up to the rate of inflation would
be accommodated within the overall requirement to meet the price cap index.
RCI noted that its proposal would permit the required rate reductions to be
realized exclusively through business rate reductions, with residential rates
increasing by as much as inflation. |
326. |
RCI argued that there was not likely
to be competitive entry in HCSAs in the near to medium term. Therefore, to
achieve some of the objectives of price cap regulation in these areas, RCI
recommended that residential local exchange rates should be capped at their
current levels in HCSAs, with formal recognition of the implicit amount of
subsidies inherent in the rates in more urban areas. RCI argued that its
proposal would provide sufficient incentives for the ILECs to achieve
productivity improvements and reduce costs in HCSAs, while providing retail
customers with some benefit. |
327. |
RCI suggested that under its
proposal a pricing link remained between residential and business single and
multi-line services, and that this link provided the ILECs with an
appropriate level of pricing flexibility. |
|
Optional local services |
328. |
RCI supported the view that the
treatment of optional local service revenues in the initial price cap period
should be maintained during the next price cap period: specifically,
residential optional local services should not be included in a capped
service basket. RCI further submitted that the Commission should retain the
power to re-assign residential optional local services to capped services
without a proceeding to review the entire price cap structure, if sufficient
local residential competition did not develop. |
|
Other parties' comments on RCI's proposal
|
329. |
ARC et al. and BCOAPO et al.
submitted that RCI's proposal, while superficially attractive, had three
serious deficiencies: it would favour competitors over ratepayers, would
permit anti-competitive pricing, and would result in a potentially
unsustainable implicit cross-subsidy within each ILEC. |
330. |
ARC et al. and BCOAPO et al. noted
that, while rates for Competitor Services under RCI's proposal would be
subject to a productivity offset from the outset of the next price cap
period, other rates would not be. In their view, the proposal would result in
productivity gains that would normally have flowed to residential or business
customers first being applied against the HCSA subsidy; only once the subsidy
had been eliminated would residential and business customers experience
financial benefit from the price cap regime. ARC et al. and BCOAPO et al.
argued that this approach was fundamentally unfair in that it favoured
competitors over ratepayers. |
331. |
ARC et al. and BCOAPO et al. also
noted that by maintaining the link between business and residential rates
that existed under the last price cap regime, RCI's proposal would permit the
ILECs to continue to target price reductions to business services, while
increasing residential rates by the rate of inflation. In ARC et al.'s and
BCOAPO et al.'s view, allowing such pricing flexibility to the ILECs in the
context of a highly differentiated market would result in inefficient,
anti-competitive and unfair results. |
332. |
ARC et al. and BCOAPO et al. further
submitted that RCI's proposal to aggressively eliminate the subsidy to HCSAs
(by using productivity gains to which, in their view, ratepayers were
entitled) would take the regulatory regime backward to implicit ILEC
subsidies. They noted that this was the situation that the explicit,
competitively neutral, portable contribution regime had been designed to
correct. ARC et al. and BCOAPO et al. argued that RCI's proposal for the
rapid elimination of contribution was completely at odds with the
Commission's recent establishment of a more competitively neutral and
sustainable subsidy regime. |
333. |
While ARC et al. and BCOAPO et al.
argued that RCI's proposal was unacceptable for the reasons set out above,
they endorsed the argument put forward by RCI that addressed the application
of a productivity offset to capped revenues. |
334. |
AT&T Canada submitted that, while
RCI's proposal would ensure that the rates for Competitor Services were
reduced over the course of the next price cap period to help promote the
development of competition, the focus of RCI's price cap proposal appeared to
be the elimination of contribution. |
335. |
AT&T Canada submitted that RCI's
proposal failed to address the fact that current rates for services relied on
by competitors were overstated and must be reduced going into the next price
cap period. The company noted that, under RCI's proposal, residential and
business rates would be artificially driven down once contribution was
eliminated. AT&T Canada argued that this would be detrimental to competition. |
336. |
The Companies and TELUS argued that
RCI's proposal would reduce rates and that this would damage the development
of local competition. These parties argued that reduced rates for local
exchange services would make entry less attractive to potential competitors. |
|
ARC et al.'s and BCOAPO et al.'s proposal
|
337. |
ARC et al. and BCOAPO et al.
submitted that the initial price cap regime had not balanced the interests of
the three main stakeholder groups: ILECs, competitors and consumers. They
argued that the ILECs had earned consistently greater than normal rates of
return on equity over the last four years, while residential customers had
been subject to ever increasing rates for local service and a number of
competitors had failed. |
338. |
ARC et al. and BCOAPO et al. argued
that the Commission has an opportunity to correct the imbalances inherent to
the initial regime and to ensure that some of the productivity gains
generated by the industry under price cap regulation accrue to residential
customers. ARC et al. and BCOAPO et al. submitted that residential rates were
compensatory and provided the ILECs with healthy profit margins once all
relevant services and revenue sources were included (e.g., EAS, optional
services, and HCSA subsidies). |
339. |
ARC et al. and BCOAPO et al. argued
that, if the Commission were to apply a price cap to residential optional
local services, these services should be assigned to a separate basket and
made subject to a unique pricing constraint. They argued that, if this was
not done, the ILECs would be permitted to increase basic residential rates
through reductions in optional local service rates. ARC et al. and BCOAPO et
al. submitted that this would be contrary to the public interest, insofar as
basic local service warranted specific protections given its more essential
nature. |
340. |
ARC et al. and BCOAPO et al.
proposed the following basket structure and price constraints: |
|
a) For the Residential service
basket, a price cap index (PCI) would be set to equal inflation less
productivity. Further, the price of any individual rate element would not be
allowed to increase by more than inflation on an annual basis. |
|
b) For the Business service basket,
no price cap formula would apply; instead, an individual rate element would
not be allowed to increase by more than 10% per annum. |
|
c) For the Optional local services
basket, a PCI would be set to equal inflation. Further, the price of an
individual rate element would not be allowed to increase by more than 10% per
annum. |
|
Alternatively, ARC et al. and BCOAPO
et al. proposed four baskets if that would be simpler to administer:
residential services in HCSAs, residential services in non-HCSAs, business
services and optional local services. |
341. |
In their reply argument, ARC et al.
and BCOAPO et al. noted that the fact that they had not proposed that a
productivity offset should be applied to Competitor Services did not mean
that they objected to such a factor being applied to revenues derived from
these services. |
|
Comments of other parties on the proposal of ARC et al. and BCOAPO et al.
|
342. |
TELUS argued that ARC et al.'s and
BCOAPO et al.'s proposal to apply a productivity offset to a basket of basic
residential services assumed that the prices were compensatory today. TELUS
stated that this assumption appeared to be based on the Commission's primary
exchange service (PES) cost determinations in Decision
2001-238. TELUS submitted that those
cost estimates did not reflect TELUS' actual costs. It argued that the
application of a price cap formula equal to I-X to rates which were below
cost would perpetuate implicit subsidies and foreclose efficient entry in the
residential services market. TELUS submitted that, while prices for
residential service in some bands were compensatory, competitive entry had
not yet occurred and regulation should not lower those rates. |
343. |
The Companies submitted that the
application of a productivity factor for purposes of reducing prices would be
entirely inappropriate, as it would hinder the development of local
competition and discourage investment in facilities and other inputs needed
to ensure that the benefits of competition can be more widely distributed. |
344. |
The Companies and TELUS argued that
residential rate reductions were not needed to ensure fair prices. In their
submission, residential prices were already affordable and compared
favourably with prices in other countries. |
345. |
AT&T Canada objected to ARC et al.'s
and BCOAPO et al.'s proposal that rates for residential services should be
reduced over the course of the next price cap period according to a
productivity offset. AT&T Canada noted that, since Decision
94-19, significant effort had been put into
rebalancing residential rates in order to help reduce barriers to entry into
the residential local market and to reduce the subsidy requirement. It argued
that it would be a mistake to begin to reverse the significant progress made
to date, before competitive entry in this market segment had begun. Arguing
that rebalanced rates and a significant reduction in the subsidy requirement
had been achieved, AT&T Canada submitted that it would be inappropriate to
begin a program of residential local service rate reductions as contemplated
in ARC et al.'s and BCOAPO et al.'s proposal. |
346. |
AT&T Canada submitted that the major
shortcoming of ARC et al.'s and BCOAPO et al.'s proposal was its failure to
include any measures to promote competition. It argued that, if implemented,
their proposal would likely severely limit any possibility of competition for
the foreseeable future. |
347. |
With respect to residential
services, the Commissioner of Competition stated that he understood that
average residential rates in non-HCSAs were compensatory. The Commissioner of
Competition argued that the focus of price cap regulation in these geographic
areas should be to constrain the market power of ILECs until such time as
market forces would replace regulation. The Commissioner of Competition
submitted that this included maintaining the productivity factor in the price
cap formula for residential service rates. |
348. |
The Commissioner of Competition
submitted that the roll-out of competition in the residential market was
likely to take some time. In his view, in the absence of effective
competition, residential customers would pay excessive prices for local
service unless protected by the regulator. |
|
AT&T Canada's proposal
|
349. |
AT&T Canada proposed that ILECs'
capped services should be assigned to three baskets: residential, business
and other capped services. Each basket would be subject to a price cap equal
to inflation and to a pricing constraint of 10% applied at the rate element
level. As discussed in Part III of this Decision, AT&T Canada also proposed
special treatment for Competitor Services. |
350. |
ARC et al. argued that AT&T Canada's
proposed non-HCSA residential rate increases failed to meet the test of just
and reasonable rates, and would merely increase healthy profit margins. ARC
et al. further argued that rate rebalancing was unnecessary because new
entrants in the local residential market were not interested in serving HCSAs
in the near future. |
|
Call-Net's proposal
|
351. |
Call-Net argued that a fixed
regulatory constraint on prices, such as a price cap index, was a less than
perfect substitute for competitive forces. Call-Net argued that the structure
of the baskets in the initial price cap period resulted in a number of
undesirable effects such as downward pressure on business service prices. |
352. |
Call-Net proposed to replace the
pricing constraints imposed on residential and business and other capped
services in the initial price cap regime with an approach it called the "Tag
Along Mechanism". Call-Net suggested that the Tag Along Mechanism should also
be applied to non-forborne services in the Competitive Segment. |
353. |
Call-Net submitted that the Tag
Along Mechanism would tie the movement of prices in areas where there was no
competition to those in which some competition existed. According to
Call-Net, this would better respond to the nature of the evolving competitive
marketplace. Call-Net argued that this mechanism would replicate competitive
conditions in areas where no competition was available to discipline the
ILECs' pricing behaviour and would also encourage competition by restricting
the ILECs' ability to cross-subsidize their activities in competitive markets
using monopoly rents generated in non-competitive markets. |
354. |
Call-Net noted that the Tag Along
Mechanism was based on the notion that sufficient competition existed in
competitive bands. Call-Net recognized that competition in the residential
market might not be sufficient, at this time, to rely solely on this
mechanism. For the residential market, Call-Net proposed to further restrict
rate increases that would otherwise be allowed by the mechanism by some
overall restriction similar to the 10% increase constraint imposed on
individual rate elements in the initial price cap regime. |
355. |
Call-Net stated that requiring
uniform rate reductions across an ILEC's territory could result in individual
rate elements being driven below the imputation test floor. In this
situation, Call-Net proposed that no rate element be required to go below
that level. |
356. |
Call-Net submitted that if the
Commission were to decide that some retail services should not be subject to
the Tag Along Mechanism, such determinations should be made in a follow-up
proceeding. |
|
Other parties' comments on Call-Net's proposal
|
357. |
The Companies submitted that
simultaneously increasing prices in one area and lowering prices in another
area could not be considered anti-competitive unless prices were lowered
below cost. In their view, the imputation test would ensure that this could
not happen. Consequently, they argued that the Tag Along Mechanism was not
required to protect against potential anti-competitive pricing. |
358. |
The Companies also argued that the
Tag Along Mechanism would reduce an ILEC's ability to compete and react to
price changes in the marketplace because it would have to consider the
financial impacts of changing prices across its territory before reacting to
competitors' price changes or initiating price changes. They submitted that
such artificial financial constraints would lessen market-driven price
competition and the associated consumer benefits. |
359. |
The Companies submitted that the Tag
Along Mechanism would negatively impact much of the telecommunications market
because Call-Net proposed to apply this mechanism to a vast majority of
Utility services and to non-forborne services in the Competitive Segment. |
360. |
The Companies further argued that
the Tag Along Mechanism could compel an ILEC to react to competition by
reducing prices in all areas in order to protect market share. The Companies
argued this would reduce service margins in all areas, and would particularly
lessen incentives for entry into areas where competitors did not currently
compete. |
361. |
The Commissioner of Competition
argued that the Tag Along Mechanism would reduce an ILEC's incentives to
change rates in competitive and non-competitive areas to reflect changes in
demand, costs, or competitive conditions. The Commissioner of Competition
also submitted that other means less harmful to competition, such as the
imputation test, could be used to prevent anti-competitive pricing by the
ILECs. |
362. |
The Commissioner of Competition also
argued that the Tag Along Mechanism would make it less likely that an ILEC
would lower its prices in competitive regions, thus reducing its competitive
response to entry. The Commissioner of Competition submitted that while this
could be beneficial to the competitors, and perhaps even to the ILECs, the
fact that it was likely to reduce competition in competitive regions was
harmful to consumers and not favourable to the competitive process. The
Commissioner of Competition was of the view that, rather than protecting
consumers, the effect of the Tag Along Mechanism would be to maintain
collective market power in competitive regions. |
363. |
TELUS supported the positions
advanced by the Companies and the Commissioner of Competition. It also
submitted that the proposed Tag Along Mechanism was in fact an attempt to use
this proceeding to review and vary the Commission's imputation rules. |
364. |
ARC et al. and BCOAPO et al. stated
that the problem with the Tag Along Mechanism was that, while it might
adequately protect competitors, it would not adequately protect consumers
from otherwise unjustified rate increases. |
|
Commission consideration of parties' proposals
|
365. |
The Commission notes the wide
variety of proposals submitted by parties. While it considers that certain
aspects of the different proposals had merit, the Commission is of the view
that no party submitted a proposal that adequately balanced the interests of
customers, competitors and ILECs. |
366. |
The proposals submitted by the
Companies and TELUS requested enhanced pricing flexibility and did not
provide for a productivity offset to revenues derived from their services.
The Commission does not consider that the markets under consideration are
sufficiently competitive that a productivity offset is not required to ensure
that productivity and efficiency gains are reflected appropriately in the
service rates. |
367. |
The Commission also notes the
general consensus among parties commenting on the ILECs' proposals that those
proposals would do little to foster competition. As discussed in Part II of
this Decision, the Commission considers that while competition is expected to
increase gradually, the ILECs are likely to continue to have substantial
market power over the next price cap period in most services that are now
subject to price regulation. The Commission therefore considers the price cap
regulation proposals made by the Companies and TELUS to be unsuitable. |
368. |
The Commission addressed the central
elements of the proposals made by AT&T Canada and Call-Net in Part III of
this Decision dealing with services used by competitors. As regards
Call-Net's proposed Tag Along Mechanism, the Commission considers that it
would unduly reduce the pricing flexibility available to the ILECs to respond
in a competitive environment. Accordingly, the Commission does not consider
it appropriate to adopt the Tag Along Mechanism. |
369. |
RCI proposed to eliminate the
subsidy to residential service in HCSAs by applying productivity gains from
residential and business services first to the subsidy. Residential and
business customers would benefit from ILEC productivity gains applicable to
those services only after the subsidy had been eliminated. On the other hand,
RCI proposed that rates for services provided to competitors would reflect
productivity gains from the outset. |
370. |
The Commission considers that
implementing RCI's proposal would reinstate an implicit subsidy from
non-HCSAs to HCSAs. This would be contrary to the revisions to the
contribution regime introduced in Decision
2000-745, where the Commission made the subsidy to residential service in
HCSAs explicit to ensure, among other things, a competitively neutral
environment. The Commission notes that the ILECs, competitors, the
Commissioner of Competition and ARC et al. and BCOAPO et al. all expressed
concerns about this aspect of RCI's proposal. The Commission therefore
considers RCI's proposal unsuitable. |
371. |
The Commission notes that the
proposal of ARC et al. and BCOAPO et al. focused on ensuring that residential
customers derive their "fair share" of benefits in the next price cap period.
The Commission also notes that ARC et al. and BCOAPO et al. stated in reply
argument that they did not object to a productivity offset being applied to
Competitor Service revenues. However, the Commission considers that, if
implemented without modification, ARC et al. and BCOAPO et al.'s proposal
would not adequately take into account the Commission's objective of
fostering facilities-based competition. The Commission therefore declines to
adopt the proposal made by ARC et al. and BCOAPO et al. |
372. |
Based on the objectives for the new
regime and the record of this proceeding, the Commission has decided to adopt
a different structure for the new regime. In particular, the Commission has
decided to move away from the single basket structure of the initial price
cap framework with its overall price cap constraint. Instead, the next price
cap regime will involve multiple baskets and service groups with
individualized basket constraints, as well as specific rate element
constraints in some cases. The overall scheme of the framework is illustrated
in Figure 1: |
![Figure 1 - Capped Services](/web/20061109154911im_/http://www.crtc.gc.ca/archive/ENG/Decisions/2002/dt2002-34.jpg)
373. |
In the Commission's view, this
revised structure will more closely focus the required regulatory
constraints, while still providing the benefits and incentives of price cap
regulation. However, in order to avoid the possibility that the operation of
the price cap constraints might force price reductions that would have a
negative impact on local competition, the Commission has included a deferral
account mechanism. The full rationale for and operation of the deferral
account is discussed in the context of the relevant service basket. |
|
General conclusions regarding the basket structure and the application of
a productivity offset
|
374. |
In a price cap regime, a
productivity factor or offset is generally applied to a basket of services if
competition in those services is insufficient to ensure that subscribers will
benefit from productivity gains. Consequently, a decision to group services
into a single basket and apply a productivity factor involves an assessment
of whether competition sufficient to discipline prices exists for those
services. |
375. |
Part II of this Decision provides an
overview of the state of local competition. Based on that analysis, the
Commission has reached the following conclusions regarding the general
grouping of services into baskets and the need for a productivity offset. |
|
Residential market
|
376. |
The record of this proceeding
indicates that local competition is developing very slowly in the market for
residential local exchange service. In addition, there is virtually no
competition for residential optional local services. |
377. |
The Commission does not anticipate
that competition will be sufficient to discipline the ILECs' residential
local exchange and residential optional local service rates during the next
price cap period. Accordingly, the Commission considers it appropriate, with
the exception of service provided in HCSAs, to subject these services to a
productivity offset. The treatment of these services in non-HCSAs, as well as
a full explanation of the basket structure for these services in HCSAs, is
set out below. |
|
Business market
|
378. |
The Commission agrees with those
parties who argued that business service customers in larger metropolitan
areas were major beneficiaries of the initial price cap regime. Between 1998
and 2000, business rates in urban areas declined in every province except
Saskatchewan. SaskTel was not subject to price cap regulation during the
initial price cap period. On average, business rates in urban areas declined
by 15% in Ontario and Quebec, 11% in British Columbia, and 5% in Alberta. |
379. |
The Commission notes that no party
other than RCI proposed that a productivity offset be applied to business
rates. The Commission considers that the ILECs' market power is somewhat
limited in areas where competitors have facilities or are otherwise present
through the resale of ILEC services, notably through Centrex resale. |
380. |
The Commission is of the view that,
given the extent to which market forces are present in the business market
and the extent to which business rates were reduced in the initial price cap
regime, it is not necessary to subject business services to a productivity
offset. |
|
Market for Other capped services
|
381. |
The Commission notes that various
classes of customers use services that were assigned to the Other capped
services sub-basket in the initial price cap regime. For example, many of the
services in this basket were on AT&T Canada's and Call-Net's proposed
expanded lists of Competitor Services. On the other hand, residential
customers use operator services that were also assigned to this sub-basket. |
382. |
The Commission considers that the
ILECs retain market power with respect to most services assigned to Other
capped services. In the Commission's view, the resale of ILEC services by
competitors to provide competitive alternatives to Other capped services is
not an option in respect of many of these services. In view of these
considerations, the Commission considers that market forces cannot be relied
upon in the next price cap period to sufficiently discipline the prices of
these services. The Commission also anticipates that the ILECs will continue
to achieve productivity and efficiency gains in respect of these services in
the next price cap period. Accordingly, the Commission finds it appropriate
to subject these services to a productivity offset. |
|
Market for non-forborne Competitive Segment services
|
383. |
In Implementation of regulatory
framework – Splitting of the rate base and related issues, Telecom
Decision CRTC 95-21, 31 October 1995
(Decision 95-21), the Commission assigned ILEC services to the Competitive
Segment based chiefly on the consideration that competition was permitted in
these services at that time. A number of ILEC services assigned to the
Competitive Segment, however, are offered in markets that are not
sufficiently competitive to support a decision to forbear from regulation of
the services pursuant to section 34 of the Act. |
384. |
In the present proceeding, Call-Net
proposed that non-forborne Competitive Segment services be included in the
price cap framework. The ILECs opposed subjecting these services to a price
cap constraint on the grounds that markets for these services are
competitive. |
385. |
The Commission notes that it has
received few applications from the ILECs to reduce rates for non-forborne
Competitive Segment services in the last few years. In the Commission's view,
non-forborne Competitive Segment services are offered in markets that, while
competitive, are not sufficiently competitive to ensure that customers
benefit from the ILECs' productivity and efficiency gains. The Commission
therefore concludes that it is appropriate to include non-forborne
Competitive Segment services in the price cap framework for the next price
cap period and to subject them to a productivity offset. |
386. |
As determined later in this
Decision, the Commission has decided to include non-forborne Competitive
Segment services in the other capped services basket. |
|
Market for Competitor Services
|
387. |
In Part III of this Decision, the
Commission established two categories of Competitor Services. Category I
Competitive Services are those services deemed to be in the nature of an
essential service. These services will generally be priced on the basis of
Phase II costs plus a 15% mark-up. |
388. |
The Commission notes that there are
few, if any, competitive alternatives for services that have been assigned to
Category I Competitor Services. In view of this, and having regard to its
expectation that ILECs will experience productivity and efficiency gains in
respect of these services, the Commission considers that rates for Category I
Competitor Services should reflect productivity gains on an ongoing basis. |
389. |
Category II Competitor Services
include the remainder of Competitor Services (i.e., those not classified as
Category I). These services are not in the nature of an essential service.
The rates for these services are either mandated or market-based and are
based on considerations in addition to or other than Phase II costs. The
Commission considers it appropriate not to apply a productivity offset to the
rates for these services. |
|
Basket structure and pricing constraints: specific conclusions
|
|
General
|
390. |
In the initial price cap regime, the
ILECs chose not to reduce residential local exchange service rates to meet
their price cap commitments. Instead, they chose to decrease rates for
business and Other capped services. Consequently, business service customers
in major metropolitan areas were the major beneficiaries of the price cap
constraints, while all but a few residential customers experienced rate
increases. |
391. |
Most parties argued in favour of
tailoring specific tailoring specific price cap constraints to individual
service baskets rather than establishing an overall price cap constraint in
order to reflect the relevant market and policy factors for each group of
services. |
392. |
The Commission agrees that it would
not be appropriate to continue with an overall price cap constraint, and that
it is preferable to design constraints that are more closely matched to the
circumstances of individual baskets or groups of services. |
393. |
The Commission notes that, as in the
initial price cap regime, two different types of constraints wil be in effect
in the next regime. First, there will be "basket constraints" which will
impose a constraint on the revenues derived from a basket or sub-basket of
ILEC services. Basket constraints will apply on an annual basis and operate
through service basket limits, as in the initial price cap regime. The second
type of constraint is a "rate element constraint" which will impose a
restriction on the price of a specific service. ILEC services that are
subject to a basket constraint will, in many cases, also be subject to a rate
element constraint. |
394. |
Finally, the Commission notes that
the basket structure and constraints adopted in this Decision reflect its
view of the state of competition and the degree to which market forces will
be sufficient to protect customers by disciplining ILECs' pricing during the
next price cap period. They are also designed with a view to fostering
facilities-based competition and providing incumbents with incentives to
increase efficiencies and innovation. |
|
Basket structure for residential local exchange services and residential
optional local services
|
395. |
As discussed in Part II of this
Decision, the Commission does not anticipate that competition will be
sufficient to discipline the ILECs' residential local exchange and
residential optional local service rates during the next price cap period.
Accordingly, these services will be subject to the basket structure and
pricing constraints discussed below. |
396. |
Parties to this proceeding were
generally of the view that there should be separate baskets for residential
local exchange services in HCSAs and non-HCSAs and that these two baskets
should be made subject to different pricing rules. |
397. |
Given the significantly different
circumstances in HCSAs and non-HCSAs, the Commission has concluded that it is
appropriate to establish two baskets for residential local services: a basket
of residential local services in HCSAs and a basket of residential local
services in non-HCSAs. The Commission notes that each of these baskets will
include both residential local exchange services and residential optional
local services. |
398. |
The Commission further notes that
the ILECs have introduced services that bundle a residential local exchange
service or a residential optional local service with other telecommunication
services. The Commission notes that, from the perspective of a residential
customer, these service bundles are discretionary. In view of this, the
Commission finds it appropriate to consider service bundles that include a
residential local exchange service or a residential optional local service as
an optional service. Accordingly, the revenues derived from service bundles
that include a residential local exchange service or a residential optional
local service will be included in calculating revenues for services in each
of these baskets. |
399. |
The Commission notes that different
pricing policy considerations apply to residential local exchange and
residential optional local services, including service bundles that include a
residential local exchange service or a residential optional local service.
As residential local optional services are discretionary, the Commission
considers that less price protection is warranted than for residential local
exchange service. |
400. |
In light of these differences, the
Commission concludes that each basket of residential services should be
divided into two sub-baskets: a sub-basket of residential local exchange
services and a sub-basket of residential optional local services which
includes service bundles that include a residential local exchange service or
a residential optional local service. |
401. |
The constraints applicable to the
two residential services baskets and their respective sub-baskets are
discussed in the following sections. |
|
Residential local exchange
services and residential optional local services in non-HCSAs |
402. |
The Commission concluded above that
it is does not anticipate that market forces will be sufficient to discipline
the ILECs' prices for residential local exchange and optional local services
in the next price cap period and that a productivity offset should be applied
to these services in non-HCSAs. The productivity offset is established in
Part V of this Decision. The Commission therefore considers it appropriate to
apply a basket constraint equal to inflation less a productivity factor to
the non-HCSA basket of residential local services. |
403. |
The Commission notes, however, that
the ILECs and AT&T Canada argued against mandated reductions to residential
local service rates on the grounds that such reductions would have a negative
impact on competition in the local market. The Commission agrees that there
is the potential for adverse effects on local competition as a result of
mandated rate reductions. Consequently, the Commission has decided to
implement a deferral account mechanism to mitigate these potential effects. |
404. |
In this proceeding, the Commission
explored the use of a deferral account in the context of an overall price cap
constraint. With a deferral account mechanism, an amount equal to the revenue
reduction required by a basket constraint is assigned to the deferral account
and retained in that account, instead of reducing the revenues of the basket
by means of rate reductions. The monies in the deferral account are then
available for other purposes, including possible subscriber rebates. |
405. |
During the proceeding, the Companies
opposed the creation of a deferral account within the context of an overall
price cap constraint. In their view, a deferral account could create
significant uncertainty in the regulatory and financial market environments,
increase regulation and have negative revenue consequences for the ILECs and
the industry as a whole. |
406. |
TELUS expressed concern that, if a
deferral account were implemented, price changes might not reflect market
conditions. TELUS was also concerned that productivity gains could be
double-counted. |
407. |
The Commission notes that the
deferral account mechanism it has chosen to implement applies only to
revenues from residential local services in non-HCSAs. In the Commission's
view, this approach mitigates any regulatory or financial market uncertainty. |
408. |
With regard to the ILECs' concern
that a deferral account could increase regulation, the Commission is of the
view that use of a deferral account would be an efficient means of addressing
regulatory adjustments. For example, during the initial price cap period
there were several significant proceedings that dealt with adjustments to the
price cap indices, such as changes arising from approval of exogenous
factors. In the Commission's view, the deferral account will provide an
appropriate mechanism to deal with such situations. |
409. |
The Commission considers that the
creation of a deferral account for residential local services will assist in
achieving the objective of balancing the interests of the three main
stakeholders in telecommunications markets: customers, competitors and ILECs. |
410. |
The Commission notes that it has
implemented rate rebalancing initiatives over the last decade. These
initiatives and Commission determinations in other decisions have improved
the relationship between residential local service costs and revenues. This,
in turn, has fostered competition in the residential long distance market.
The Commission considers that residential local rate reductions that flow
from market forces would be generally preferable to mandated rate reductions. |
411. |
Accordingly, the Commission
concludes that, in non-HCSAs, it is appropriate to create a deferral account
in conjunction with the application of a basket constraint equal to inflation
less a productivity offset to all revenues from residential local services,
including service bundles that include a residential local exchange service
or a residential optional local service. |
412. |
The Commission anticipates that an
adjustment to the deferral account would be made whenever the Commission
approves rate reductions for residential local services that are proposed by
the ILECs as a result of competitive pressures. The Commission also
anticipates that the deferral account would be drawn down to mitigate rate
increases for residential service that could result from the approval of
exogenous factors or when inflation exceeds productivity. Other draw downs
could occur, for example, through subscriber rebates or the funding of
initiatives that would benefit residential customers in other ways. |
413. |
The Commission will review the
amount in each ILEC's deferral account on an annual basis, no later than the
second year of the next price cap period, at the time of the ILECs' annual
price cap filings. Beginning in the second year of this period, it is the
Commission's intention to dispose of amounts outstanding in the deferral
account that accrued during the previous year. The Commission intends to
clear these amounts in a manner that contributes to achieving the
Commission's objectives for the next price cap framework, including balancing
the interests of the three main stakeholders in the telecommunications
markets. |
414. |
Amounts in deferral accounts will
bear interest at the ILECs' short-term cost of debt, effective 1 June 2002,
and modified annually thereafter. |
415. |
The Commission has concluded in Part
V of this Decision that impacts due to the expiry of time-limited exogenous
factors from the initial price cap regime should be used to offset some of
the reductions to Competitor Services rates set out in this Decision. To the
extent that funds corresponding to the time-limited exogenous factors in the
non-HCSAs are not sufficient to compensate the ILECs, the deferral account
will be drawn down. To the extent that not all amounts due to the expiry of
time-limited exogenous factors are utilised, any amount remaining will be
added to the deferral account. |
416. |
In addition to the basket constraint
applied to the non-HCSA basket of local residential services as a whole, the
Commission considers it necessary to impose an additional basket constraint
on the sub-basket of basic local exchange services in non-HCSAs. This
constraint addresses the concern raised by ARC et al. and BCOAPO et al., that
under a price cap constraint that applies to both residential local exchange
services and optional local services, the ILECs could decrease rates for
residential optional local services and increase rates for residential local
exchange services. |
417. |
The Commission has decided that the
following basket constraint should apply to this sub-basket of services:
ILECs may increase residential local exchange service rates in non-HCSAs, on
average, by inflation less the productivity offset in each year in which
inflation exceeds the productivity offset. If the productivity offset exceeds
inflation in a given year, then the ILECs' average rates for residential
local exchange services assigned to the residential local exchange service
sub-basket in non-HCSAs may not increase in that year. An ILEC that does not
increase residential local exchange service rates in a given year to the
extent permitted by this constraint may use any unused "room" to increase
residential local exchange service rates in a subsequent year. Rate increases
would still be subject to the rate element constraint described below. |
418. |
However, the Commission is of the
view that rate element constraints are also required for the services in each
of the non-HCSA residential sub-baskets in order to provide additional
protection to subscribers. |
419. |
The Commission considers it
appropriate to impose a rate element constraint that limits increases in
ILECs' rates for residential local exchange services in non-HCSAs to 5% per
year on a non-cumulative basis. The Commission considers this 5% limit will
provide the ILECs with pricing flexibility while, at the same time,
adequately protecting subscribers. Moreover, the Commission considers that
residential local exchange services should not generally be de-averaged
further within a band. Consistent with the Commission's policy regarding
de-averaging of residence local exchange rates, rates for residential
optional local services in non-HCSAs, including bundles consisting of
residence local exchange services and/or optional local services, should
generally not be de-averaged further within a band. |
420. |
As far as local optional services in
non-HCSAs are concerned, the Commission is of the view that the discretionary
nature of these services justifies a more liberal rate element constraint.
The Commission has therefore concluded that rate increases for residential
optional local service rates in non-HCSAs should not exceed $1 per feature
per year. This limit will not apply to the prices of service bundles that
include a residential local exchange service or a residential optional local
service as these services are generally available on a stand-alone basis and
are subject to constraints at the rate element level when sold on that basis. |
|
Residential local exchange
services and residential optional local services in HCSAs |
421. |
In Decision
2000-745, the Commission determined that
the national subsidy requirement should be reduced over time and noted that
further rate increases might be necessary to move rates closer to costs. The
Commission indicated in that decision that the issue of further rate
rationalization would be addressed in this proceeding. |
422. |
The Commission notes that the size
of the national subsidy requirement is now considerably lower than
anticipated in Decision 2000-745.
Pursuant to Decision 2001-238, there has
been a reduction of approximately 70% in the national subsidy requirement
from $1 billion in 2001 to less than $300 million in 2002. |
423. |
The Commission notes that the ILECs'
proposed increases to rates for residential exchange services in HCSAs would,
if approved, virtually eliminate the subsidy over the next price cap period.
The Commission further notes the RCI view that the level of residential rates
has not been a barrier to entry into the residential telephony market for the
company. |
424. |
Finally, the Commission notes that
residential subscribers in many of the larger ILECs' HCSAs experienced
several increases in rates of approximately 10% each during the initial price
cap period. The ILECs' proposals to raise rates in HCSAs above rates in
non-HCSAs raised considerable protest from subscribers and their elected
representatives in Atlantic Canada. Consumers and the associations
representing consumers and many rural municipalities in Quebec also opposed
the ILECs' proposed increases to residential rates in HCSAs. |
425. |
In light of the above, the
Commission is not persuaded that it would be appropriate to permit the ILECs
the additional pricing flexibility they requested with respect to rate
increases for residential local exchange service rates in HCSAs. In the
Commission's view, residential local subscribers in HCSAs should be protected
from rate increases in the next price cap period to the same extent as
residential local subscribers in non-HCSAs. |
426. |
That being said, the Commission does
not consider it appropriate to impose a basket constraint on the HCSA basket
of local residential services. Such a constraint could force down local
exchange rates in HCSAs which are already set below cost. A basket constraint
could significantly impair the ability of the ILECs to achieve the annual
implicit contribution target amount of $60 per residence NAS included in the
subsidy calculation for HCSAs. Consequently, there will be no basket
constraint on the HCSA basket of local residential services. |
427. |
However, in order to protect
subscribers in HCSAs, the Commission considers it appropriate to impose a
basket constraint on the sub-basket of residential local exchange services in
HCSAs as follows: ILECs may increase residential local exchange service
rates, on average, by inflation less the productivity offset in each year in
which inflation exceeds the productivity offset. If the productivity offset
exceeds inflation in a given year, the ILECs' average rates for residential
local exchange services assigned to the residential local exchange service
sub-basket in HCSAs may not increase in that year. An ILEC that does not
increase residential local exchange service rates in a given year to the
extent permitted by this constraint may use any unused "room" to increase
residential local exchange service rates in a subsequent year. Rate increases
would still be subject to the rate element constraint described below. |
428. |
Consistent with its approach above
for non-HCSAs, the Commission also considers it appropriate to impose a rate
element constraint that limits increases in ILECs' rates for residential
local exchange services in HCSAs to 5% per year on a non-cumulative basis. As
noted above, this 5% limit will provide the ILECs with pricing flexibility
while, at the same time, adequately protecting subscribers. Moreover, the
Commission considers that residential local exchange services should not
generally be de-averaged further within a band. |
429. |
Similarly, consistent with its
approach in non-HCSAs, the Commission is imposing a rate element constraint
on local optional services in HCSAs. Specifically, rate increases for
residential optional local service rates in HCSAs should not exceed $1 per
feature per year. This limit will not apply to the prices of service bundles
that include a residential local exchange service or a residential optional
local service as these services are generally available on a stand-alone
basis and are subject to constraints at the rate element level when sold on
that basis. Consistent with the policy regarding de-averaging of residential
local exchange rates, rates for residential optional local services in HCSAs,
including bundles consisting of residential local exchange services and/or
optional local services, should generally not be de-averaged further within a
band. |
|
Single and multi-line business local exchange services
|
430. |
As discussed above, the Commission
has concluded that it is not appropriate to apply a productivity offset to
business services. However, given that facilities-based competition in the
business local exchange service market is not widespread geographically, the
Commission concludes that it is appropriate to cap the index of prices for
the basket of single and multi-line business local exchange services basket
at the rate of inflation to provide broad protection for these customers. |
431. |
The Commission therefore establishes
a basket constraint equal to inflation applicable to the basket of single and
multi-line business local exchange services. |
432. |
To provide additional protection
with respect to rate increases, especially to those customers in areas with
limited access to competitive alternatives to the ILEC services, the
Commission adopts a rate element constraint to limit increases in the ILECs'
rates for single and multi-line business local exchange services to 10% per
year. |
433. |
With respect to proposals from ILECs
that would decrease rates for single and multi-line business local exchange
services in a band's more competitive areas and increase them in less
competitive areas of that band, the Commission considers that rates for these
services should not generally be de-averaged further within a band. |
|
Other capped services
|
434. |
On the basis of its assessment of
competition in respect of Other capped services (including non-forborne
Competitive Segment services), the Commission has concluded that it is
appropriate to apply a productivity offset to these services. |
435. |
The Commission concludes that the
Other capped services basket will be subject to a basket constraint equal to
the rate of inflation less the productivity offset determined in Part V of
this Decision. |
436. |
However, in order to provide
customers of these services with additional protection from rate increases,
the Commission considers it appropriate to also impose a rate element
constraint which limits rate increases for a service in the Other capped
services basket to 10% per year. |
437. |
The Commission notes that in
Pricing policy for services subject to price caps, Telecom Order CRTC
99-494, 1 June 1999 (Order
99-494), it determined that it would not require an ILEC to file a rate
reduction for a service below its Phase II costs plus a mark-up of 25% in
order to meet the ILEC's price cap commitments. The Commission determines
that the pricing policy established in Order
99-494 will continue to apply to
Other capped services. |
438. |
With respect to potential proposals
from ILECs that would decrease rates for Other capped services in a band's
more competitive areas and increase them in less competitive areas of that
band, the Commission considers that rates for these services should not
generally be de-averaged further within a band. |
|
Competitor Services
|
439. |
As noted above, RCI proposed that
rates for Competitor Services be subject to a rate element constraint equal
to inflation minus a productivity factor. The Companies stated that they were
not opposed to such a constraint and that it would be straightforward to
apply. However, they argued that, if such a constraint were imposed, periodic
reviews of underlying costs should not be undertaken. The Companies submitted
that prices subject to this approach would reflect assumed changes in
underlying costs on a going-forward basis. |
440. |
TELUS argued that applying a
pre-determined productivity offset to individual prices for Competitor
Services is certain to have anti-competitive consequences as actual prices
diverge over time from competitive prices. TELUS suggested that competitive
inefficiencies would result from such an approach being adopted, including
inefficient wholesale and retail entry, the threatened financial viability of
ILECs, and incentives for anti-competitive behaviour by the ILECs. TELUS
argued that, if such a policy were adopted, it would be necessary to
determine a specific offset for each individual service. |
441. |
The Commission notes that revenues
derived from services assigned to Competitor Services were not subject to a
basket or rate element pricing constraint during the initial price cap
period. Consequently, rates for these services have remained unchanged with
some exceptions, such as, DC service, unbundled local loops, and 800 database
access. |
442. |
The Commission concluded above that
the ILECs can be expected to experience productivity gains in respect of
Category I Competitor Services. Given that the rate levels for some of these
services already reflect productivity gains, the Commission does not consider
it appropriate to subject these services to a further productivity offset. |
443. |
The Commission considers that the
application of a basket constraint on a basket of Category I Competitor
Services would allow the ILECs greater freedom to assign the productivity
gains for that basket to particular services, possibly advantaging one
competitor over another. The Commission is of the view that it would be
impractical to develop and use service-specific productivity as suggested by
TELUS. The Commission considers that the approach proposed by RCI provides an
acceptable means of reflecting ongoing productivity gains for the Category I
Competitor Services rates that do not already explicitly reflect productivity
gains. |
444. |
Therefore, with the exception of
those Category I Competitor Services whose rates explicitly reflect
productivity gains, the Commission adopts a rate element constraint equal to
inflation less the productivity offset established in Part V of this
Decision. This constraint would apply to all ILEC services assigned to
Category I Competitor Services, with the exception of those exempted services
identified in Appendix 1 to this Decision. The Commission further
considers that, due to these annual I-X adjustments, all usage rates of less
than $1 are to be rounded to the fourth decimal place, with the exception of
the DC and Access Tandem service rates which are to be rounded to the fifth
decimal place. |
445. |
The Commission directs each ILEC to
issue tariff pages by 1 June of each year, beginning in 2003, incorporating
adjustments to Category I Competitor Service rates to reflect the application
of the I-X constraint. |
446. |
With respect to the Category II
Competitor Services, the Commission considers it appropriate to cap rates for
these services at existing levels. |
|
Rate changes to Competitor Services
|
447. |
Under the initial regime established
for Competitor Services, the Commission determined that rates for Competitor
Services would be subject to change on application by the ILECs, by
competitors or through a proceeding initiated by the Commission. The
Commission further determined that the primary rationale for a change in
these services' rates would be a change in Phase II costs. |
448. |
As indicated above, the Commission
considers that the approach proposed by RCI provides an acceptable means of
incorporating ongoing productivity gains for Category I Competitor Services.
However, the rates for those services that have not been subject to recent
regulatory scrutiny may not be reflective of the costs of providing them. |
449. |
Accordingly, the Commission
considers it appropriate to maintain the current process for initiating rate
changes, independent of the changes that result from application of the rate
element constraint. |
|
Services with frozen rate treatment
|
450. |
In Decision
97-9, rates for certain services were
frozen. The Commission noted that 9-1-1 Service and Message Relay Service
were generally rated on the basis of Phase II costs plus a mark-up which
reflects the nature of these services. Given the manner in which the rates
for these services have been determined and the importance of these services,
the Commission considered it appropriate to freeze the levels of these rates,
as approved at 1 January 1998, in the initial price cap period. In addition
to the services noted above, the rates for Toll restriction and Call blocking
and the Instalment payment plan for residence installation charges were also
frozen in Decision 97-9. In 9-1-1 Service
– Rates for Wireless Service Providers, Centrex Customers and
Multi-Line Customers/Manual Access to the Automatic Location Identification
Database, Telecom Decision CRTC 99-17,
29 October 1999, the Commission changed the method for rating 9-1-1 service
such that these rates are now modified on an annual basis. |
451. |
All parties commenting favoured a
continuation of the rate treatment applied to services assigned to this group
in the initial price cap period. |
452. |
The Commission considers that rates
for all services identified above should continue to be frozen over the next
price cap period. While the 9-1-1 service rates will be adjusted annually,
the Commission considers it appropriate to continue to assign 9-1-1 service
to the group of services with frozen rate treatment since it is of a like
nature. In addition, as proposed by the Companies, the Commission includes
residential unlisted telephone number service in this group as the rate for
this service is subject to a maximum of $2. The services with frozen rate
treatment are identified in Appendix 2 to this Decision. |
453. |
The Commission also concludes that,
in light of their respective mergers, TELUS and Aliant Telecom are permitted
to average rates for these services over their serving territory on a
revenue-neutral basis. |
|
Uncapped services
|
454. |
The Commission is assigning tariffed
services that are not included in any basket or subject to a rate element
constraint to a service group entitled Uncapped services. In particular,
Centrex, business optional local services and service bundles that include a
business local exchange service or a business optional service are classified
as Uncapped services. |
455. |
The Commission notes that an
important consideration underlying its approach in the initial price cap
regime was to provide regulatory protection to customers of primary exchange
service where market forces were not sufficient to so do. This remains an
important consideration for the next price cap period. In this connection,
the Commission notes that Centrex service is a premium business service that
is used as a substitute for single-line and multi-line business local
exchange services. As this Decision makes these latter services subject to a
basket constraint and a rate element constraint, the Commission does not
consider it necessary to subject Centrex services to such constraints. |
456. |
Similarly, in view of the
substitutes available, the Commission does not consider it necessary to apply
constraints to business optional local services or to service bundles that
include a business local exchange service or a business optional local
service. However, should an ILEC seek to further de-average rates for
Uncapped services, it should provide the rationale in its application. |
457. |
Most SFTs or Special Assembly
Tariffs (SATs) are assigned to Uncapped services. The Commission notes that
these services are generally offered to a limited number of customers and
that the rates are often developed having regard to factors such as long-term
customer commitments. However, the Commission notes that it has assigned a
few services offered by the ILECs, pursuant to a SFT or a SAT, to baskets or
service groups other than Uncapped services. |
458. |
The Commission also assigns the
ILECs' Late Payment charge to Uncapped services. The Commission considers
that it is not necessary to apply a constraint to these charges, given that
they are calculated based on a Commission-approved formula. |
|
Specific requests made by Aliant Telecom, MTS, SaskTel and Bell Canada
|
459. |
As noted above, Aliant Telecom, MTS,
SaskTel and Bell Canada each submitted proposals for specific rate or service
changes in addition to the Companies' general price cap proposal. |
|
Aliant Telecom's proposal for a uniform residential local service rate of
$25
|
460. |
Aliant Telecom asked to be permitted
to raise the rates for residential local individual line service to a common
level of $25 per line across all bands within Aliant Telecom's serving area
in 2002. The monthly rate increases necessary to attain a common level of $25
per month across Aliant Telecom's territory are $0.55 in Prince Edward
Island, $3 in New Brunswick and $3.05 in Newfoundland. |
461. |
ARC et al. and BCOAPO et al. noted
that the proposed increases for Newfoundland and New Brunswick would exceed
10% and would not comply with the rate element constraint of the initial
price cap regime. ARC et al. and BCOAPO et al. submitted that Aliant
Telecom's claim that these increases are required in order to achieve various
marketing objectives and to bring more standardization throughout the region
are not adequate justification for the proposed increases. ARC et al. and
BCOAPO et al. further argued that Aliant Telecom could standardize rates at a
level less than $25. ARC et al. and BCOAPO et al. noted that Aliant Telecom
and the other ILECs were invited in PN 2001-37
to propose cost-justified rate increases. ARC et al. submitted that
Aliant Telecom and the other ILECs could have provided the required
justification in the form of a revenue requirement analysis, but chose not to
do so. |
462. |
The Commission notes that Aliant
Telecom argued that its proposed rate restructuring did not involve setting
going-in rates and did not warrant a revenue requirement assessment.
Therefore, the Commission considers that any rate restructuring in Aliant
Telecom's territory should be implemented within the constraints of the price
cap regime established in this Decision. |
463. |
The Commission has established the
basket structure and constraints that it considers appropriate for Aliant
Telecom and the other ILECs. The Commission therefore denies Aliant Telecom's
request for the flexibility to implement a uniform rate of $25 for
residential local exchange service across its serving territory. |
|
Aliant Telecom's proposal to increase EAS and CCP charges
|
464. |
Under the Companies' proposal,
services such as EAS and residential installation service would be assigned
to the Other residential services basket. As an exception to the Companies'
proposal to limit annual rate increases for services assigned to this basket
to inflation on average and no more than 10% at the rate element level,
Aliant Telecom requested the flexibility to increase the EAS and CCP charges
in Newfoundland to a uniform rate of $5 over the next price cap period. |
465. |
Newfoundland is the only province
within Aliant Telecom's serving area that has EAS and CCP charges identified
separately. EAS charges for residential services range from $1.05 to $3.10,
and CCP charges are $5. Aliant Telecom proposed to move EAS charges to a
uniform rate of $5 over time. Aliant Telecom proposed that the 10% rate
element limit should not apply to the services in this basket. However, on
average, rates for EAS, CCP and residential installation charges would not be
allowed to increase by more than the rate of inflation in a given year. |
466. |
Aliant Telecom submitted that its
proposal with respect to EAS and CCP charges would permit it to consolidate
the eleven different EAS/CCP rate levels that apply in Newfoundland to a
uniform CCP rate. |
467. |
The Commission notes that in those
areas of Newfoundland where EAS and CCP services are offered, these services
are mandatory services with subscription to local exchange service. Given the
mandatory nature of EAS and CCP services, the Commission considers that it is
appropriate to apply the same regulatory approach to these services as to the
associated local exchange services. Therefore, the Commission assigns Aliant
Telecom's EAS and CCP services, as appropriate, to the Residential local
exchange services sub-basket in non-HCSAs, to the Residential local exchange
sub-basket in HCSAs and to the Single-line and multi-line business services
basket. The Commission further considers that changes to rates for EAS and
CCP service should be implemented within the constraints of the price cap
regime established for local exchange services in this Decision. |
468. |
Accordingly, the Commission denies
Aliant Telecom's request for the flexibility required to increase EAS and CCP
rates in Newfoundland to $5 over the next price cap period. |
|
MTS' request for flexibility to increase Band D residential local rates
|
469. |
MTS requested approval for a maximum
annual rate increase of $2 for residential individual line service in Band D
in each year of the next price cap period. MTS stated that this proposal
would enable the company to move residence rates towards a uniform level of
$30 in rural and northern Manitoba. |
470. |
MTS stated that rates for
residential local individual line service rates are the same in Band D, a
non-HCSA Band, and most of Band E, a HCSA band. MTS also submitted that these
rates are significantly below the average cost of providing service in these
bands. |
471. |
No parties commented on this aspect
of MTS' proposal. |
472. |
The Commission has not adopted the
Companies' proposal to increase monthly rates for residential local service
in HCSAs by an annual maximum of $2. In view of this determination, MTS will
not need the pricing flexibility requested for Band D in order to keep rates
in the rural areas of Manitoba at comparable levels. |
473. |
Accordingly, the Commission denies
MTS' request for additional flexibility to increase monthly residential local
exchanges service rates in Band D. |
|
SaskTel's request to raise business rates in HCSAs
|
474. |
SaskTel submitted that approximately
half of its single-line business customers reside in HCSAs, and that business
local exchange service in these areas is provided at rates that do not cover
the associated costs of providing the service. The rates currently charged to
single-line business customers in HCSAs are $28.50 for Rate Group 1 and $34
for Rate Groups 2 and 3; business customers in non-HCSAs pay $34 for
single-line business service. |
475. |
SaskTel requested permission to move
single-line business rates in HCSAs to $38 by 2005, with an initial increase
of $5.50 in 2003 and subsequent maximum annual increases of $2 in each of
2004 and 2005. As noted earlier, SaskTel also proposed to eliminate excess
mileage charges for all individual line customers in 2003. |
476. |
ARC et al. and BCOAPO et al.
supported SaskTel's proposal to place below-cost business services in a
separate basket, and to move rates for these services closer to cost through
a series of price increases. |
477. |
The Commission notes that the price
cap framework adopted in this Decision will provide SaskTel with the pricing
flexibility to increase single-line business rates in HCSAs. |
478. |
Accordingly, the Commission denies
SaskTel's request to increase single-line business rates in HCSAs through the
specific rate flexibility requested. |
|
Bell Canada's request to grandfather four-party local exchange service
|
479. |
Bell Canada proposed to grandfather
four-party access lines that remain in service, effective 1 January 2002. At
that time, the company would cease offering four-party line service to new
customers. |
480. |
No party commented on this aspect of
Bell Canada's proposal. |
481. |
The Commission notes that the basic
service objective includes, among other things, the provision of individual
line local exchange service. The Commission further notes that existing
customers would not be subject to any rate increases as a result of the
approval of this particular proposal. Accordingly, the Commission finds Bell
Canada's proposal to be acceptable. |
482. |
The Commission approves Bell
Canada's proposal to cease offering four-party local exchange service to new
customers, effective immediately. |
|
Classification of services
|
|
General
|
483. |
The Commission's preliminary
assignment of services to baskets, sub-baskets or service groupings is
contained in Appendix 2 to this Decision. In the sections below, the
Commission addresses the classification of extra listings, individual line
service surcharges and new services. |
484. |
As discussed below, various issues
remain outstanding with respect to local payphone service. In view of this,
the Commission assigns local payphone service to its own service group. |
485. |
As discussed earlier, in non-HCSAs,
residential local services are assigned to a basket of services. This basket
is composed of two sub-baskets: residential local exchange services and
residential optional local services, including service bundles that include a
residential local exchange service or a residential optional local service.
In HCSAs, residential services are assigned to a sub-basket of residential
local exchange services and to a sub-basket of residential optional local
services, including service bundles that include a residential local exchange
service or a residential optional local service. |
486. |
The residential local exchange
services sub-baskets contain residential local exchange services,
installation charges and non-discretionary services associated with various
grades of residential local exchange services but do not include 9-1-1
Service and Message Relay Service. |
487. |
The residential optional local
services sub-baskets include services such as voice mail, call display and
call waiting, the rates for which were not capped in the initial price cap
period. As stated above, bundled services that include a residential local
exchange service or a residential optional local service are to be included
in this sub-basket. |
488. |
The single and multi-line business
services basket includes single-line and multi-line business local exchange
services, including contract options, installation charges and
non-discretionary services associated with various grades of business
services, but excludes 9-1-1 service and Message Relay Service. |
489. |
The group of services, the rates for
which will be frozen over the next price cap period, includes 9-1-1 service,
Message Relay Service, Toll restriction, Call blocking, the Instalment
payment plan and unlisted telephone number service for residential
subscribers. |
490. |
The Commission has addressed the
assignment of services to the Competitor Services group in Part III of this
Decision. |
491. |
The Uncapped services group of
services includes Centrex, business optional local services and service
bundles that include a business local exchange service or a business optional
service. It also includes specific SFTs or SATs that are not assigned to
other baskets or groups and the Late Payment Charge. |
492. |
The Other capped services basket
includes all tariffed services that are not assigned to another basket or
service group. |
493. |
Parties to this proceeding may file
comments with the Commission on the service assignment set out in Appendices
1 and 2 to this Decision by 17 July 2002 and may submit reply comments by 29
July 2002. A party filing comments or reply comments must also serve a copy
of its submission on all other parties to this proceeding. Documents must be
received, not merely sent, by the dates indicated. |
|
Extra listings
|
494. |
ARC et al. and BCOAPO et al. noted
that, under the current regime, the ILECs' residential extra listings service
is assigned to Uncapped services. ARC et al. and BCOAPO et al. submitted that
this service is provided on a monopoly basis and is not discretionary because
family members do not always share the same surname. They further argued that
an extra listing in the directory should be provided free of charge and, if
not, that the ILECs' extra listing service should be assigned to a capped
services basket. |
495. |
The Companies argued that extra
listings are discretionary. They noted that, in Bell Canada's serving area,
the penetration rate associated with such listings was just over 1% and
argued that the very low penetration rate indicated that the value
subscribers place on additional listings is generally low. The Companies
argued that the fact that people sharing the same telephone number may not
share the same last name did not justify providing this service free of
charge or placing a cap on the ILECs' prices for these services. The
Companies further argued that providing the extra listings service free of
charge would be inappropriate, given that there are costs associated with the
provision of this service and that these costs could increase sharply if
demand were to increase substantially. |
496. |
The Commission notes that, while
rates for the ILECs' extra listings service vary by ILEC, these rates are
approximately $2 per month per extra listing for residential customers and $3
for business customers. Having regard to the limited market forces which are
present in the market for directory services, the Commission considers that
it is appropriate to assign the ILECs' extra listings service, for
residential and business subscribers, to the Other capped services basket. |
|
TELUS' proposal regarding individual line service surcharges
|
497. |
TELUS submitted that ILS charges are
additional non-discretionary charges that apply to customers in Alberta
located beyond the base rate area who request residential or business local
exchange service. TELUS noted that it intends to replace ILS charges during
the next price cap period and submitted that ILS charges should be frozen at
their current rates, thereby maintaining the affordability of ILS charges,
until such time as an alternative service is submitted for the Commission's
consideration. |
498. |
No parties commented on this aspect
of TELUS' proposal. |
499. |
The Commission considers that it
would be inappropriate to assign TELUS' ILS charges to the basket of services
whose rates are frozen. ILS surcharges are mandatory and are therefore
assigned with residential local exchange services or single-line and
multi-line business services, as applicable. |
|
Treatment of new services
|
500. |
TELUS submitted that new services
are non-essential by definition and proposed that they should not be
regulated on the basis that doing so would dampen the ILECs' incentives to
innovate. The Companies proposed that new services, unless they were
Competitor Services as defined by the Companies, should not be subject to
upward pricing constraints. |
501. |
In Decision
98-2, the Commission stated that the ILECs
would be required to submit a price cap classification with tariff
applications for new services or new service elements. The Commission also
determined that parties' comments regarding an ILEC's proposed service
classification should be filed within 30 days of the date that the ILEC's
application becomes publicly available. |
502. |
The Commission considers that its
determinations in Decision 98-2 with respect
to the price cap classification of new services remain appropriate. New
services will be classified on a case-by-case basis. |
503. |
The Commission therefore concludes
that, consistent with its determinations in Decision
98-2, when an ILEC files a tariff
application in respect of a new service offering, the ILEC must identify the
service basket, sub-basket or service group to which it proposes to assign
that service. |
|
Other issues
|
504. |
A number of additional issues arose
in the present proceeding regarding the pricing of services and related
issues. These issues are addressed below. |
|
Imputation test for promotions
|
505. |
In Decision
97-8, the Commission determined that
promotions offered by an ILEC would be exempt from the application of the
imputation test on condition that sufficient information is provided by the
ILEC to demonstrate that the offering is a legitimate promotion of limited
duration. |
506. |
Call-Net submitted that the ILECs'
promotional pricing programs gave the appearance of a vigorously competitive
market. Call-Net argued that because of their exemption from the imputation
test, the ILECs' promotions undermined the long-term viability of the
competitive process, especially in the residential market where competition
had yet to develop. Call-Net submitted that the ILECs that had faced
competitive entry had been prolific in their use of promotions and submitted
that a number of service offerings appeared numerous times on the list, with
promotions lasting as long as 12 months. Call-Net therefore submitted that,
at a minimum, residential promotions should no longer be exempt from the
requirement to pass an imputation test. |
507. |
Group Telecom submitted that
temporarily reducing or eliminating the ILECs' flexibility to engage in
promotions without filing imputation tests could be one remedy that the
Commission could consider against what Group Telecom argued was the ILECs'
regulatory non-compliance with the Commission's requirements. |
508. |
In reply argument, the Companies
submitted that the use of promotions has been a standard business practice
for many years and a method they used to increase service penetration. The
Companies noted that imputation tests for promotions were filed if the
elapsed time of the promotion, plus any benefit period that would extend
beyond the time the promotion was offered in the market, was 12 months or
longer. They stated that imputation tests were also filed in situations where
the promotion was repeated to the same target market, at any time during the
life cycle of the product of service such that the 12-month window was met or
exceeded. The Companies submitted that the current practice on promotions
provided ample protection against anti-competitive pricing. |
509. |
In Review of regulatory framework
– Targeted pricing, anti-competitive pricing and imputation test for
telephone company toll filings, Telecom Decision CRTC
94-13, 13 July 1994 (Decision 94-13), the
Commission stated that it did not consider below-cost pricing in the case of
market trials and promotions to be generally anti-competitive. The Commission
determined that market trials and promotions would be exempt from the
application of the imputation test on the condition that sufficient
information was provided by the ILECs to demonstrate that the offering was a
legitimate market trial or a promotion of limited duration. In Tariff
filings relating to promotions, Telecom Decision CRTC
96-7, 18 September 1996, the Commission
confirmed its position that below-cost pricing in the case of legitimate
promotions of limited duration was generally not anti-competitive. |
510. |
The Commission stated in Decision
97-8 that, consistent with the treatment of
market trials and promotions in Decision 94-13,
market trials and promotions were exempt from the application of the
imputation test as long as sufficient information was provided by the ILECs
to demonstrate that the offering was a legitimate market trial or a promotion
of limited duration. The Commission is not persuaded that it is necessary to
alter its approach to the application of the imputation test to ILEC
promotions. Accordingly, the Commission denies the requests made by Call-Net
and Group Telecom. |
|
Basic toll constraints
|
511. |
In Forbearance – Regulation of
toll services provided by incumbent telephone companies, Telecom Decision
CRTC 97-19, 18 December 1997 (Decision
97-19), the Commission forbore from regulating ILEC-provided toll and
toll-free services, subject to certain conditions. The Commission required,
among other things, that the ILECs provide to the Commission, and make
publicly available, rate schedules setting out the rates for basic toll
service. The ILECs were also required to update their respective schedules
within 14 days of any change to the rates for basic toll service. The
Commission also required that reasonable advance notice of rate changes be
provided directly to subscribers; it prohibited route de-averaging; and it
required that any increases to basic toll rates be offset by corresponding
rate decreases that would ensure no change to the basic toll schedule's
weighted average rate. |
512. |
Pursuant to Decision
94-19, the rates used to calculate the
average price of calls in the basic toll schedule include any surcharges for
credit card calls. Approved credit card surcharges are applied to pay
telephone-originated long distance calls where credit cards are used. |
513. |
The Companies applied to the
Commission to remove the pricing constraint on the basic toll schedule. In
the alternative, the Companies requested that the Commission exclude credit
card surcharges when calculating the average price of basic toll services. |
514. |
The Companies submitted that
interexchange competition was well established; customers had access to
alternative service providers; and only a small portion of customers made
calls rated under the basic toll schedule. Further, the Companies argued that
the present constraint prevented passing on the costs of credit card usage to
customers, which is what other businesses could do, including the Companies'
payphone competitors. |
515. |
TELUS supported the Companies'
application, stating that customers had competitive alternatives, and that
only a small percentage of customers made basic toll schedule calls
exclusively. |
516. |
ARC et al. and BCOAPO et al. argued
that the pricing constraint on basic toll services should not be removed. ARC
et al. and BCOAPO et al. observed that: (i) there have been no significant
changes in competitive conditions in toll markets since 1997; (ii)
competition may have lessened, since the ILECs appeared to be regaining
market share; (iii) the ILECs have not reduced basic toll schedule rates
since 1997; and (iv) the ILECs obtained significant revenues from basic toll
schedule rated calls. They submitted that basic toll users needed protection
from unjustified rate increases, since they made basic toll calls either
because they had not switched off basic toll, or because they were
subscribers to discount toll plans that apply basic toll rates to calls made
outside the hours of the discount toll plan. ARC et al. and BCOAPO et al.
also argued that the credit card surcharges should not be uncapped, since pay
telephone users may not have access to alternatives when they place a call at
a pay telephone. |
517. |
AT&T Canada supported ARC et al.'s
and BCOAPO et al.'s views, stating that there was no compelling reason to
eliminate the current price constraints on the ILECs' basic toll schedule
service. |
518. |
The Commission notes that the ILECs
obtain substantial revenues from calls charged at basic toll rates. For
example, such calls account for nearly 30% of Bell Canada's toll revenue. The
percentages for other ILECs range from about 10% to 20%. As parties noted,
some of these calls are made by customers who use discount toll plans that
apply basic toll rates at certain times of the day. |
519. |
The Commission agrees with ARC et
al. and BCOAPO et al. that toll market conditions have not changed
significantly since 1997. Accordingly, the Commission considers it
appropriate to maintain the conditions on the basic toll schedule established
in Decision 97-19. Further, in view of these considerations, the Commission
is of the view that the proposed changes in respect of credit card surcharges
would not be appropriate. Accordingly, the Commission determines that credit
card surcharges should continue to be included in the calculations of the
average basic toll schedule price. |
|
Pay telephone rates
|
|
The Companies' proposal |
520. |
The Companies submitted that demand
for local payphone service was declining due to the availability of
alternative services including cellular telephones and two-way paging
services. They noted that, as a result, revenues available to support
payphone service were also declining. |
521. |
The Companies proposed that local
payphone service should be treated outside the price cap framework and that
current payphone rates should remain in effect until such time as specific
proposals are made to and approved by the Commission. The Companies submitted
that applications for future rate changes for local payphone service would be
made on a company-specific basis. |
|
Bell Canada's proposal |
522. |
Bell Canada submitted that after
three years of payphone competition, competitors had not made significant
inroads into the payphone market in Ontario and Quebec. |
523. |
Bell Canada submitted that the
current rate of $0.25 for a local payphone call was a critical factor in the
slow growth of competitors' market share. The company argued that the current
local payphone rate, which had been in place for approximately 20 years, was
a barrier to entry in the payphone industry in that it was insufficient to
provide payphone operators with an adequate return on their investment. |
524. |
Bell Canada further submitted that,
without the pricing flexibility to increase its local payphone rates, it
would need to remove a significant number of its payphones by the end of
2006. Bell Canada stated that the remaining payphones would be concentrated
in high-traffic, low-cost locations (i.e., malls and airports). Bell Canada
argued that, as the financial returns diminish, there would be a considerable
risk that Bell Canada could be forced to close down its pay telephone
operations entirely at some point in the future. |
525. |
Bell Canada proposed that it be
permitted to increase the rate to a maximum of $0.50 for a local call placed
from an indoor payphone. Bell Canada requested the flexibility to introduce a
$0.50 charge per call for local directory assistance provided in respect of
calls placed from payphones located indoors. To address concerns regarding
accessibility, Bell Canada stated that the rate for a local call placed from
an outdoor payphone would remain at $0.25 and directory assistance would
continue to be provided at no charge. |
526. |
Bell Canada noted that outdoor
payphones in Ontario and Quebec represented 23% of its payphone base, that
the number of outdoor payphones had only dropped by about 100 since 1998, and
that the number of payphones in HCSAs had increased. |
527. |
Bell Canada noted that it had
eliminated about 9,200 payphones from its service base since the beginning of
1998. The company submitted that the rate at which payphones would be removed
from service would be slowed under its proposal, as lower traffic levels
would be required to justify the continued maintenance of a payphone station.
Bell Canada anticipated that, if its proposal were approved, the number of
payphones in service at the end of 2005 would be about 50% higher than would
otherwise be the case. Bell Canada also undertook not to remove from service
more than 5% of the previous year's payphone base in any year of the next
price cap period, if its requested pricing flexibility were granted. |
528. |
Bell Canada submitted that its
proposal would offer all payphone competitors more pricing room and an
opportunity to improve their profit margins. Bell Canada also argued that its
proposal would provide a simple balance between the objectives of fairness
and the incentive to invest. |
|
TELUS' proposal |
529. |
TELUS proposed that the local
message rate (paid by coin or prepaid card) for public telephone service in
bands where there was no evidence of competitive entry in the local pay
telephone market should be limited to a maximum of $0.50 per call. |
|
Other parties' positions and
proposals |
530. |
Paytel submitted that the Commission
should approve a local calling rate of $0.50 for all payphones. Paytel argued
that there should be no flexibility with respect to the rate for a local
call. It further argued that raising this rate to $0.50 on all payphones
would keep the service as affordable today as it was when the Commission
approved the current rate of $0.25 in 1981. |
531. |
Paytel submitted that granting the
ILECs the flexibility requested in their proposals would have
anti-competitive results. Paytel argued that the ILECs would raise the rate
for local calls to $0.50 immediately where they had an adequate degree of
exclusivity and that they would leave the rate unchanged where they faced
competition. |
532. |
However, Paytel submitted that the
ILECs should not be permitted to offer payphone service on a below-cost
basis, since doing so would be incompatible with the development of a
competitive industry. Paytel argued that maintaining a rate of $0.25 per call
or mandating a smaller increase would not be viable in the long run. |
533. |
Paytel submitted that Bell Canada's
proposal contravened the provisions of the Act since the proposed rate
differential was not based on substantiated cost differential considerations,
rate band differences, income of user, specific geographical location or
specific industry considerations. |
534. |
Paytel submitted that TELUS'
proposal to allow the company the flexibility to increase rates to up to
$0.50 per call in areas where there was no evidence of competition is not in
the public interest. Competitive pay telephone service providers would be
obliged to maintain the $0.25 rate wherever they currently operate, since
TELUS would presumably not be permitted to increase its rate above that level
in areas where there was competition. |
535. |
Paytel supported a three-year
interim period for a mandated rate of $0.50 for a local cash call made from
any ILEC payphone. Paytel submitted that at the end of the interim period,
the Commission should initiate a review of the industry to determine whether
it should forbear from regulating the ILECs' payphone services, and if so
under what conditions. |
536. |
ARC et al. and BCOAPO et al.
submitted that the payphone rate proposals made by Bell Canada and TELUS had
significant implications for low-income consumers and had not been the
subject of a thorough examination in this proceeding. ARC et al. and BCOAPO
et al. submitted that people who could afford rate increases were
increasingly less likely to use payphones. They argued that it would be more
appropriate to focus on the affordability of the service for persons who were
still relying on payphone service and who did not have alternatives to that
service. |
537. |
ARC et al. and BCOAPO et al.
submitted that low-income consumers used payphones for two significant
purposes; for some, it was the dominant form of public communication, for
others, it was their only access to phone service. |
538. |
Paytel submitted that it would be a
mistake for the Commission to accept the notion that appeared to be advanced
by ARC et al. and BCOAPO et al. that the only rate at which a payphone call
would be considered fair or affordable was $0.25. Paytel also submitted that
ARC et al. and BCOAPO et al. had not provided any link between the income
levels of their constituents and their use of any form of telecommunications.
Paytel noted that in Local pay telephone competition, Telecom Decision
CRTC 98-8, 30 June 1998, the Commission
stated that the vast majority of people who used pay telephones did so as a
matter of convenience or emergency and not as a substitute for basic
telephone service. |
539. |
ARC et al. and BCOAPO et al.
submitted that, based on the information publicly available, they could not
assess whether access to pay telephones for low-income people was threatened
by the general decline in the industry itself. ARC et al. and BCOAPO et al.
argued that issues relating to the affordability of payphones for low-income
consumers, and the implications of Bell Canada's proposal, raised policy
issues that had not been adequately canvassed in this proceeding. ARC et al.
and BCOAPO et al. further submitted that, if Bell Canada's and TELUS'
proposals were adopted, consumers would see prices increase without service
improvement while the ILECs and competitors would increase their revenues. |
540. |
ARC et al. and BCOAPO et al.
submitted that profound changes to the rating structure for payphones should
be studied in a separate proceeding so as to consider more fully the
appropriate rate treatment and the impact that any rate increase would have
on low-income consumers. ARC et al. and BCOAPO et al. submitted that the
Commission should issue a public notice on the date that a decision is issued
in this proceeding to address the payphone issues raised in this proceeding. |
|
Conclusions |
541. |
The Commission agrees with ARC et
al. and BCOAPO et al. and Paytel that issues raised in this proceeding with
respect to payphones should be addressed. As noted by interveners, Bell
Canada stated that, even with a $0.50 rate for local calls, payphones would
continue to be decommissioned, although at a slower rate than otherwise. The
Commission also agrees with Paytel that the competitive implications of the
pricing flexibility that Bell Canada and TELUS have requested must be
considered. The Commission considers that it would be premature to address
pricing policy issues with respect to payphones before more general policy
issues relating to payphones are addressed. |
542. |
In light of the foregoing, the
Commission considers that the ILECs' public and semi-public pay telephone
services should be assigned to a separate category in the next price cap
regime. The Commission also considers that rates for public and semi-public
payphones should remain at current levels until the Commission considers
policy issues related to payphone service, in a forthcoming proceeding. |
543. |
Accordingly, the Commission rejects
the pricing flexibility proposals made by Bell Canada and TELUS in respect of
public and semi-public payphones. |
|
Competitiveness tests
|
544. |
The Companies proposed that the
Commission should remove the upward pricing constraint, i.e., not limit rate
increases, for a service once competitors could serve 30% of the market for
that service and once competitors actually serve 5% of the customers in that
market. The Companies noted that these criteria are similar to the rate
deregulation criteria applicable to Class 1 cable distribution undertakings.
The Companies submitted that their proposed test is a simple objective
measure of the extent of competitive penetration in the relevant market. |
545. |
The Companies stated that the
relevant market for the test could be the entire territory, a rate band, or a
smaller geographic area. The Companies proposed that prices in the relevant
geographic market would not be de-averaged. |
546. |
The Companies argued that removal of
the upward pricing constraint would give the ILECs pricing flexibility to
respond to market conditions more quickly than would be possible through the
forbearance process. The Companies argued that the removal of the upward
pricing constraint would not be equivalent to forbearance, since the ILEC
would continue to file tariffs for the relevant services and the imputation
test would continue to apply to these services. |
547. |
The Companies submitted that CLECs
are quickly growing their market share in major urban centres, and are
expected to serve 20% of customers in Bell Canada's Band A by year end 2001.
The Companies also suggested that more than 30% of customers in Bell Canada's
Band A could be served by competitors, and that competitive conditions in
Band A satisfy the proposed test for removal of the upward pricing
constraint. |
548. |
TELUS proposed a competitiveness
test for business services only. TELUS proposed that the upward pricing
constraints could be removed no sooner than one year after there has been
actual entry in a given rate band, i.e., a service provider has served or
actively sought customers for at least one year. TELUS concurred with the
Companies' view that the concept of relevant geographic market may require
further refinement, and could be larger or smaller than a rate band. TELUS
stated that the test was not a forbearance test and should be applied to
markets not ready for forbearance. |
549. |
Most parties were opposed to the
competitiveness tests proposed by the ILECs, arguing that, if adopted, the
tests would permit the ILECs to use their market power to increase rates in
areas where they were not subject to competition and reduce rates in areas
where there was competition. The Commissioner of Competition submitted that
to avoid this, it was essential to identify the relevant market for the
tests, and stated that the relevant market could be smaller than a rate band.
The Commissioner of Competition also argued that removal of the upward
pricing constraint would be equivalent to forbearance, and that the
Commission should continue to apply the forbearance test developed in
Decision 94-19. |
550. |
Group Telecom, the Commissioner of
Competition, and ARC et al. stated that the test developed for cable
distribution was not appropriate for telecommunications, because
telecommunications was an essential service. The Commissioner of Competition
also noted that in cable distribution, satellite service was an effective
substitute for many users, and that no equivalent telecommunications service
substitute was available. |
551. |
As discussed in Part II of this
Decision, local competition is developing slowly, and CLECs have significant
start-up and ongoing costs. CLECs must lease services or facilities from the
ILECs to serve many of their customers. In addition, CLECs may also face
difficulties accessing tenants in multi-dwelling buildings, and in accessing
municipal rights-of-way and non-carrier support structures. All of these
considerations can limit the size of the market an entrant can serve, thus,
in essence, becoming barriers to entry. |
552. |
While all parties accepted that
competition in the business market would increase in the next few years, the
Commission is not persuaded, at this stage, that there will be substantial
competitive entry in the residence market during the next price cap period. |
553. |
The removal of upward pricing
constraints as proposed by the Companies and TELUS would provide the ILECs
with the flexibility to increase prices beyond the price cap constraints. The
ILECs already have the flexibility to price below the price cap constraints,
as long as the prices comply with an imputation test. |
554. |
In light of the above, the
Commission considers that the increased flexibility proposed by the Companies
is not appropriate. The Commission is of the view that consideration of any
increased pricing flexibility beyond the pricing constraints approved in this
Decision should continue to take place within the context of the criteria for
forbearance developed in Decision 94-19. |
555. |
For these reasons, the Commission is
also not persuaded that approval of the test proposed by TELUS would be in
the public interest. The Commission's view on this proposed test takes into
account the considerations regarding limited competitiveness and the presence
of non-regulatory entry barriers. The Commission considers that a necessary
pre-condition to loosening restrictions as proposed by TELUS and the
Companies would be the existence of appreciably more competitive markets than
is the case at present. |
|
Long-term contracts
|
556. |
Group Telecom argued that long-term
contracts limit entry by reducing the market that competitors can address.
Group Telecom proposed that long-term contracts in multi-dwelling buildings
should be terminated one year after a CLEC builds facilities that could serve
such multi-dwelling buildings. |
557. |
The Companies argued that all
service providers can sign customers to multi-year contracts. Customers are
well informed and know the alternatives open to them. Further, long-term
contracts do expire. TELUS noted that long-term contracts benefit both the
customer and the carrier by permitting the sharing of risks between the
carrier and the customer, and by permitting the ILEC to pass on cost savings
to its customers. TELUS also observed that Decision
97-8 did not limit the use of long-term
contracts. |
558. |
TELUS submitted that only 5% of its
business customers have long-term contracts. TELUS submitted that it would
lose pricing flexibility if it were not permitted to enter into long-term
contracts. TELUS also argued that Group Telecom does not know whether, or how
often, prior contracts have prevented entry into a building. |
559. |
In Decision
97-8, the Commission noted that it had
approved long-term contracts for a number of services, but that in some cases
it had not permitted such contracts where inconsistent with Subsection 27(2)
of the Act. The Commission also noted that parties could submit comments on
any filing by the ILECs for approval of changes to their tariffed contract
terms. The Commission considers that this approach continues to be
appropriate. |
560. |
However, the Commission also notes
that the issue of automatic renewals of long-term contracts arose during
Group Telecom's cross-examination of Bell Canada. |
561. |
The Commission notes that Bell
Canada, General Tariff CRTC 6716, Item 70 provides that: |
|
At the end of the commitment period,
the MCP [the minimum contract period] will automatically be renewed with a
new MCP of the same duration unless customers notify the Company of their
intention to terminate this option during the last 30 days of the MCP. |
562. |
Thus, under the terms of the tariff,
the onus is on the customer to terminate the contract. Unless the customer
takes action as stated in the tariff, Bell Canada is entitled to renew the
contract automatically. No positive consent is required for renewal. |
563. |
Pursuant to the tariff, the customer
must be made aware of all the terms and conditions of the contract, which
would include the renewal mechanism. Bell Canada's methods to satisfy itself
that the customer understands the terms and conditions are: |
|
a) receipt of a signed document as
customer confirmation; |
|
b) oral confirmation verified by an
independent third party; |
|
c) electronic confirmation through
the use of a toll-free number; and |
|
d) electronic confirmation via the
Internet. |
564. |
Similar mechanisms are set out in
TELUS Communications (B.C.) Inc. General Tariff CRTC 1005, Item 32 and TELUS
Communications Inc., General Tariff CRTC 18001, Item 425. |
565. |
The Commission is not persuaded that
these tariffs adequately ensure that all customers are specifically aware of
the automatic renewal provisions. Accordingly, Bell Canada and TELUS are
directed to show cause, within 17 July 2002, why the tariffs referenced
above, as applicable, should not be amended to remove the automatic renewal
provision, and to add a provision requiring that positive consent to renew be
obtained from customers no less than 30 days before expiry, such as the
positive consent provision approved in Optel Communications Corporation
vs. Bell Canada – CRTC clarifies contract requirements for local link service,
Order CRTC 2000-250, 30 March
2000. |
|
Carrier Services Group and the role of an ILEC's in-territory affiliate
|
566. |
Bell Canada testified that it had
moved its Carrier Services Group to Bell Nexxia, an affiliated Canadian
carrier that offers services as a non-dominant competitor nation-wide,
including Bell Canada's territory. |
567. |
Group Telecom submitted that the
ILECs have incentives not to comply with Commission rules related to building
access, tariff filings, the imputation test and the local affiliate rule
implemented in Affiliate rule for primary local exchange services,
Telecom Order CRTC 99-972,
8 October 1999. Group Telecom stated that the ILECs have many opportunities
to use affiliates to circumvent the regulatory safeguards developed by the
Commission. Call-Net argued that the ILECs may use their in-territory
affiliates to price services below levels required by the imputation test.
Call-Net submitted that Bell Nexxia's activities in reselling Bell Canada's
services to Bell Canada's competitors and to end-users present many
opportunities to avoid Bell Canada's pricing obligations. |
568. |
On 31 January 2002, the Commission
received an application from Group Telecom that addresses issues similar to
those noted above. The Commission will consider these issues in the
proceeding initiated by that application. |
|
Implementation issues
|
|
Amalgamation of price cap indices
|
569. |
In CRTC denies TELUS
Communications Inc.'s application to merge price cap models, Telecom
Decision CRTC 2002-6, 12 February 2002
and CRTC directs Aliant Telecom Inc. to submit individual-company price
cap summaries in tariff notices, Telecom Decision CRTC
2002-9, 12 February 2002, the Commission denied
requests by TELUS and Aliant Telecom, respectively, to merge the price cap
indices of their predecessor companies. At that time, the Commission stated
that the amalgamation of the individual indices would provide greater pricing
flexibility than that permitted under the initial price cap regime. The
Commission further stated that it would address the issue of the amalgamation
of these ILECs' price cap indices in the context of this proceeding. |
570. |
In this proceeding, the Commission
is establishing a price cap regime that is specific to each of Aliant Telecom
and TELUS. The Commission therefore considers it is appropriate that the
price cap indices should also be specific to these ILECs. |
571. |
Accordingly, the Commission
concludes that Aliant Telecom and TELUS are no longer required to file
separate price cap indices for their predecessor companies. Instead, they
should submit filings that reflect their respective mergers. |
|
Timing of annual price cap filings
|
572. |
The Companies noted that, under
their proposals, specific services or groups of services would be subject to
pricing constraints and that with each tariff filing, the ILECs would be
required to demonstrate that these constraints were being met. |
573. |
The Companies also noted that, for
service groups subject to upward pricing constraints, compliance with the
applicable overall upward pricing constraint would be demonstrated by
comparing a price index of actual price changes with a price index of
allowable price changes. The allowable average price changes would be
indicated by a service band limit (SBL) while the actual average price
changes would be indicated by a service band index (SBI). |
574. |
The Companies submitted that the SBL
and SBI should be set at 100 at the start of the new regime for each service
category. They proposed that the SBL be updated each year, by 31 March, based
on the average annual rate of change in the inflation factor in the previous
calendar year, and that the SBLs would apply for the twelve-month period from
1 May to 30 April of the following year. |
575. |
The Companies further submitted
that, as in the initial price cap period, the base period for determining the
revenue weights for the SBI updates in any twelve-month period should be the
last full calendar year prior to these updates. |
576. |
The Companies put forward two
reasons for selecting 31 March for the annual SBL updates. First, the total
subsidy requirement for each year would be updated on 31 March, in accordance
with the Commission's determinations in Decision
2000-745. Second, Statistics Canada
releases data on the inflation factor for a particular calendar year at the
end of February of the following year. |
577. |
The Commission considers that the
Companies' proposal to continue with 31 March for the annual update of the
price indices is reasonable. The Commission would normally expect to dispose
of the ILECs' annual price cap filings by 1 June. In view of the date that
this Decision is being issued, the Commission modifies the date of the ILECs'
2002 annual price cap filings to 1 August 2002. |
578. |
To ensure that the annual price cap
period for 2002 reflects a full year, the Commission determines that all
ILECs' tariffed rates are to be made interim, effective 1 June 2002. The
Commission expects that any rate changes approved by the Commission to meet
the 2002 price cap commitment would be effective as of 1 June 2002. |
579. |
The Commission concludes that the
SBLs and SBIs should be set at 100 effective 31 May 2002. |
|
Directions
|
580. |
The Commission therefore directs: |
|
- each ILEC to file the SBL and SBI with supporting calculations,
formulae and spreadsheets, for each basket/sub-basket of capped services,
as applicable, on 1 August 2002; and
|
|
- on an annual basis on 31 March for the remainder of the price cap
period, each ILEC to file updates to the SBL and SBI, with supporting
calculations, formulae and spreadsheets, for each basket/sub-basket of
capped services, as applicable.
|
|
|
|
Background
|
581. |
In Decision
97-9, the Commission established a price cap
formula that consisted of three basic components: an inflation factor, a
productivity offset (the X-factor) and an exogenous factor (the Z-factor). |
582. |
These three components were used to
determine the maximum allowable annual price changes for the basket of capped
services. The inflation factor allowed for cost increases in keeping with
changes in the national economy. The X-factor imposed a downward constraint
to reflect productivity improvements. The Z-factor permitted adjustments
required by certain unanticipated events beyond the control of the ILECs. |
583. |
In Decision
2000-745, the Commission determined that
residence PES costs would be one of the components of the total subsidy
requirement (TSR). The Commission further determined that these PES costs
would be adjusted, annually, using a pre-determined productivity offset, to
be determined in the present proceeding. In Decision
2001-238, the Commission determined that
the base PES costs in the TSR calculation would also be adjusted annually for
an inflation factor, also to be determined in the present proceeding. The TSR
is discussed in more detail in Part IX of this Decision. |
584. |
In PN
2001-37, the Commission sought
comments on the use and value of these compnents in the next price cap
regime, as well as in the TSR calculation. |
|
Inflation index
|
585. |
With regard to the inflation factor,
the Companies and TELUS proposed to continue to use the same basic measure of
inflation as in the initial price cap regime – the national Gross Domestic
Product - Price Index (GDP-PI). The GDP-PI is a measure of the national
output price change published by Statistics Canada. |
586. |
Other parties who commented on the
inflation factor also supported the continued use of the GDP-PI. |
587. |
Until recently, there were two forms
of GDP-PI produced by Statistics Canada: a chain-weighted index and a
fixed-weighted index. The chain-weighted index reflects changes in the price
of a basket of goods and is updated to reflect actual expenditures on a
quarterly basis. The fixed-weighted index also tracked price changes for a
basket of goods but was updated less frequently. In Decision
97-9, the Commission used the fixed-weighted
index in the price cap formula. |
588. |
In their submissions, the Companies
and TELUS pointed out that, effective 31 May 2001, Statistics Canada had
adopted the chain-weighted GDP-PI as the official measure of the economy-wide
inflation rate. The fixed-weighted GDP-PI is no longer published by
Statistics Canada. |
589. |
TELUS and the Companies provided
tables illustrating minor differences between the two indices in the past.
Given that the fixed-weighted index is no longer available, they recommended
the Commission use the chain-weighted GDP-PI for the next price cap formula. |
590. |
The Commission agrees, and
accordingly directs Aliant Telecom, Bell Canada, MTS, SaskTel and TELUS to
use the annual chain-weighted GDP-PI published by Statistics Canada as the
measure of inflation for the price cap indices and pricing constraints, and
in the calculation of the TSR. |
|
Productivity offset (X-factor)
|
|
Background
|
591. |
In Decision
97-9, the Commission concluded that the
productivity offset should be calculated using the following components: |
|
a) the industry total factor
productivity (TFP) defined as the measure of efficiency of the telephone
companies taking into consideration all the inputs (labour, material, and
capital) and outputs (revenues); |
|
b) the economy-wide TFP defined as
the productivity index for the business sector of the economy as a whole,
produced by Statistics Canada; |
|
c) the input price differential
defined as the difference between the industry and economy-wide input price
growth rates; and |
|
d) the consumer productivity
dividend (stretch factor). |
592. |
The first three components comprised
the basic offset. The stretch factor was included in order to ensure that
consumers shared in the benefits resulting from the streamlining of
regulation and the increased incentives for efficiency for the telephone
companies under price cap regulation. |
593. |
In determining the level of the
basic offset, the Commission relied on time periods that were long enough to
capture the sustained effects of productivity growth and to mitigate the
effect of one-time events and short-term fluctuations. In Decision
97-9, the Commission approved a basic
productivity offset of 3.5% along with a stretch factor of 1.0% for an annual
X-factor of 4.5% for the initial price cap period. |
594. |
In PN
2001-37, the Commission
invited parties to provide proposals and evidence on the appropriate
productivity offset, if any, for the next price cap regime, as well as the
offset to be used in the calculation of the TSR. |
595. |
In determining the appropriate level
of the X-factor, the following issues were addressed: |
|
a) whether the productivity offset
should be industry-wide or company-specific; |
|
b) the methodology that should be
used to determine the basic productivity offset for the TSR calculation; |
|
c) the methodology that should be
used to determine the basic productivity offset for the price cap formula;
|
|
d) the actual level of the basic
productivity offset; and |
|
e) whether there should be a stretch
factor. |
|
The Commission's determinations on
each of these issues are set out below. |
|
Industry-wide versus company-specific X-factors
|
596. |
The Companies submitted that, in
theory, the X-factor should be set on an industry-wide basis in order to
provide incentives to the ILECs to increase efficiency. In their view, the
use of an industry-wide X-factor would provide the right incentives to ILECs
to achieve productivity gains at least as high as this target. |
597. |
At the same time, the Companies
suggested that company-specific offsets could be considered in circumstances
where operating characteristics such as terrain, density, demography or
network characteristics might prevent a particular ILEC from being able to
achieve the same level of productivity gains as others. |
598. |
TELUS argued in favour of a
company-specific X-factor. In TELUS' view, the operating characteristics of
Bell Canada and TELUS were too different to allow for the use of an
industry-wide offset. |
599. |
SaskTel proposed that there be no
X-factor used either in the price cap regime or in the TSR calculation. In
the alternative, SaskTel supported company-specific offsets with its own
offset fixed at 0%. In its view, a 0% offset was justified for a number of
reasons, including the minimal opportunity to achieve productivity gains
within HCSAs in its territory. |
600. |
Call-Net, AT&T Canada, ARC et al.,
Calgary and RCI did not directly address the issue of industry-wide versus
company-specific X-factors. However, these interveners provided data in their
evidence on an industry-wide basis. |
601. |
In addition, RCI submitted that
SaskTel had achieved TFP gains that were comparable to those of the other
telephone companies over the past four years. Consequently, RCI argued that
there was no need for a SaskTel specific X-factor. |
602. |
Group Telecom submitted that,
contrary to SaskTel's suggestion, it was appropriate to apply a productivity
adjustment in the TSR calculation and that such an adjustment was necessary
to ensure that the TSR remained cost-based. |
603. |
In the Commission's view, neither
SaskTel nor TELUS have demonstrated that their operating characteristics
differ sufficiently from the other ILECs to warrant a company-specific
X-factor. |
604. |
In Decision
97-9, the Commission stated that an
industry-wide X-factor rewards those companies that have achieved
higher-than-average productivity results and forces those companies with
lower productivity results to become more efficient. The Commission continues
to be of that view. |
605. |
Accordingly, the Commission has
concluded that it is appropriate to continue to use an industry-wide X-factor
in the next price cap period for the TSR calculation and for the pricing
constraints, as applicable. |
|
Methodology for deriving the X-factor for the TSR calculation
|
606. |
With the exception of SaskTel, the
ILECs argued in favour of applying a marginal cost approach to determine the
basic productivity offset for the TSR calculation. |
607. |
The Companies (except SaskTel)
submitted that the productivity offset should be set based on the expected
reductions in marginal costs for HCSAs. According to the Companies, an
analysis of historical marginal cost changes for basic residential local
service would provide a reasonable basis for determining the productivity
target with a strong link to widely-used productivity concepts. |
608. |
The Companies noted that no
historical cost data was available for HCSAs, since the current band
structure relating to HCSAs had only been established as of April 2001 in
Decision 2001-238. The Companies
proposed to approximate the marginal cost trend data in the HCSA bands using
the marginal cost data observed in residence PES as a whole. |
609. |
The Companies submitted that it was
reasonable to expect that there would not be large differences in the
marginal cost trends between the HCSA bands and the residence PES as a whole,
since the underlying technologies and business operations were essentially
the same across all bands. |
610. |
TELUS submitted that the current
X-factor approach applied to an environment in which all services provided by
a regulated firm fell under the price cap regime. TELUS submitted that the
manner of establishing the offset must be modified to determine an X-factor
for capped services in a way that would preserve the ideal incentive
properties of a price cap regime. |
611. |
TELUS submitted that prices in
competitive markets grew at long-run rates equal to marginal cost growth
rates. Thus, an X-factor that preserved the ideal incentive properties of a
price cap regime would set the average growth rate of prices for capped
services equal to the average marginal cost growth rate for those services. |
612. |
The interveners who commented on
this issue argued that TFP was the most comprehensive measure of productivity
and should be used for the TSR calculation. |
613. |
In AT&T Canada's view, the ILECs'
more recent productivity performance under price caps should be taken into
account in setting the productivity offset for the cost component of the TSR. |
614. |
The Commission notes that applying a
company-wide TFP-based productivity offset to the cost of local residential
service in HCSAs could overestimate the productivity gains that could
reasonably be expected for such areas. This would, in turn, result in an
understatement of the TSR. |
615. |
In any event, the calculation of the
TSR includes only revenues and costs associated with local residential
service in HCSAs. Consequently, the productivity offset to be applied to the
cost component of the TSR should be based on the expected reductions in
marginal costs for local residential services in HCSAs. The Commission
considers that it would not be appropriate to use a TFP-based company-wide
measure in the TSR calculation. |
616. |
Finally, the Commission is of the
view that SaskTel has not presented any substantial evidence to demonstrate
that productivity adjustments have already been incorporated into the subsidy
requirement outlined in Decision 2001-238. |
617. |
In light of the above, the
Commission concludes that marginal cost trend data for basic residential
local service in HCSAs provides an appropriate basis for determining the
basic productivity offset for the TSR calculation. |
618. |
The Commission also agrees with the
Companies that it is reasonable to expect there would not be large
differences in the marginal cost trends between residence PES costs in HCSA
bands and residence PES costs as a whole. The Commission therefore considers
that it would be appropriate to use residence PES cost data as a proxy for
the purposes of setting the basic productivity offset for the TSR
calculation. |
|
Methodology for deriving the X-factor for price cap baskets
|
619. |
Both the Companies and TELUS opposed
the inclusion of a basic productivity factor in a price cap formula applied
to capped services. |
620. |
In the alternative, the Companies
argued against an X-factor based on TFP. They noted that TFP provides a
measure of company-wide productivity improvement. They claimed that
significant productivity gains have been achieved in their Competitive
Segment and, in their view, it would be inappropriate to rely on those gains
when determining an X-factor for the Utility Segment's capped services. |
621. |
Instead, the Companies proposed that
basket-specific marginal costs, derived using the Phase II methodology,
should be used to determine a basic productivity offset for capped services. |
622. |
TELUS submitted that prices in
competitive markets grew at long-run rates equal to marginal cost growth
rates. It followed in TELUS' view that an X-factor that preserved the ideal
incentive properties of a price cap regime would set the average growth rate
of prices for capped services equal to the average marginal cost growth rate
for those services. |
623. |
RCI, Call-Net and ARC et al. argued
that an X-factor based on Phase II data was not appropriate. |
624. |
ARC et al. submitted that
company-wide TFP results offered a good indicator of Utility productivity
gains in the absence of clear evidence to the contrary. ARC et al. argued
that TFP was a more comprehensive, and hence a more realistic measure of
productivity gains than the marginal cost approach. |
625. |
RCI argued that it would be
inappropriate to determine a productivity offset using Phase II studies since
these studies did not measure actual marginal costs. Rather, they relied on
yearly forecasts of demand and cost levels. Specifically, they incorporated
certain cost data into models that were then used to generate forecasts based
on demand predictions. |
626. |
RCI was of the view that the
Commission should continue to calculate the productivity offset using the
TFP-based methodology established in Decision
97-9. RCI stated that this would capture the efficiencies achieved across
all ILEC services, including all of the capped services. In this regard, RCI
observed that this methodology relied on actual achieved output and input
figures, rather than estimates of costs and forecasts of productivity. |
627. |
Call-Net submitted that it supported
the continued use of the TFP-based formula from Decision
97-9, with one key difference: industry TFP
should be restricted to the ILECs' productivity achievements over the initial
price cap regime. Call-Net argued that with the adoption of the initial price
cap regime, the ILECs were given the incentive to increase their
productivity. Call-Net submitted that the Commission now has data as to the
ILECs' TFP for the period during which they were subject to the incentives of
the price cap regime, and should use this measure as the industry TFP
component in the X-factor calculation. |
628. |
Group Telecom argued that using TFP
in the PCI would not provide a reliable proxy for the change in marginal
costs over time on either a rate-element-specific, service-specific or a
sub-basket-specific basis. Group Telecom noted that a PCI based on TFP was
essentially a measure of how unit costs changed over time for a company as a
whole. Group Telecom submitted that Phase II was a fundamentally sound
methodology for estimating forward-looking causal costs. |
629. |
In Part IV of this Decision,
the Commission determined that the productivity offset will be applied
directly to certain baskets of services and individual rate elements. The
Commission notes that this is significantly different from the initial price
cap regime, in which a productivity offset was imposed on capped services
overall. |
630. |
The Commission considers that, in
applying an X-factor to certain baskets of services and individual rate
elements, a TFP-based approach would be more comprehensive than a marginal
cost-based approach. However, the Commission notes that the ILECs were not
able to calculate a TFP-based X-factor on a service-specific basis. |
631. |
In these circumstances, the
Commission does not consider the continued used of a TFP-based X-factor to be
appropriate. In the Commission's view, the basic productivity offset for the
next price cap regime should be based on service-specific marginal costs in
order to reflect the actual productivity gains that are likely to be achieved
for individual capped baskets. |
|
The level of the offset
|
632. |
In light of the above
determinations, it is necessary to calculate an industry-wide basic
productivity offset for the TSR calculation based on the marginal cost of
local residential service in HCSAs. It is also necessary to calculate an
industry-wide basic productivity offset for the baskets of capped services
and individual rate elements based on the relevant marginal costs. |
633. |
With respect to the TSR calculation,
the Companies filed a detailed analysis that measured the marginal cost trend
of residence PES as a whole, using data extracted from cost studies conducted
by Bell Canada over the period 1988 to 2001. The Companies proposed to use
this Bell Canada data as a proxy for Aliant Telecom and MTS since PES
marginal costs were not available on a consistent year-to-year basis for
these two companies. Based on this data, the Companies proposed a 3.5% basic
productivity offset. |
634. |
In its original submission, TELUS
proposed on X-factor of 3.0%. TELUS based this proposal on the marginal cost
data of Bell Canada for the period 1989 to 1995, as well as the marginal cost
data of Bell Canada and TELUS (Alberta) combined over the period 1996 to
2001. In its final argument, TELUS proposed a basic productivity offset of
2.2% based on TELUS (Alberta) marginal cost data for the period 1996 to 2001. |
635. |
ARC et al. and Call-Net separately
proposed TFP-based offsets relying on the methodology used by the Commission
in the initial price cap regime. |
636. |
The Commission notes that only TELUS
and Bell Canada provided marginal cost data during the course of the
proceeding. The Commission also notes that TELUS' marginal cost data for its
residential service was based on a very limited number of data points. TELUS
also relied, to some extent, on Bell Canada marginal cost data in its
original proposal. The Commission is of the view that the low number of data
points and the short time period underlying TELUS' final proposal makes it
less reliable than Bell Canada's. The Commission accordingly concludes that
Bell Canada's residence PES marginal cost data provides the best basis on
which to calculate the productivity offset for the TSR. |
637. |
With respect to the productivity for
services and rate elements, the Commission notes that Bell Canada's marginal
cost data for residential services do not relate specifically to services
such as Competitor Services and Other capped services. Nonetheless, the
Commission is of the view that the residential PES marginal cost data would
better approximate marginal cost trends than other data available in this
proceeding. The Commission therefore concludes that the basic productivity
offset for the price cap constraints should also be calculated using this
data. |
638. |
In light of the above, the
Commission concludes that the basic productivity offset should be 3.5% for
the TSR calculation and for the pricing constraints, as applicable. |
|
Stretch factor
|
639. |
In Decision
97-9, a 1.0% stretch factor was added to the
basic offset to ensure that the benefits of moving from rate of return
regulation to price cap regulation would be shared with consumers in the form
of price reductions. |
640. |
The Companies noted that the stretch
factor was intended to reflect the additional productivity gains that a
company might experience as a result of the change in regulatory regime. In
the Companies' view, consumers had already benefited from these changes,
given that current prices reflected the impact of the stretch factor over the
past four years. Consequently, the Companies argued that a stretch factor was
not appropriate in the next price cap regime. |
641. |
TELUS submitted that any cost
reductions resulting from the transition to price cap regulation were one
time and transitory by their very nature. It would therefore, in TELUS' view,
be inappropriate to include a stretch factor in the next price cap formula. |
642. |
AT&T Canada submitted that a stretch
factor should be added to establish a reasonable and challenging target
productivity offset. |
643. |
Call-Net and RCI argued that it was
reasonable to add a stretch factor to the productivity offset since the time
period used to calculate the offset, viz. 1998 to 2001, had for the most part
been characterized by rate of return regulation, when ILECs had little
incentive to be productive. A stretch factor would, therefore, counterbalance
the negative effects on productivity attributable to the previous form of
regulation. |
644. |
The Commission agrees with the
Companies' view that current prices already reflect the impact of the stretch
factor established in the initial regime. In addition, the Commission
considers that additional productivity gains due to the further streamlining
of regulation would be difficult to achieve in the next price cap regime. The
Commission is also of the view that the basic productivity offset of 3.5%,
based on the marginal cost approach, indirectly incorporates a limited
stretch factor. This implicit stretch factor results from the fact that the
marginal cost growth for the years 1998 to 2001 included the productivity
gains achieved under price cap regulation. |
645. |
Accordingly, the Commission
concludes that no stretch factor should be applied to the productivity
offset. |
|
The value of the X-factor
|
646. |
Based on the above, the Commission
determines that an annual X-factor of 3.5% will be used in the TSR
calculation and in the price cap indices and pricing constraints, as
applicable, in the next price cap regime. The Commission notes that its
determinations in Part IV of this Decision, regarding the capped services to
which a productivity offset will apply, result in a broader base of services
being subject to the productivity offset than under the initial price cap
regime. |
|
Exogenous factor
|
647. |
In Decision
97-9, the Commission established an
exogenous factor (Z-factor) as a component of the price cap formula for the
initial price cap regime. The Z-factor flows through the impact associated
with events not captured by other elements of the price cap formula.
Adjustments were considered for events or initiatives which satisfied the
following criteria: |
|
a) they are legislative, judicial or
administrative actions which are beyond the control of the company; |
|
b) they are addressed specifically
to the telecommunications industry; and |
|
c) they have a material impact on
the Utility Segment of the company. |
648. |
The Commission also directed that
the impact of an exogenous event be determined on a company-wide basis and
assigned between the Capped and Uncapped Services on a cost-causal basis. In
addition, the Commission considered that, in general, actual data should be
used to determine the impact. |
649. |
Further, the Commission required the
ILECs to file any proposed Z-factor adjustments to the PCI with their annual
price cap filings. |
650. |
In PN
2001-37, the Commission
invited comments on whether a Z-factor should be included in the next price
cap formula and, if so, how it should be treated. |
|
The need for exogenous factors
|
651. |
Both the Companies and TELUS
submitted that it would be appropriate to continue to allow for exogenous
adjustments in the next price cap regime. The Companies indicated that there
were some circumstances under which exogenous factors may be justified and
may prove necessary to preserve the integrity of the price cap regime. TELUS
submitted that a company subject to price regulation should not unduly
benefit from nor be unduly penalized for events beyond its control, and that
certain types of events were not accurately captured by other elements of the
price cap formula. |
652. |
AT&T Canada was the only party who
argued that there was no longer a requirement for exogenous adjustments. AT&T
Canada's position on this point was based on its proposal to eliminate the
overall constraints on the PCI. |
653. |
The Commission has determined that
there is a continued requirement for exogenous adjustments. If there were no
adjustments for exogenous events, the ILECs would unfairly be required to
bear the risk associated with events beyond their control that increase their
costs to a significant extent. At the same time, consumers and competitors
using the ILECs' services would not benefit from cost savings that could be
passed on to them through these adjustments. |
654. |
In the Commission's view, the most
appropriate way to capture an exogenous event continues to be as a component
of the price cap formula that is triggered when that event occurs.
Accordingly, the Commission determines that the next price cap regime will
include exogenous adjustments. |
|
Criteria for exogenous treatment
|
655. |
The Companies submitted that a
material impact on the ILECs' costs of an unforeseen event should not
necessarily trigger an exogenous adjustment. Retail prices should not
generally be regulated with reference to the companies' costs, but rather
with reference to market conditions and the policy objectives relating to
affordability and competition. As a result, the Companies proposed that an
exogenous adjustment would only be necessary if the event were to materially
change the nature of the Utility services, or be inconsistent with the
predefined pricing flexibility. The Companies indicated that, under these
conditions, it was likely that only decisions made by the Commission would
qualify. |
656. |
The Companies also indicated that
their proposal is symmetric as it encompasses upward and downward
adjustments. The Companies did not propose to change the basis for the
assignment of exogenous adjustments to Capped Services from the current
practice. |
657. |
TELUS submitted that an exogenous
adjustment should be defined by the following characteristics: |
|
a) legislative, judicial or
administrative actions which are beyond the control of the telephone company;
|
|
b) addressed specifically to the
telecommunications industry; |
|
c) having a material impact on the
firm; and |
|
d) otherwise recoverable in the
absence of price regulation. |
658. |
TELUS submitted that its proposal
was symmetric; that any exogenous adjustment should be assigned to services
on a revenue-weighted basis; and that exceptions should be granted only in
rare circumstances. TELUS further submitted that a firm should be entitled to
an exogenous adjustment for a significant natural disaster, the imposition of
fees for access to public rights-of-way and the imposition of building access
fees in certain circumstances. |
659. |
RCI submitted that public interest
programs such as SIPs should be included in the price cap formula as an
exogenous factor. RCI believed that SIPs met the existing criteria and were
best included in the price cap formula as exogenous factors in order that
their impact not be maintained in the rate levels indefinitely. |
660. |
The Commission notes that the
criteria proposed by the Companies differ significantly from the existing
criteria and considers that they would unduly narrow the definition of an
exogenous factor. In the Commission's view, these proposed criteria do not
ensure recognition of all potential exogenous events. As such, the Commission
considers that the Companies' proposed criteria for exogenous treatment is
not appropriate. |
661. |
The Commission notes that TELUS'
proposed criteria are similar to the existing criteria. The first two
criteria cited by TELUS are identical to the existing criteria established in
Decision 97-9. TELUS has indicated that its
fourth criterion simply summarizes the purpose for an exogenous adjustment.
With respect to TELUS' third criterion, since the Commission has determined
in Part X of this Decision that the ILECs will no longer be required to
produce Phase III/split rate base (SRB) results, no separate financial
reporting of their Utility Segments will be available in the next price cap
regime. The Commission accordingly agrees with TELUS that an exogenous event
should be defined to be material measured against the total company. |
662. |
The Commission considers that
exogenous events should continue to be events of a material impact beyond the
control of the ILECs that are not otherwise accounted for in the price cap
parameters. It concludes that the criteria for exogenous events set out in
Decision 97-9, modified to measure
materiality in relation to the total company, remain appropriate. |
663. |
As each exogenous adjustment
proposed in the next price cap regime will be reviewed on an individual
basis, taking into consideration the particular circumstances of each event,
the Commission is of the view that the basis of assigning the exogenous
adjustment should be determined on a case-by-case basis. This will provide
the flexibility needed to ensure that the amounts are properly assigned to
the appropriate baskets. Accordingly, Aliant Telecom, Bell Canada, MTS,
SaskTel and TELUS will be expected to file a proposal, with supporting
rationale, with each application for an exogenous adjustment stating the
preferred basis of assignment. |
664. |
The Commission is also of the view
that exogenous factors should not be assigned to the Frozen Rates and the
Competitor Services baskets. If it is determined that all or part of an
exogenous adjustment should be assigned to the Competitor Services basket,
the Commission considers that this event may, for Category 1 Competitor
Services, affect the Phase II costs directly, which may require the revised
rates to be filed using the Phase II costing methodology. With respect to
Category II Competitor Services, the Commission has determined in Part IV of
this Decision that the rates for these services are to be capped at existing
levels. |
665. |
With respect to RCI's proposal that
SIPs be included in the price cap formula as exogenous factors, the
Commission notes that the recovery of SIP costs is addressed in Part VIII of
this Decision. |
|
Identification of exogenous events
|
666. |
The Companies submitted that they
and other interested parties should be required to notify the Commission of
any exogenous adjustments, either positive or negative, within 30 days of the
event's occurrence. During the proceeding, TELUS expressed the view that a
30-day window was unfair to interested parties as it was unlikely that there
would be enough time to identify and analyze the impacts of any potential
exogenous adjustments. |
667. |
The Commission is of the view that
in order to ensure fairness to all stakeholders, the ILECs should be required
to notify the Commission of all proposed exogenous adjustments as soon as
possible after they have been identified. The Commission shares the concern
voiced by TELUS that 30 days may not allow enough time to identify and
analyze the impacts of any potential exogenous adjustments. Therefore, Aliant
Telecom, Bell Canada, MTS, SaskTel and TELUS are required to notify the
Commission of any proposed exogenous adjustment within 60 days of the event's
occurrence. Other parties who believe an exogenous adjustment is required
should notify the Commission as soon as possible after they learn of the
relevant facts. |
668. |
The Commission also concludes that
the impact of any proposed exogenous adjustment should be initially captured
in a separate deferral account pending a ruling from the Commission as to its
applicability. The impact of any proposed adjustment is to be measured from
the time the event occurred. The disposition of the deferral account would
follow the Commission's ruling on the proposed exogenous adjustment. |
|
Exogenous adjustments carried through from the initial price cap period
|
669. |
The Companies and TELUS submitted
that they were subject to a number of exogenous adjustments during the
initial price cap period, relating to: |
|
a) certain one-time start-up costs
associated with local competition and local number portability (LNP); |
|
b) a reduction in DC rates; and |
|
c) the contribution revenue-percent
charge. |
670. |
Other ILEC-specific exogenous
adjustments that the Companies were subject to during the initial price cap
period stemmed from: |
|
a) a reduction to Bell Canada's
Ontario Gross Receipts Tax (GRT); |
|
b) the mechanism to recover MTS'
income tax expense; |
|
c) an adjustment to NBTel's 1999
contribution rate; and |
|
d) an adjustment to MTT's 2001 9-1-1
service rate. |
671. |
TELUS also identified an exogenous
adjustment made during the initial price cap period relating to the Greater
Vancouver Region common local calling area. |
672. |
The Companies opposed the view that
exogenous adjustments made in the initial price cap period should
automatically carry through to the next price cap plan. They indicated that
such a process would overlook the potential impact of these events on future
prices and objectives. During the hearing, the Companies indicated that they
did not propose to reduce the PCI when the amounts for local competition
start-up and LNP were recovered. The Companies also noted that they were not
planning to adjust prices for the reduction in the revenue-percent charge in
2002 or for the additional impact of the GRT savings. |
673. |
TELUS submitted that exogenous
adjustments should be carried through from one price regulation plan to the
next without a revenue requirement determination. TELUS submitted that the
fact that an event entitling exogenous treatment occurs late in the regime
ought not to result in the company recovering only a portion of what they
would otherwise be entitled to. TELUS also indicated that it planned no
reduction to rates as a result of the reduction in the contribution
revenue-percent charge. |
674. |
AT&T Canada submitted that the ILECs
had benefited significantly at the expense of competitors and consumers as a
result of the exogenous factor adjustments granted to them during the initial
price cap period. In AT&T Canada's view, this amount, along with the other
impacts of additional pricing flexibility, had combined to give the ILECs
"supra-normal" profits that would more than offset any discounts given on
Competitor Services. |
675. |
Call-Net submitted that the
Commission should ensure that once the ILECs had recovered the money that an
exogenous factor was meant to address, the Z-factor should be eliminated.
Call-Net further stated that rather than implementing rate reductions, the
Commission should ensure that this pool of gains was used to offset the
financial impact to the ILECs of changes that Call-Net had proposed to
promote competition. |
676. |
RCI indicated that it expected that
the PCI would be adjusted, where necessary, in the next price cap regime to
reflect changes to, or the expiration of, exogenous factors applied during
the initial price cap regime. RCI stated that it was appropriate for the
ILECs to adjust for the impact of carried-over exogenous factors to ensure
that customers benefited from the price reductions that they were entitled to
receive. |
677. |
ARC et al. and BCOAPO et al.
submitted that time-limited exogenous impacts should be reflected in
time-limited exogenous adjustments. They stated that once the total dollar
amount in question had been recovered, the PCI should be reduced accordingly.
Group Telecom, Calgary and Shaw also agreed that the carry-through impact of
time-limited exogenous factors should be adjusted for in the next price cap
period. |
678. |
The Commission notes that it allowed
the ILECs certain exogenous factors in the initial price cap period. Most of
these allowed the ILECs to recover costs by increasing rates to subscribers
or mitigating required rate decreases. While most of the adjustments were
intended to be ongoing, portions of two of these adjustments were
time-limited. These two adjustments relate to the expected reduction in 2002
of the contribution revenue-percent charge and the costs, that were one-time
in nature, related to the start-up costs associated with local competition
and LNP. |
679. |
The Commission is of the view that
an adjustment should be made to recognize the expiry of these two
time-limited exogenous events, and hence the expiration of the requirement
for the original adjustment. |
680. |
The Commission notes that these
time-limited exogenous adjustments were applied to rates in both non-HCSAs
and HCSAs. The Commission has concluded that the treatment of the
time-limited exogenous adjustments should be different for non-HCSAs and
HCSAs. |
681. |
The Commission has determined that
the adjustment to be made for these two time-limited exogenous factors
associated with non-HCSAs should be accomplished through the deferral account
discussed in Part IV of this Decision. The value of the exogenous factors to
be carried forward in the deferral account would be used to offset: |
|
a) the reduction in revenue caused
by the reduction of both the mark-up on Competitor Services and the price of
DNA services to competitors (discussed in Part III of this Decision);
and |
|
b) the recovery of SIP costs in
non-HCSAs (discussed in Part VIII of this Decision). |
682. |
The Commission considers that the
expired portion of the exogenous factors relating to non-HCSAs and the other
amounts in the deferral account, where required, will be sufficient to offset
these lost revenues and additional costs. The Commission notes that the
disposition of the deferral account is addressed in Part IV of this Decision. |
683. |
As outlined in Part VIII of
this Decision, the time-limited exogenous adjustments in HCSAs will be used
to offset costs related to the SIP through the mechanism of the subsidy
calculation. |
684. |
The Commission directs Aliant
Telecom, Bell Canada, MTS, SaskTel and TELUS to file by 6 August 2002, their
estimates, along with supporting calculations, of the amounts of the expected
reductions in 2002, for non-HCSAs and HCSAs, of (i) the contribution
revenue-percent charge, and (ii) the one-time start-up costs associated with
local competition and LNP. |
|
Other matters
|
685. |
The Commission notes that the
Ontario government has been reducing the 5% GRT by 1% per year since 1999.
The GRT will be completely eliminated in 2003. In Bell Canada's savings
from gross receipts tax reductions, Order CRTC
2001-100, 2 February 2001
(Order 2001-100), the Commission directed Bell Canada to include a downward
exogenous adjustment to its price cap formula to recognize certain savings
resulting from the reduction in the GRT rate. The Commission directed that an
adjustment be made for 2001 to the pricing limits for each of the Residence
Local Services and the other Capped Services sub-baskets and the overall PCI.
The Commission also directed that a one-time adjustment be made for the
capped services' GRT savings in 2000, and that these savings were to be
amortized over a two-year period starting in 2001. This Order also stated
that the regulatory treatment of the GRT savings related to the years 2002
and 2003 should be in compliance with the regulatory framework established in
this proceeding. |
686. |
In light of the criteria established
for exogenous factors in the next price cap regime, the reduction in the GRT
would qualify as an exogenous adjustment in 2002 and 2003. The Commission
considers that one final adjustment is required at the beginning of the next
price cap regime to account for the additional reductions in the GRT. The
Commission directs Bell Canada, in its 1 August 2002 price cap filing, to
include these savings as an exogenous adjustment to the appropriate service
baskets for 2002, and to include the portion related to residence services in
non-HCSAs in the deferral account discussed in Part IV of this Decision. |
687. |
The Quebec government has proposed
to reduce the rate of the telecommunications, gas and electric (TGE) tax to
harmonize the thresholds and tax rates on telecommunications, gas
distribution and electric power networks, effective 1 January 2001. Bell
Canada has implemented the tax reduction for 2001 and is awaiting the Quebec
Government's passage of this proposal into law. |
688. |
The Commission notes that, in
Harmonization of thresholds and tax rates on telecommunications networks in
the Province of Quebec, Decision CRTC
2001-773, 21 December 2001 (Decision 2001-773), Bell Canada was directed
to record any TGE savings pertaining to Capped Services in a separate
deferral account, effective 1 January 2001, and to advise the Commission when
the status of the proposed TGE thresholds and rates is resolved by the Quebec
legislature. The Commission also directed Bell Canada at that time to propose
a plan for the disposition of any amounts in the deferral account and propose
how any ongoing savings should be reflected. |
689. |
This item qualifies as an exogenous
event under the criteria established for the next price cap period. |
|
|
|
The current regime
|
690. |
The Commission has had a quality of
service monitoring regime in place since 1982. In Decision
94-19, the Commission decided it was
necessary to review that regime in light of the introduction of
facilities-based competition and the proposed shift to a price cap regulatory
regime for the ILECs. |
691. |
In Decision
97-16, the Commission set out its revised
regime for the monitoring and reporting of quality of service by the ILECs
(except SaskTel). Under this regime, ILECs must file quarterly reports on
performance of approved quality of service indicators. An ILEC that does not
meet the approved standard for a particular indicator for three consecutive
months or seven out of twelve consecutive months is required to report that
indicator's performance monthly, rather than quarterly until such time as
performance has met or exceeded the approved standard for three consecutive
months. In addition, the ILEC is required to explain the reasons for
non-compliance and provide a detailed plan describing how it intends to
rectify the situation and prevent it from recurring. |
692. |
During the initial price cap period,
the ILECs filed quality of service reports as required by Decision
97-16. Those reports indicated that quality
of service problems occurred during much of the period for each of the ILECs. |
693. |
In PN
2001-37, parties were invited
to comment on the appropriateness of implementing a quality of service
component or other regulatory mechanisms in the price cap regime (e.g.,
targeted refunds) in order to address quality of service issues. |
694. |
The Commission notes that SaskTel is
not currently subject to the Commission's monitoring regime for quality of
service, and will not be subject, at this time, to the determinations set out
below. |
|
Positions of parties on the need for changes to the regime
|
695. |
The ILECs acknowledged that there
had been quality of service problems during the course of the initial price
cap period. However, the ILECs expressed the view that the current monitoring
regime was sufficient to ensure quality of service. |
696. |
TELUS stated that while its service
quality had degraded temporarily during the price cap period, overall it had
actually improved. TELUS described any degradation as a transitory effect
resulting from its mergers with Edmonton Telephones and BC TEL. TELUS claimed
that it did not provide superior levels of service to its own customers in
comparison to the level of service provided to competitors, and noted that
from 1998 to 2000, the number of below-standard months had declined for both
services provided to its own customers and services provided to competitors.
TELUS also stated that actual quality of service results for competitor
services had exceeded standards. |
697. |
TELUS submitted that the existing
monitoring regime and the publication of quality of service results continue
to be appropriate because they encourage ILECs to take the necessary steps to
improve results that are below standard. TELUS argued that there was no
conclusive evidence linking price cap regulation with a degradation of
service quality. TELUS was of the view that the need for operational
efficiency and the ILECs' growth objectives provided an adequate incentive
for ILECs to establish and maintain service quality. |
698. |
TELUS also argued that a service
quality guarantee for competitor services would be premature since, in its
view, there was no evidence that any new standards would not be met. TELUS
argued that ILECs had an incentive to maintain a high quality of service to
competitors in order to convince them to purchase non-essential services
which might otherwise be obtained from other sources. |
699. |
The Companies acknowledged that
their quality of service was substandard at times, but argued that proper
remedial steps had been taken. Like TELUS, the Companies also argued that the
current monitoring regime was adequate in light of the incentives under which
the ILECs operated. |
700. |
Aliant Telecom submitted that the
service problems it had experienced were attributable, to a large extent, to
an employee retirement program. Aliant Telecom indicated that it had taken
significant steps to remedy the staffing problem in order to ensure that
service standards would be met. |
701. |
MTS acknowledged that it had failed
to meet service standards for a number of indicators during the initial price
cap period. MTS attributed its difficulties to staff losses resulting from a
departure incentive program and also to labour difficulties in 1999. |
702. |
Most interveners who commented on
the quality of service issue expressed concern at the ILECs' failure to
consistently meet the Commission's quality of service standards. Accordingly,
a number of interveners proposed that the Commission introduce changes to the
quality of service regime. |
703. |
AT&T Canada argued that the absence
of competition had resulted in a degradation of service quality during the
first three years of the initial price cap regime. In support, AT&T Canada
provided the results for the years 1998 to 2000 with respect to the
indicators reported, noting that even as of 2000, the percentage of misses
was as high as 44%. |
704. |
AT&T Canada also argued that, in
almost all cases, the quality of service provided by ILECs to competitors was
inferior to that provided by ILECs to their own retail customers for like
services. In particular, the service intervals associated with competitor
services often exceeded ILECs' provisioning cycles to their own customers. |
705. |
ARC et al., Call-Net, Calgary, the
Commissioner of Competition and Group Telecom agreed with AT&T Canada that
there is inadequate competition for local services to ensure ILEC compliance
with quality of service performance standards. Consequently, they submitted,
that the Commission should establish new incentive mechanisms for quality of
service. |
|
The Commission's conclusions regarding the need for change
|
706. |
The quality of service standards
established by the Commission are intended to be the minimum level of
performance for each associated indicator. The Commission notes that the
ILECs' performance on quality of service indicators shows ongoing and, for
the most part, uninterrupted substandard performance in the years 1998 to
2000. For example, in 2000, Bell Canada failed to meet the required monthly
standards 48 times across all indicators, while TELUS (BC) and TELUS
(Alberta) each had substandard performance 42 times. NBTel reported
substandard performance 78 times in that year. In 2001, only Bell Canada
consistently met all indicators. |
707. |
The Commission is not persuaded that
competitive pressures in either the retail or competitor services markets are
sufficient to ensure that ILECs meet approved service quality standards.
Moreover, as discussed in Part II of this Decision, the Commission notes that
there has been only limited competitive entry in the local exchange market
and that entry has primarily occurred in the business sector in urban areas.
In addition, many competitors have not yet constructed their own facilities,
but instead rely on the resale of ILEC services, especially Centrex service,
in order to provide local service to end users. In these circumstances, the
drive to improve earnings at the expense of quality of service is not
adequately checked by competitive pressures. |
708. |
In light of the above, the
Commission considers that the existing monitoring regime is not sufficient to
ensure that ILECs' service quality performance meets the Commission's
approved standards. In the Commission's view, it is necessary to establish
incentives to ensure ILEC compliance with quality of service performance
standards for services provided to the ILEC's own customers, as well as
services provided by the ILEC to competitors. |
|
Classification of services for a quality of service mechanism
|
709. |
The Companies argued in favour of
retaining the current monitoring regime, but also provided comments on
possible modifications in the event the Commission concluded that changes
were necessary. |
710. |
The Companies were of the view that
it would be appropriate to have the same quality of service component for
residential and business customers. They submitted that, given the far
greater number of residential subscribers, ILECs would be unable to provide
substandard quality of service to residential subscribers and yet still meet
approved standards. They also suggested that to establish separate processes,
one for residential and another for business customers, would be costly. |
711. |
The Companies suggested that it
would be appropriate to have a separate quality of service component for
competitor services. |
712. |
TELUS maintained its view that no
change to the current regime was required. However, TELUS argued that if the
Commission deemed a new quality of service mechanism to be necessary, it
should be in the form of direct rebates to customers who actually suffered
substandard quality of service. |
713. |
Group Telecom and AT&T Canada argued
that a mechanism for competitors must be kept separate from any mechanism
related to non-competitor quality of service, in order to prevent ILECs from
offsetting below-standard service to competitors with above-standard service
to other customers. |
714. |
Group Telecom argued that quality of
service performance should be measured separately for residential and
business customers. Group Telecom submitted that establishing a quality of
service mechanism applicable to business and residence in common would
provide an incentive for the ILECs to avoid penalties by improving the
quality of service for business customers at the expense of residential
customers. |
715. |
The Commission notes that the
current retail quality of service indicators are not reported by customer
type. The Commission also notes that establishing separate quality of service
components for business and residential services would require separate
monitoring and reporting of indicator results. |
716. |
The Commission accepts the
Companies' argument that the number of residential customers sufficiently
outweighs the number of business customers so as to render ineffective any
ILEC attempts to "game" the system. |
717. |
The Commission believes that the
costs associated with establishing separate business and residential
mechanisms outweigh the potential benefits. The Commission has therefore
determined that a single quality of service mechanism should be established
to cover both residence and business services. |
718. |
As far as competitor services are
concerned, the Commission notes that most of the competitor indicators are
reported by customer. The Commission is of the view that the current
monitoring and reporting regime for competitor services should continue.
Accordingly, the Commission has decided to establish a separate quality of
service mechanism for competitors, using the current competitor indicators
that have final approval. |
|
Form of quality of service mechanism
|
|
Q-factor
|
719. |
One of the issues in this proceeding
was whether there should be a quality of service component (or Q-factor)
incorporated in the price cap formula. A Q-factor is a numerical factor which
reflects the compliance (or non-compliance) of the regulated company with
quality of service standards. The inclusion of a Q-factor in a price cap
formula permits quality of service performance to have a direct effect on the
pricing constraints. |
720. |
Parties did not support the use of a
Q-factor as the remedy for substandard quality of service. ARC et al., AT&T
Canada and TELUS were generally of the view that a Q-factor in the price cap
formula would be too complex to create, administer and amend. The Companies
submitted that the disadvantages of a Q-factor in the price cap formula would
outweigh its advantages. |
721. |
ARC et al., noting that substandard
performance would lead to a one-year rate reduction, submitted that this
could give rise to an inter-generational inequity: customers suffering the
substandard service would not necessarily be those who would enjoy the
reduced rates. ARC et al. also noted that customers would experience a rate
increase as a result of the correction of a service quality problem. In ARC
et al.'s view, such a rate increase would be confusing to customers. |
722. |
Group Telecom noted that substandard
performance would result in an ILEC rate reduction if a Q-factor were in
place. In Group Telecom's view, this would hurt competition since an ILEC
rate reduction would likely force competitors to make a corresponding
reduction. In Group Telecom's view, if competitors matched the ILEC's rate
reductions, they would effectively be funding part of the remedy for an
ILEC's substandard quality of service. Group Telecom also argued that
customers might delay or refrain from moving to competitors while awaiting,
and obtaining, the benefits of reduced rates over the year. |
723. |
In the Commission's view, a Q-factor
could have a distorting effect on competition and, therefore, would be less
suitable for use as a quality of service component than other possible
mechanisms. The Commission also notes that a Q-factor would not provide a
competitor-specific remedy for non-compliance with competitor indicators. In
light of these considerations, the Commission has decided not to include a
Q-factor in the next price cap regime. |
|
Approaches to rate adjustments for residential and business customers
|
724. |
Parties to the proceeding suggested
two forms of rate adjustments for residential and business customers as
possible alternatives to a Q-factor. The first would involve
customer-specific rate adjustments and would be structured to provide
compensation only to each customer actually affected by a service quality
failure. The second approach would not be customer-specific but instead would
provide for rate adjustments either to the aggregated class of residential
and business customers or separately to residential and business customers as
distinct classes. |
725. |
TELUS was the only party that
supported a customer-specific rate rebate approach for business and
residential customers. Under TELUS' approach, an ILEC would provide rebates
solely to those customers that suffered quality of service degradation as
measured by certain specific indicators. Only indicators that could measure
effects on individual customers would be included. TELUS submitted that its
approach would be appropriate because it would constitute, in effect, a
market response rather than a regulatory penalty. |
726. |
Group Telecom opposed TELUS'
approach on the grounds that it would create opportunities for
anti-competitive behaviour. For example, ILECs might reduce or waive charges
for future services rather than grant rebates, thus requiring the customer to
remain with the ILEC in order to gain the benefit of the remedy. |
727. |
ARC et al. opposed TELUS' approach
on the grounds that this approach could unjustly discriminate between
business customers and residential customers. |
728. |
The Companies were of the view that
a customer-specific plan would be difficult and costly to administer due to
the complexities of the ILECs' administrative systems, including their
billing systems. The Companies argued that customer non-specific rate
adjustments would be better suited to current ILEC systems and would be
suitable for all non-competitor quality of service indicators. Under this
latter approach, ILECs would be subject to financial penalties if they
consistently provided below-standard service quality, regardless of whether
or not individual customers could be identified. The Companies stated that
these penalties would provide ILECs with incentives to meet or exceed the
service quality standards, as well as to fix any underlying problems, rather
than simply paying the penalty. |
729. |
The Commission notes that a
customer-specific plan would not be compatible with several of the
established indicators for business and residential customers. The Commission
also considers that it would be highly impractical, in light of the
administrative burden, to track an indicator's results customer by customer.
The current Commission-approved indicator results are reported in aggregate
for non-competitor customers. As a result, adopting the TELUS approach would
require changes to the definition and application of most, if not all, of the
non-competitor service quality indicators. |
730. |
In light of the above, the
Commission considers that a customer non-specific rate adjustment approach is
the most appropriate quality of service mechanism for ILEC business and
residential customers. |
|
Rate adjustment plan for residential and business customers
|
731. |
The Companies proposed a "Service
Quality Guarantee" (SQG) for residential and business customers. Under the
Companies' proposal, a penalty would be assessed against an ILEC, on an
indicator by indicator basis, when the ILEC has not met the standard for an
indicator for all "countable months". Countable months would be determined on
a basis similar to that of the current monitoring regime. |
732. |
The Companies proposed that the
monthly penalty for each indicator attracting an adjustment would be $0.05
times the number of year-end residential NAS for the previous year. The total
annual penalty payable would be the lesser of the sum of the penalty amounts
for each indicator, or 1.5% of the total annual revenues for both residential
basic exchange service and capped business basic exchange services, for the
previous year. The total annual penalty would be paid to residential
customers of record in February of each year, commencing in year 2003, with
one rebate per residential basic exchange service. |
733. |
The Companies argued that the amount
of the penalty should provide a sufficient incentive for an ILEC to attain
the quality standards, while not being so high as to cause the ILEC to
over-provision the network and operational processes in order to avoid the
penalty. |
734. |
AT&T Canada supported the plan
proposed by the Companies, subject to certain modifications. Regarding an
appropriate penalty, AT&T Canada argued that the penalty proposed by the
Companies would amount to a relatively insignificant percentage of revenues
and would therefore be ineffective. AT&T Canada submitted that if a penalty
were too low, an ILEC could opt to pay the penalty and ignore the service
quality problem. AT&T Canada submitted that the penalty should be sufficient
to encourage corrective behaviour, and submitted that a much larger penalty
than that proposed by the Companies would be appropriate. |
735. |
AT&T Canada also submitted that the
trigger mechanism in the Companies' plan should be strengthened so that
penalties are incurred whenever a service indicator is missed for 3 months in
a 12 month consecutive time period. It added that the methodology for
calculating quality of service indicators should be made uniform for all
ILECs to the extent practicable and that results should be audited. |
736. |
ARC et al. proposed that the
Commission adopt a service quality incentive plan that would take as its
starting point the methodology of the Companies' SQG. The mechanics, however,
would have to be substantially modified. ARC et al. submitted that the size
of the penalty should ideally meet two criteria. First, the loss to customers
from a failure to meet the standard for a particular indicator should be
measured by the amount that customers would be willing to pay for the
incremental benefit of that increased level of service quality. Second, there
should be a floor amount greater than the costs that the ILEC could avoid
through permitting the quality of service to degrade to any given substandard
level for any indicator. Noting that, in practice, both these amounts would
be too difficult to calculate, ARC et al. submitted that the Commission must
select an amount that is high enough to ensure that, at the very least, the
second criterion was met at all times. |
737. |
ARC et al. argued that the most
sophisticated approach to the selection of the quantum would be to express it
in terms of impact on the return on equity (ROE) of the ILEC. ARC et al.
noted that the proposal of the Companies would only put 0.3% ROE at risk for
Bell Canada. |
738. |
ARC et al. also argued that the
consequences of selecting an incorrect quantum would be asymmetric. Should
the figure selected be too low, the ILECs would be presented with the
incentive to pay the penalty as one more cost of doing business. Should the
Commission select a figure that is too high, the ILECs would consistently
deliver high quality service. ARC et al. proposed that the Commission follow
the recommendation of its witness, Ms. Alexander, and set the target penalty
at 4% to 5% of total local revenues, which it stated would translate into
2.2% to 2.8% ROE for Bell Canada for 2000. |
739. |
ARC et al. proposed that the trigger
mechanism employ annual average results, instead of using the Companies'
methodology, since, among other things, it would be much simpler to explain
to customers. ARC et al. argued that, contrary to the fears of the Companies,
the use of annual average results would not necessarily lead to a larger
rebate to consumers at the end of any given year. On the contrary, in ARC et
al.'s view, the use of annual average results would smooth the data more
effectively than the Companies' mechanism. |
740. |
ARC et al. also proposed that the
results be audited by Commission staff or an outside firm on a frequency that
balances the cost of auditing against the need to have confidence in the data
where significant financial consequences are at stake. It also proposed that
the Commission require each ILEC to report the results of its service quality
performance annually in a billing insert. |
741. |
As indicated above, the Commission
has concluded that it is necessary to modify the current quality of service
regime. However, the Commission considers it necessary to explore certain
aspects of a rate adjustment mechanism in greater detail before establishing
a plan on a final basis. The Commission has therefore decided to implement a
new regime on an interim basis while it conducts a proceeding to gather
further input from parties on a final quality of service regime. The
Commission will issue a public notice in the near future, initiating this
process. |
742. |
For the reasons that follow, the
Commission's interim quality of service regime is based primarily on the
proposals advanced by ARC et al. |
743. |
The Commission considers that ARC et
al.'s proposed trigger mechanism would be less administratively burdensome
than the one proposed by the Companies. The methodology would also be clearer
to all stakeholders and, as a result, there is likely to be greater
confidence that the results reflect performance reality. |
744. |
The Commission agrees with ARC et
al.'s analysis of the effects which would flow from a level of the rate
adjustment that is too low. The Commission does not accept the Companies'
contention that a high rate adjustment could provide incentives for the
Companies to over-provision the network and operational processes in an
attempt to avoid the penalty. ILEC provisioning to meet approved quality of
service standards does not amount to over-provisioning. |
745. |
The Commission also believes that
the Companies' proposed rate adjustment is unlikely to create sufficient
incentives for maintenance of quality of service and could instead be merely
treated as a cost of doing business. |
746. |
In the Commission's view, the $0.05
rate adjustment proposed by the Companies was not supported by sufficient
rationale. In contrast, the Commission considers that ARC et al. developed a
useful methodology for establishing the amount of rate adjustment based on
percentage of revenues. The basis for calculating the adjustment would be
objective and transparent, since the rate adjustment formula would be based
on clearly measured results reported by the ILEC. The Commission also
believes that ARC et al.'s proposal is more likely to create appropriate
incentives to meet the quality of service standards. |
747. |
Accordingly, the Commission approves
on an interim basis, effective 1 July 2002, the rate adjustment mechanism
proposed by ARC et al. for business and residential customers. The mechanism
is to be based on a maximum annual adjustment of 5% of total annual business
and residential local revenues. This revenue base is not to be restricted to
local exchange services; it is to include revenues from all other local
retail business and residential services that are not forborne. Worksheets
for the calculation of rate adjustments are presented in Appendix 3 to this
Decision. Sample calculations are also included. Any rate adjustments flowing
from this interim regime will be addressed in the follow-up proceeding. |
748. |
The Commission agrees that periodic
audits of quality of service results would enhance the effectiveness of the
rate adjustment plan. The Commission will gather input from parties on the
methodology of an audit process, in the proceeding to establish a final
retail quality of service regime. |
|
Rate adjustment plan for competitors
|
749. |
The Companies argued that there had
not been sufficient experience with the current competitor quality of service
indicators to assess whether the current interim standards were appropriate
and to structure a penalty mechanism accordingly. They noted that the
Commission had established 19 competitor quality of service indicators,
several of which were interim and would not be finalized until after December
2002 (see Decision 97-16; CRTC creates
new quality of service indicators for telephone companies, Decision
2001-217, 9 April 2001; and CISC recommended competition-related Quality
of Service indicators – Follow-up to Decision CRTC
2001-217, Decision CRTC
2001-366, 20 June 2001). They also noted
that results for 15 of these indicators were reported for the first time, on
15 November 2001. |
750. |
The Companies suggested the
Commission direct the CRTC Interconnection Steering Committee (the CISC) to
examine and make recommendations on principles for and implementation of a
rate adjustment plan for competitor services. |
751. |
The Companies also argued that the
following principles, which underlay their proposed residential SQG, should
apply to a quality of service regime for competitor services: |
|
a) the quality of service mechanism
should provide sufficient incentive to the Companies to meet the indicators,
but not to deploy resources in an inefficient manner. There should not be
penalties for every breach and the penalties should not be so large as to
encourage inefficient operations; |
|
b) the program should follow the
quality of service standards and reporting requirements that have been
established by the Commission; |
|
c) penalties should apply for the
period of persistent problems and should continue to apply until the problem
has been corrected; and |
|
d) penalties should apply where a
failure to meet a quality of service standard relates solely to the actions
of the ILEC. The penalties should not apply where a failure to meet a quality
of service standard is caused by events beyond the reasonable control of the
Companies. |
752. |
The Companies argued that the
current trigger mechanism, whereby three months of substandard performance
makes the indicator "penalty-ready", should continue to apply. |
753. |
Group Telecom argued that a remedial
plan for quality of service on competitor services is essential. Group
Telecom submitted that competitors depend on certain ILEC services and their
ability to offer service is critically reliant on the ILECs' regulatory
compliance. However, in Group Telecom's view, the ILECs have little financial
or strategic incentive to comply. |
754. |
Group Telecom acknowledged that
Altering terms of service for competitors that are customers, Order CRTC
2000-397, 12 May 2000, had
eliminated ILECs' liability limitations in cases of anti-competitive conduct.
However, Group Telecom was of the view that the courts would not provide
timely or cost effective relief. Accordingly, Group Telecom submitted that a
quality of service regime must incorporate penalties which would provide
sufficient incentive for regulatory compliance. |
755. |
Group Telecom argued that there was
a direct causal link between poor service quality that the ILECs provide to
competitors and the rebates and remedies that competitors may have to provide
their own customers as a result. Therefore, where a competitor must provide
remedies to its own customers owing to poor ILEC-provided quality of service,
the ILEC should have to provide remedies to the competitor. Group Telecom
submitted that the size of remedy must be great enough to provide the ILECs
with incentives to comply with service quality standards. Further, the amount
of the remedy should provide an incentive for compliance, which would
increase with the duration of the problem, thereby giving the ILECs an
incentive to restore quality quickly. |
756. |
Group Telecom proposed a competitor
rate adjustment plan in which the six competitor-specific indicators for
competitor services that have final approval would attract rate adjustments
for substandard performance. Group Telecom pointed out that the CISC has
already endorsed the intervals and standards associated with these six
indicators. In Group Telecom's view, the ILECs have had more than adequate
operational experience with them. |
757. |
Group Telecom indicated that its
plan would include any new competitor-specific indicators that may be
established by the Commission on a final basis. Its plan would exclude the
indicators established on an interim basis in Decision 2001-366 until
finalized, as well as the indicators established in Decision
97-16, which are not reported on a
competitor-specific basis. |
758. |
Under Group Telecom's proposal,
penalties would be triggered as soon as service falls below acceptable
levels. There would be no provision for a "grace period", or any requirement
that penalties be applied only after service has been substandard for a
prolonged period. Thus, a penalty would apply for an indicator that had been
substandard for one month. Group Telecom added that, to limit complexity,
penalty payments should be made quarterly but be calculated on the basis of
monthly data for the given indicator. |
759. |
Group Telecom's position was that a
rate adjustment plan should be based on the following criteria, as
applicable: |
|
1) the rate a CLEC is paying for the
service that does not meet the indicator's standard; or |
|
2) the rate a CLEC is paying for the
service that is affected by an indicator whose standard is not met; or |
|
3) ILEC prices for business exchange
services, as a proxy for the market advantage to the ILEC of the substandard
indicator, where the indicator whose standard is not met does not apply to or
affect a particular competitor service. |
760. |
The specific formulae for the
penalties would be: |
|
For case (1) above: (mandated
percentage standard – achieved percentage) x (CLEC-specific total tariffed
charges applied for the month for the specific rate element(s) in question) x
(monthly multiplier #1) |
|
For case (2) above: (mandated
percentage standard – achieved percentage) x (CLEC-specific total tariffed
charges applied for the month for the service in question) x (monthly
multiplier #2) |
|
For case (3) above: (mandated
percentage standard – achieved percentage) x (CLEC's specific demand for the
month for the activity in question) x (CRTC mandated penalty amount per
event) x (monthly multiplier #2). |
761. |
Multiplier #1 would equal two (2)
for the first three months, consecutive or not, of non-compliance. Multiplier
#2 would equal one (1) for the first three months, consecutive or not, of
non-compliance. |
762. |
Group Telecom stated that Multiplier
#1 would reflect the negative competitive effect of non-compliance:
additional CLEC costs, lost CLEC revenue and damage to the CLEC's competitive
position. It would also reflect disruption to the end-customer. Multiplier #2
would reflect a weaker link between the penalty amount and the activity
covered by the indicator. The price on which the penalty is based could cover
several activities including that covered by the indicator. The penalty could
also be based on a monthly charge rather than a per-event charge. |
763. |
The multiplier would double for each
succeeding three month period, consecutive or not, of non-compliance unless
the quality of service had met the standard for nine consecutive months in
the intervening period. That is, the ILEC would be compliant only after the
indicator showed the standard being met for nine consecutive months. |
764. |
Group Telecom argued that doubling
the multiplier over time would ensure that the incentive to quickly restore
acceptable service levels would increase with the duration of poor service.
It would also reflect the cumulative negative impact of such non-compliance
on the marketplace position of entrants. Group Telecom submitted that neither
its nor Call-Net's proposals amounted to punitive damages and, as such, were
within the Commission's power to mandate. Group Telecom argued that remedies
must provide a meaningful incentive for compliance and that their quanta
should be related to the duration of non-compliance. |
765. |
Group Telecom agreed with the
Companies' proposal that any quality of service regime that included rebates
or penalties should include an exception for situations where an ILEC failed
to meet the quality of service standards because of events beyond its
control. Group Telecom agreed with the list of such events put forward by the
Companies, with the exception of the exemption for strikes. |
766. |
In response to the Companies'
proposal to delegate to the CISC the development of a system of penalties,
Group Telecom argued that it is unreasonable to expect discussions in the
CISC to yield agreement within a reasonable period of time. Group Telecom
submitted that the ILECs would have no incentive to agree to legitimate
penalties or to see that negotiations come to a timely conclusion. |
767. |
The Companies argued that Group
Telecom's proposed regime could provide an incentive to the Companies to
deploy resources in an inefficient manner so as to avoid payment of
penalties. They noted that Group Telecom's proposed multipliers could result
in the Companies paying penalties many times in excess of the revenues for
the services being measured. |
768. |
AT&T Canada supported a
competitor-specific quality of service plan which would include the following
elements: |
|
a) incentives for ILECs to improve
quality of service, as well as a mechanism to flow through to competitors the
benefits from such productivity improvements, so that they can be passed
along to retail customers; |
|
b) penalties payable to each CLEC on
an individual basis; |
|
c) a mechanism for setting penalties
based on the total billing by the ILEC to the CLEC for services directly
associated with supporting the CLEC's local service offering, in amounts that
guarantee appropriate ILEC behaviour, so that an ILEC does not decide that
paying the penalty is less expensive than maintaining good service quality;
and |
|
d) additional quality of service
indicators that directly reflect the importance of certain services used by
CLECs providing local access facilities (e.g., co-location, repair of A5
loops, etc.). |
769. |
AT&T Canada opposed the Companies'
proposed use of the CISC to establish a competitor-specific rate adjustment
plan. In AT&T Canada's view, such a task would be beyond the mandate of the
CISC. |
770. |
Call-Net also opposed the Companies'
suggestion to rely on the CISC to develop a rate adjustment plan. Call-Net
argued that such an approach would unreasonably delay the development and
implementation of a regime. Instead, Call-Net proposed its own rate
adjustment plan. |
771. |
As part of its plan, Call-Net
proposed that the penalty should be tied to the revenues the ILEC receives
for the relevant service. In the case of non-revenue generating services, the
penalty would relate to the revenues forgone by the CLEC. For indicators that
measured a mixture of service levels, such as local service requests to order
both local loops and LNP, a reasonable flat fee would apply for each
violation. |
772. |
Call-Net agreed with Group Telecom
that all competitor indicators should always be penalty-ready. Call-Net noted
that the indicators themselves are already generally designed to exclude any
violations where due dates were missed "for reasons attributable to an
end-customer or a CLEC". It also agreed with Group Telecom that the measure
and application of penalties should be CLEC-specific and that the amounts of
penalties should grow with the duration of the non-compliance. |
773. |
Call-Net submitted that the ILEC's
indicator data should be audited by third parties if there were any
disagreement between a competitor and an ILEC over the data presented. Where
the auditor confirmed the general acceptability of the ILEC's reports (within
a pre-determined level of variance), the competitor would pay for the audit.
If the auditor challenged the ILEC's reports (beyond the pre-determined level
of variance), then the ILEC would pay for the audit. |
774. |
The Companies argued that Call-Net's
proposal would effectively raise the quality of service standard to 100% for
the indicator that was missed. If approved, they argued, Call-Net's proposal
would provide incentives to the Companies to deploy resources in an
inefficient manner since even a single miss would be subject to payment of
penalties once an indicator was breached. |
775. |
In the Commission's view, the record
of this proceeding demonstrates clearly that competitors depend significantly
on the use of ILEC services. For competition to succeed, competitors must be
able to provide service to their customers of a quality that is comparable to
that which the ILECs provide to their own customers. If a CLEC cannot provide
comparable quality of service, it will not be able to compete effectively.
Further, CLECs must be able to quickly correct substandard service to their
customers if they are to be able to retain customers and minimize any
possible customer rebates. |
776. |
The Commission agrees with the
competitors that a successful rate adjustment plan for ILEC competitor
services must include incentives that encourage ILECs to correct problems as
quickly as possible. Accordingly, the Commission concludes that the trigger
for rate adjustments on ILEC competitor services should apply as soon as the
quality of service indicator shows a substandard result for one month. |
777. |
The Commission considers that
quality of service rate adjustments should not apply to indicators that have
only interim approval. However, the Commission disagrees with the view that
ILECs must gain experience with indicators that have been given final
approval before adjustments are made for substandard service. In granting
final approval to an indicator, the Commission has concluded that the
indicator is appropriate and that an ILEC is obliged to meet the associated
standard. |
778. |
As already indicated, the Commission
disagrees with the Companies' contention that the amount of a rate adjustment
must not be so large as to provide incentives for ILECs to over-provision the
network and associated processes. The Commission considers that provisioning
to meet approved quality of service standards, thus avoiding rate
adjustments, does not amount to over-provisioning. |
779. |
The Commission notes that only
Call-Net and Group Telecom proposed a specific structure for a competitor
rate adjustment plan. The Companies and AT&T Canada provided a list of
matters on which determinations would be required to create a rate adjustment
plan, but did not provide particulars of any plan. |
780. |
The Commission is of the view that
neither the Call-Net nor the Group Telecom plan warrant approval on a final
basis. While both approaches use approved service rates as departure points,
neither provides a sufficient explanation as to how final remedies would
result in just and reasonable rates. The Commission is especially concerned
by the use of multipliers in the Group Telecom proposal. In the Commission's
view, rate adjustments under that plan might become punitive. |
781. |
Given the importance of ILEC quality
of service to the development of local competition, the Commission considers
it necessary to implement a rate adjustment mechanism for competitor services
immediately. However, the Commission also believes it is necessary to explore
certain aspects of a rate adjustment mechanism in greater detail before
establishing a plan on a final basis. Consequently, the Commission will
initiate a follow-up proceeding for this purpose in the near future. In the
meantime, the Commission considers that an interim mechanism is required. |
782. |
As between the Group Telecom and
Call-Net proposals, the Commission is of the view that Group Telecom's plan
has a more direct link to service rates. This is an important consideration
for a competitor-specific rate adjustment plan. The Commission considers that
Group Telecom's proposal provides a better starting point for an interim rate
adjustment mechanism. However, given the Commission's concerns regarding the
monthly multipliers, this aspect of Group Telecom's proposal has not been
included in the interim regime. The Commission is of the view that the other
components of the proposed formulae remain applicable. In the case (1)
formula, the adjustment will be calculated based on the loop service charges
including fixed and variable components combined. In the case (2) formula,
the adjustment will be calculated based on loop monthly lease rates.
Adjustments where the case (3) formula applies cannot be identified without
further development on the amount per event it refers to. The adjustment
formula for indicators associated with services involving a non-rated
activity will be reviewed in the follow-up proceeding referred to earlier. |
783. |
Accordingly, the Commission approves
on an interim basis, effective 1 July 2002, the competitor-specific rate
adjustment mechanism proposed by Group Telecom solely as it pertains to
competitor service indicators having final approval, but without the monthly
multipliers. A description of the interim rate adjustment plan, including
worksheets, is set out in Appendix 4 to this Decision. |
784. |
As provided for under the retail
quality of service regime, the Commission is of the view that an audit
process should be incorporated into the rate adjustment plan for competitors.
The Commission will consider proposals for the methodology of an audit
process, in the proceeding to establish a final competitor quality of service
regime. |
785. |
In Part III of this Decision, the
Commission has directed that new ILEC-provided services be created for use by
the CLECs. The Commission considers that such services may require additional
quality of service indicators and associated standards where existing
indicators for competitor services are either unsuitable or insufficient.
Accordingly, the Commission directs the CISC Business Process Working Group
(BPWG), by 15 October 2002, to examine and report to the Commission on
whether additional indicators and associated standards are required for the
new competitor services and, if so, to provide to the Commission proposed
indicators and standards. |
|
|
786. |
In PN
2001-37, the Commission
invited comments on the extent to which ILECs' adherence to benchmarks for
consumer service, such as billing policies or a consumer bill of rights
(CBOR), should be linked to the price regulation regime and what form any
such benchmarks might take. |
|
Consumer bill of rights
|
787. |
ARC et al. submitted that the
current presentation of consumer rights in the introductory pages of ILEC
telephone directories was inadequate. According to ARC et al., consumers
often have difficulty understanding the ILEC Terms of Service which are
included in these pages. In addition, ARC et al. stated that the introductory
pages often lack complete information. Alternatively, information about a
topic may be scattered throughout the introductory pages thereby confusing
and frustrating customers. |
788. |
ARC et al. also argued that there
was an asymmetric situation between consumers and ILECs with respect to
information. In particular, the ILECs were better informed than consumers
about consumers' legal rights and market alternatives. In ARC et al.'s view,
both consumer education and access to information were required to overcome
this asymmetry so that consumers could properly assess the value of
competitive offers, understand their rights and advocate these rights to
their telephone services provider. ARC et al. suggested that a CBOR would
contribute significantly to achieving this goal. |
789. |
ARC et al. proposed that the CBOR
take the form of a published brochure. This publication would contain key
customer rights and remedies, presented in plain language and a
customer-friendly format. ARC et al. submitted that this information should
be written so as to reflect both the minimum standards approved by the
Commission, as well as an ILEC's individual policies. Noting that different
ILECs had different Terms of Service, ARC et al. submitted that there should
be consistency in the Terms of Service among the ILECs. |
790. |
In ARC et al.'s view, the CBOR
should also contain information on services that are available from
alternative providers and on how to shop and compare rates for competitive
services. While acknowledging that CLECs' regulatory obligations were outside
the scope of this proceeding, ARC et al. submitted that the CBOR should apply
to both ILECs and CLECs. |
791. |
ARC et al. submitted that a
proceeding would be required to identify consumer rights and to create a
CBOR. ARC et al. requested that this consumer rights proceeding, in addition
to defining the CBOR and its content, also review the ILECs' Terms of
Service. In ARC et al.'s view, a review of the Terms of Service should
examine the extent to which the Terms of Service could be rewritten in plain
language, without technical terms and in a customer-friendly format. In
addition, ARC et al. submitted that the Terms of Service should be amended to
reflect changes required as a result of the consumer rights proceeding and
other changes in the industry. ARC et al. also suggested that the consumer
rights proceeding could explore the issue of possible links between a CBOR
and the framework for price regulation. |
792. |
CAC (Alta) supported the publication
of a clear statement of customer rights and obligations. |
793. |
The Companies stated that the Terms
of Service together with the information on customers' rights currently found
in the introductory pages of the Companies' telephone directories constituted
an existing CBOR. While in their view this information was accessible, they
indicated their willingness to implement a CBOR to ensure that all consumers
would be aware of their rights and obligations. |
794. |
As far as "competitive information"
was concerned, the Companies submitted that in a market where all services
were competitive and many of them forborne, it would be unreasonable to
expect the Companies to provide information to their customers in a CBOR on
how to obtain services from competitors. |
795. |
The Companies advocated a
co-operative approach on this matter, in order to gain a variety of
perspectives and quickly arrive at a useful CBOR. They submitted that a
committee, such as the Committee on Bill Management Tools and Access to
Telephone Service (the BMTS Committee), established by Commission modifies
reporting requirements for affordability, Order CRTC
2002-393, 10 May 2000, (Order
2000-393) would be an appropriate forum. |
796. |
With respect to a possible link
between the CBOR and price cap regulation, the Companies stated that a
position on this was premature until the CBOR was defined. The Companies
submitted that monitoring of CBOR compliance and of the performance of ILECs
in their handling and resolution of customer complaints was already
encompassed in their reporting on quality of service indicator 5.1. |
797. |
TELUS submitted that its Terms of
Service, together with other information included in the TELUS White Pages
directory, already met the requirements of a CBOR. TELUS also argued that an
indicator or related penalties should not be constructed to deal with
"violations" of the CBOR. TELUS stated that its preferred approach to
customer complaints was to treat customers as individuals and address quality
of service issues in a timely and efficient manner. |
798. |
In the Commission's view, ARC et al.
has demonstrated that the Terms of Service and introductory pages of the
ILECs' telephone directories are difficult to understand in some places. In
addition, in some cases they may not contain all the information necessary
for an accurate understanding of consumer rights. Consequently, the
Commission agrees that it would be useful to develop a CBOR. |
799. |
The Commission considers that a CBOR
should be a comprehensive and concise statement of consumer rights. At the
same time, the Commission notes that parties' views varied as to what should
be included in a CBOR, and is of the view that the current proceeding did not
produce sufficient information to establish a precise, unambiguous, and
readily publishable CBOR at this time. Consequently, the Commission intends
to initiate a further proceeding in which it will consider detailed
submissions on CBOR content and related issues. |
800. |
As far as a review of the Terms of
Service is concerned, the Commission considers it appropriate to await the
completion of the proceeding on the CBOR before deciding on the need for such
a review. At that time, the Commission will be able to consider in the
context of the new CBOR whether there is a need for greater clarity of the
Terms of Service. |
|
Billing policy issues
|
801. |
The Companies indicated that billing
practices were being addressed by the BMT Committee established by Order
2000-393. While stating that
their subscribers were generally satisfied with current billing policies, the
Companies reported focus group results indicating a preference for
"consolidated" statements, similar to those sent annually. |
802. |
ARC et al. suggested that billing
policy issues should be reviewed in the CBOR proceeding. For example, that
proceeding could look at issues such as the level of detail and the
information that customers want on their bills, as well as the monthly
itemizing of optional services that customers were paying for. |
803. |
The Commission considers that there
are two separate issues regarding billing policy: the content of a billing
statement, and the frequency of sending itemized, detailed statements to
customers. |
804. |
The Commission notes that ILECs have
varying policies with respect to the frequency with which itemized statements
are sent to customers. As prescribed in Review of the General Regulations
of the federally regulated common terrestrial telecommunications common
carriers, Telecom Decision CRTC 86-7,
26 March 1986, and subsequent rulings, ILECs must provide their single-line
customers with a detailed itemization of service and equipment charges at
service commencement, after any rate or service and equipment changes and, at
a minimum, once a year. |
805. |
However, the Commission notes that
TELUS and MTS send itemized statements to their customers monthly, while
SaskTel has begun implementing monthly itemized statements to its
subscribers. The Commission is of the preliminary view that such a policy
should be extended to all ILECs subject to this Decision. Accordingly, the
Commission directs Bell Canada and Aliant Telecom to show cause, by 2 July
2002, why they should not be directed to send their customers monthly
itemized billing statements at the same level of detail as is currently
provided on an annual basis, copying parties to the proceeding leading to
Order 2000-393. Any interested
parties may file comments on Bell Canada's and Aliant Telecom's responses to
this direction to show cause by 12 July 2002, copying parties to the
proceeding leading to Order
2000-393. Bell Canada and Aliant Telecom may file reply comments by 22
July 2002, copying those interested parties who filed comments. All material
must be received, not merely sent, by these dates. |
806. |
In the Commission's view, it may be
appropriate that the manner in which charges and services are identified in
billing statements be modified. The Commission concludes that it would be
appropriate for these issues of content and related issues to be considered
by the BMT Committee. As is the case with other working committees, such as
the CISC working groups, the BMT Committee's consensus or other conclusions
will be submitted to the Commission for approval. |
|
|
|
Background
|
807. |
In Decision
99-16, the Commission examined the level of
telecommunications service in Canada and concluded that it was, in general,
very high. The noted exceptions were the HCSAs which are generally found in
remote, rural regions and in the far north. Telephone service to these areas
generally costs more to provide and is often of lower quality than service in
other regions. |
808. |
In light of the lower service levels
in some areas, the Commission decided it was appropriate to define a basic
service objective (BSO) which set a basic level of telephone service that the
Commission would attempt to ensure is available to the public throughout
Canada. |
809. |
In Decision
99-16, the Commission defined the BSO as
comprising: |
|
a) individual line local service
with Touch-Tone dialling, provided by a digital switch with capability to
connect via low-speed data transmission to the Internet at local rates; |
|
b) enhanced calling features,
including access to emergency services, Voice Message Relay service, and
privacy protection features [included in call management services (CMS)];
|
|
c) access to operator and directory
assistance services; |
|
d) access to the long distance
network; and |
|
e) a copy of a current local
telephone directory. |
810. |
The Commission then set three goals
for service improvement in HCSAs: |
|
i) to extend service to the few
areas that are unserved; |
|
ii) to upgrade service levels in
those areas where customers do not have access to telecommunications services
which meet the BSO (i.e., underserved areas); and |
|
iii) to maintain service levels, and
ensure that existing levels do not erode under competition. |
811. |
In order to implement these goals,
the Commission directed all ILECs to file SIPs for approval, or to
demonstrate that the BSO has been and will continue to be achieved in their
territory. ILECs were required to consult stakeholders prior to preparing
their SIPs. |
812. |
The Commission also stated that it
would require the ILECs to provide a tracking plan to monitor SIPs as they
are implemented. |
813. |
In connection with the design of a
SIP, the Commission decided that where construction is taking place in a
specific area pursuant to the SIP, the customer's contribution to the costs
should not exceed $1,000 per customer premises. Furthermore, where payment
instalment plans are not available in a company's tariffs, the Commission
directed the ILECs to file with their SIPs, proposed tariffs giving customers
the option to pay for extensions on a reasonable basis. |
814. |
The Commission also required the
SIPs to incorporate least-cost technology, target larger communities or areas
first, serve unserved areas prior to providing upgrades, and serve permanent
dwellings before seasonal ones. |
815. |
In PN
2001-37, the Commission
indicated that it would review the various SIPs filed by the ILECs to ensure
that the telephone companies meet the BSO and other key elements of Decision
99-16. |
816. |
The Commission's determinations with
respect to the ILECs' SIPs, both unserved and underserved areas, are set out
below, except for MTS. In Public Notice CRTC
2001-37 – Price cap review and
related issues – Disposition of the MTS service improvement plan,
Decision CRTC 2001-767, 19 December 2001
(Decision 2001-767), the Commission considered that prior consultation with
stakeholders (including MKO) regarding MTS' proposed SIP was inadequate. The
Commission disposed of MTS' SIP on an expedited basis given the importance of
deploying the SIP as soon as possible to the benefit of customers. |
817. |
The Commission approved MTS'
projected SIP expenditures for 2000 to 2002 inclusive and denied projected
expenditures for 2003 to 2009 inclusive. The Commission required MTS to file
a revised SIP by 30 June 2002, as well as a new roll-out plan for a reduced
five-year period from 2003 to 2007. |
|
Unserved premises
|
|
Bell Canada |
818. |
Bell Canada proposed $31.2 million
of capital expenditures to provide service to unserved premises in its
territory. Bell Canada stated that its proposed SIP would make service
available over two years (2002 and 2003) to 5,366 premises, comprised of
2,148 permanent and 3,218 seasonal premises. The 5,366 potential subscribers
represent 15% of Bell Canada's 36,302 identified total unserved premises. |
819. |
Bell Canada explained that its SIP
distinguished between permanent and seasonal premises by occupancy and
applied different cost limits to these two types of premises ($25,000 per
permanent and $5,000 per seasonal premises). Bell Canada argued that this
approach was supported by stakeholder feedback that there should be a higher
cost limit for permanent premises and a lower cost limit for seasonal
premises. Bell Canada stated that it would be reasonable to expect that
permanent premises would take service year-round, while seasonal premises
would take service for only part of the year. |
820. |
Bell Canada's approach was to
determine average "take rates" for all of its unserved localities based on a
survey of unserved residential premises undertaken by an outside market
research agency. The resulting take rates were different for Ontario and
Quebec, as well as for permanent and seasonal premises. Specifically, the
take rates for unserved permanent premises were 64% in Ontario and 55% in
Quebec, and for unserved seasonal premises 24% in Ontario and 13% in Quebec. |
821. |
Based on these take rates, and the
$25,000/$5,000 cost criteria noted above, the company calculated an aggregate
cost allowance for each locality. If the aggregate cost allowance was equal
to or greater than the capital expenditure to serve that locality,
Bell Canada included the locality in its SIP. |
822. |
Bell Canada submitted that it used
the least-cost wireline or fixed wireless technology in estimating the
up-front cost of serving each locality. Wireline technologies were used where
the unserved locality was close to existing wireline facilities. Fixed
wireless technologies were used where the unserved locality was close to an
existing radio tower, or where the locality was remote and could not be
served in a cost-effective way by wireline facilities. |
823. |
Bell Canada noted that localities
that did not qualify for service under its proposal nonetheless had service
alternatives available to them. Approximately 16% of the localities that did
not qualify for service had cellular service available to them. As well,
satellite service was available everywhere in Ontario and Quebec from various
suppliers, while high frequency radio service was available in some unserved
localities from other suppliers. |
824. |
Pursuant to the Commission's
request, Bell Canada filed two alternative SIPs, using a $25,000/$25,000 cost
criteria (i.e., a $25,000 cost threshold for both permanent and seasonal
premises). These two alternatives resulted in the following cost estimates: |
|
a) Alternative 1 (Bell Canada take
rates): |
$75.3 million |
|
b) Alternative 2 (100% take rate):
|
$137.2 million |
825. |
With respect to the $1,000 customer
contribution, Bell Canada proposed to charge a non-refundable deposit of $200
in the first month of the instalment payment plan. The remaining balance
($800) would be payable in equal instalments over the next 12 months with no
interest charges. |
|
TELUS |
826. |
TELUS proposed $8.2 million in
capital expenditures for unserved premises in British Columbia and $0.7
million in capital expenditures for unserved premises in Alberta. |
827. |
TELUS proposed that its SIP would
apply to those communities with 10 or more principal dwellings, where the
average capital cost per permanent dwelling did not exceed $26,000. TELUS
proposed not to serve seasonal dwellings. |
828. |
The list of unserved communities was
based largely on information contained in the Service Extension Program
database in British Columbia, and on an internal canvassing of access
planners and other company experts in British Columbia and Alberta. As well,
TELUS indicated that it planned to try to identify additional unserved
communities. |
829. |
TELUS used a take rate of 100% to
calculate the cost of each locality. TELUS estimated that, if it applied the
$25,000/$25,000 cost criteria and a 100% take rate, its SIP for unserved
premises would cost $10.6 million in total capital expenditures. |
830. |
TELUS proposed a payment instalment
plan for the $1,000 customer contribution. TELUS considered that its current
practice, whereby the customer would pay 50% of the amount up-front, with the
remainder over 36 months, would be fair and reasonable. |
|
Aliant Telecom |
831. |
Aliant Telecom indicated that there
were no unserved premises in Prince Edward Island or New Brunswick, but that
there were a limited number of unserved premises in Nova Scotia and
Newfoundland. Aliant Telecom proposed a SIP of $2.28 million in capital
expenditures to serve 265 unserved premises and stated that its SIP would
satisfy approximately 77% of the unserved requests in the territories
mentioned above. Aliant Telecom stated that it did not propose to provide
service to meet the remaining unserved requests because of the excessive
costs that would be involved. |
832. |
Aliant Telecom carried out a
detailed survey and determined which customers would be willing to take
service, assuming that they would have to contribute $1,000 towards the
capital cost of providing service. Aliant Telecom then included each locality
in its SIP with customers that had requested service, provided that the
aggregate cost allowance assigned to the locality, based on capital cost
limits of $25,000 for permanent premises and $5,000 for seasonal premises,
was equal to or greater than the up-front cost to serve the location. |
833. |
Aliant Telecom estimated that, if it
applied the $25,000/$25,000 cost criteria and a 100% take rate, its SIP for
unserved premises would cost $2.33 million in capital expenditures. |
834. |
Aliant Telecom proposed an
instalment plan for the $1,000 customer charge similar to Bell Canada's
proposal. |
|
SaskTel |
835. |
SaskTel stated that it has no
unserved premises in its territory. Accordingly, there were no expenditures
included in its proposed SIP. |
|
Comments from interested parties
|
836. |
MKO was the only intervener that
commented on the ILECs' proposed SIPs and specifically on MTS' SIP. |
837. |
TELUS received 360 letters that
disagreed with the approach used with the TELUS SIP and the possibility of
existing customers having to pay higher rates to provide service to those who
chose to live in remote areas. |
838. |
Bell Canada received 55 letters
relating to unserved or underserved situations or claiming that Bell Canada's
SIP was inaccurate. As well, a number of persons wrote to Bell Canada during
the period March 2001 to February 2002 requesting service. In a number of
cases, Bell Canada denied service, stating that the cost to serve did not
meet the criteria set out in its proposed SIP. |
|
Commission's determinations – Unserved premises
|
|
Conclusions on common issues |
839. |
Based on its examination of the
Aliant Telecom, Bell Canada and TELUS SIPs, the Commission finds that, as
required by Decision 99-16, they: (i) use
least-cost technology; (ii) provide a tracking plan; and (iii) generally
comply with the BSO, subject to the modifications discussed below relating to
Internet access and/or CMS. |
840. |
The Commission has identified four
issues which are common to all of the ILEC SIPs as they relate to unserved
premises: |
|
i) the capital cost criteria; |
|
ii) the take rates used when
estimating the cost of a SIP; |
|
iii) the terms of an appropriate
instalment plan for the $1,000 customer contribution; and |
|
iv) the requirement for an
instalment plan for large construction charges. |
841. |
The Commission's determinations on
each of these issues are set out in the following paragraphs. |
|
a) Capital cost criteria |
842. |
Bell Canada and Aliant Telecom
proposed capital cost limits of $25,000 for permanent and $5,000 for seasonal
premises. TELUS proposed a $26,000 limit for permanent premises. TELUS did
not propose to serve seasonal premises. Each company required the customer to
contribute $1,000 towards construction as set out in Decision
99-16. |
843. |
The Commission notes that it is
often difficult to differentiate between permanent and seasonal premises. In
addition, the status of a particular dwelling could change. Accordingly, the
Commission is of the view that the capital criteria should be the same for
seasonal and permanent premises. |
844. |
In Long distance competition and
improved service for Northwestel customers, Decision CRTC
2000-746, 30 November 2000 (Decision
2000-746), the Commission approved a capital cost limit of $25,000 for
unserved premises, with no distinction between permanent and seasonal
premises. |
845. |
In the Commission's view, it would
be appropriate to approve capital cost criteria which would ensure that
service is provided to as many unserved premises as is reasonably possible
over the next four years. The Commission notes that, as discussed below,
monies will be available from other sources to offset the costs of the SIPs. |
846. |
In light of the above, the
Commission approves capital cost criteria for Aliant Telecom, Bell Canada,
and TELUS of $25,000 for both permanent and seasonal premises, including a
$1,000 customer contribution. |
|
b) Take rates |
847. |
Aliant Telecom, Bell Canada and
TELUS used various take rates when estimating the cost of their SIPs. The
Commission considers that it would be appropriate to assume a take rate which
reflects the maximum extension of service, thereby ensuring that funding is
available for the maximum number of unserved premises which meet the capital
cost criteria. |
848. |
Accordingly, the Commission
concludes that the total cost of each of the SIPs is to be calculated using a
100% take rate in each locality. |
|
c) Instalment plan for $1,000
customer contribution |
849. |
The Commission is of the view that
the requirement for a new customer to pay the $1,000 contribution in an
up-front lump-sum payment could be a disincentive to take service.
Accordingly, in Decision 99-16, the
Commission directed the ILECs to file an instalment payment plan with their
SIPs, unless such plans were already available in the company's tariffs. |
850. |
Bell Canada filed an instalment plan
in its SIP, which the company stated was similar to the plan approved for the
smaller ILECs. Aliant Telecom filed a similar plan. The Commission considers
these proposals to be appropriate. |
851. |
TELUS proposed a different
instalment plan which required a greater up-front payment and spread the
remaining payments over a longer period. The Commission is concerned that the
magnitude of the up-front payment proposed by TELUS might discourage some
potential customers from signing up for service. In light of its objective to
capture as many unserved premises as possible, the Commission considers that
TELUS' instalment plan should mirror the proposals of Bell Canada and Aliant
Telecom. |
852. |
Accordingly, the Commission directs
Aliant Telecom, Bell Canada and TELUS to institute an instalment plan for the
$1,000 payment that is the same as the plan approved in Northern Telephone
Limited - Service improvement plan, Order CRTC
2000-1096, 4 December 2000.
The Commission notes that the ILECs would be allowed to charge their tariffed
late payment interest rate for late payment of instalments that are due each
month. Each of these companies should file their instalment plan with the
Commission for approval. |
|
d) Instalment plan for large
construction charges |
853. |
The Commission notes that even with
the approved capital cost limit, a number of unserved premises would still
not qualify for service. The Commission is of the view that it would be
appropriate for the ILECs to offer a plan whereby the customer could pay an
amount over and above the $1,000 customer contribution whenever the cost of a
service extension exceeds the $25,000 capital cost limit. For example, if the
cost to serve a premises were $34,000 then the cost to the customer would be
$10,000 (i.e., $1,000 + [$34,000-$25,000]). |
854. |
Accordingly, the Commission directs
Aliant Telecom, Bell Canada and TELUS to notify any premises that do not
currently qualify for service under the SIP that the occupants of the
premises can pay the additional costs to obtain service. These costs would be
described as large construction charges. |
855. |
In the Commission's view, it would
also be appropriate to institute an additional instalment plan that would
enable customers to pay for large construction charges over a reasonable
period of time. This would mitigate the disincentive to take service because
of a high up-front cost. |
856. |
The Commission notes that Bell
Canada currently has such an instalment plan in its tariff. The Commission
approved that plan in Bell Canada Instalment Payment Plan, Order CRTC
2000-980, 26 October 2000.
Specifically, the conditions in Bell Canada's tariff are: |
|
a) instalments may be spread over a
period of up to 36 months; |
|
b) interest is charged on the unpaid
balance of construction charges at a rate of the company's cost of capital;
|
|
c) a minimum deposit of 20% of the
construction charge is to be paid prior to the start of the construction;
|
|
d) maximum construction charges of
$10,000 per customer premise are eligible for the instalment payment plan;
and |
|
e) the instalment plan is available
to residence customers only. |
857. |
The Commission directs Aliant
Telecom, Bell Canada and TELUS to adopt this instalment plan for the period
of the SIP roll-out, with condition d) above modified to state that maximum
construction charges of $10,000 per customer premise are to be calculated in
accordance with this Decision when determining eligibility for the instalment
payment plan. Each of these companies should file their large construction
instalment plan with the Commission for approval. |
858. |
The Commission also wishes to
explore an instalment payment plan for large construction charges greater
than $10,000 per customer premise. Accordingly, Aliant Telecom, Bell Canada
and TELUS are directed to file such a plan for Commission consideration by 2
July 2002. |
|
Conclusions on company-specific
issues |
|
a) Bell Canada |
859. |
Based on its determinations above,
the Commission approves a SIP for Bell Canada based on capital cost
allowances of $25,000 for both permanent and seasonal premises and assuming
100% take rates for both permanent and seasonal premises. However, the
Commission is of the view that, depending on the circumstances, the actual
cost of the SIP will vary between $75.3 million and $137.2 million.
Therefore, the Commission approves an initial amount of $75.3 million in
up-front capital costs, pending the filing of a revised SIP as directed
below. The Commission intends to review Bell Canada's progress in
implementing its SIP on a yearly basis, as reported in its tracking plan, to
determine whether additional capital and funding are required. |
860. |
The Commission directs Bell Canada
to commence rolling out its SIP in 2002. The Commission further directs Bell
Canada to start a project in a locality if it meets the following criteria:
(a) the maximum average cost per premises is $25,000 using a 100% take rate,
and (b) at least one customer requests service and is willing to contribute
$1,000. The Commission directs Bell Canada to start with those localities
that have the highest demand. Bell Canada may report new expenditures in the
annual tracking report and request approval for those additional capital
expenditures and funding at that time. |
861. |
The Commission notes that new
premises will be built during the roll-out period. The Commission is of the
view that these new premises should be included in the roll-out plan if they
meet the capital cost criteria set out above. Accordingly, the Commission
directs Bell Canada to: (i) assess applications for service from these new
premises to determine whether they qualify for service; (ii) provide service
if the customer is willing to contribute $1,000; and (iii) report the results
in the annual filing of the tracking report. |
862. |
The Commission notes that there have
been a number of past requests for service since Decision
99-16 was issued, where service has been
denied because of high costs. The Commission directs Bell Canada to reassess
these applications in the same manner as the new premises referred to above
to determine if they qualify for service, and provide service if the
applicants are willing to contribute $1,000. The Commission further directs
Bell Canada to notify those applicants that qualify by mail, and report the
results in the annual filing of the tracking report. |
863. |
During the next four years, for
localities where the company has already installed outside plant before the
commencement of the SIP, each new customer that requests service in that
locality is to have a choice between the lesser of a contribution cost
calculated pursuant to the current tariff, or $1,000, assuming a capital cost
limit of $25,000. |
|
b) TELUS |
864. |
The Commission approves a SIP for
unserved premises for TELUS of $10.6 million in capital expenditures. The
Commission intends to review TELUS' progress in implementing its SIP on a
yearly basis, as reported in its tracking plan, to determine whether
additional capital and funding are required. |
865. |
The Commission directs TELUS to
commence rolling out its SIP in 2002. The Commission further directs TELUS to
start a project in a locality if it meets the following criteria: (a) the
maximum average cost per premises is $25,000 using a 100% take rate, and (b)
at least one customer requests service and is willing to contribute $1,000.
The Commission directs TELUS to start with those localities that have the
highest demand. |
866. |
The Commission also directs TELUS to
assess applications and reassess past requests for service in the same manner
as Bell Canada, as set out above, including requests for service from
premises in localities where the company has already installed outside plant
before the commencement of the SIP. |
|
c) Aliant Telecom |
867. |
The Commission approves, as an
initial amount, the up-front capital amount of $2.33 million. The Commission
intends to review Aliant Telecom's progress in implementing its SIP on a
yearly basis, as reported in its tracking plan, to determine whether
additional capital and funding are required. |
868. |
The Commission directs Aliant
Telecom to commence rolling out its SIP in 2002. The Commission further
directs Aliant Telecom to start a project in a locality if it meets the
following criteria: (a) the maximum average cost per premises is $25,000
using a 100% take rate, and (b) at least one customer requests service and is
willing to contribute $1,000. The Commission directs Aliant Telecom to start
with those localities that have the highest demand. |
869. |
The Commission also directs Aliant
Telecom to assess applications and reassess past requests for service in the
same manner as Bell Canada, as set out above, including requests for service
from premises in localities where the company has already installed outside
plant before the commencement of the SIP. |
|
Underserved customers
|
870. |
The ILECs proposed various plans to
provide additional services to their underserved customers in order to meet
the BSO. Specifically, those plans included the provision of Internet access,
Internet access via a local call, and CMS. In assessing the reasonableness of
the proposals, the Commission has examined the cost of equipping the small
exchanges, the total number of customers to be served, and the expected
penetration rate within the exchange. |
|
Bell Canada |
871. |
Bell Canada submitted that, in 2001,
all existing customers in its territory met the BSO with the exception of
customers served by Code Division Multiple Access (CDMA), a wireless
technology. |
872. |
Bell Canada indicated that it had
approximately 175 CDMA-served customers. CDMA does not currently provide Call
Trace functionality. Bell Canada noted that CDMA provides other privacy
features, such as per-line and per-call display blocking. |
873. |
Bell Canada proposed to make Call
Trace available to all new and existing CDMA-served customers in 2002 as part
of its current SIP proposal. As well, at present CDMA technology does not
support low-speed data transmission to the Internet. Bell Canada stated that
every effort was being made to overcome, in a timely fashion, technical
difficulties encountered in provisioning low-speed data transmission to the
Internet using CDMA technology. |
874. |
In response to Commission
interrogatories, Bell Canada indicated that 4,600 customers currently did not
have access to the Internet via a local call. Bell Canada noted that 901 out
of a total of 942 exchanges had access to at least one ISP via a local call.
Bell Canada stated that there were 41 exchanges where residents must make a
long distance call to reach an ISP, and proposed a plan to connect residents
via a local call. The 41 exchanges were in HCSAs and were separated into
Bands E and G. |
875. |
For the six Band E exchanges, Bell
Canada proposed to expand the local calling area of each exchange as an
exception to the extended area service criteria for Internet access only,
creating a Natural Calling Centre at a cost of $300,000. |
876. |
For the 35 Band G exchanges, Bell
Canada proposed a solution costing $9.1 million in up-front capital. This
would provide access to the Internet for the 10 exchanges served by analogue
and digital radio and for the 25 exchanges served by satellite. However,
Bell Canada stated that there was no guarantee that ISPs would actually avail
themselves of this opportunity. |
877. |
Accordingly, Bell Canada proposed to
spend a total of $9.4 million for 2,593 NAS. |
878. |
Bell Canada requested that, should
the Commission direct it to offer local access to the Internet to residents
in the six Band E exchanges and to provide at a non-compensatory rate
end-to-end facilities to make it more attractive for an ISP to serve each of
the 35 Band G exchanges, the Commission should establish an appropriate cost
recovery plan. |
879. |
Bell Canada submitted that it was
currently meeting the BSO with respect to Internet access, since an ISP would
connect to any of its switches on a local basis. Bell Canada submitted that
the BSO does not require that residents in an exchange be able to access the
Internet without making a long distance call. |
880. |
The Commission disagrees with Bell
Canada's position regarding Internet access pursuant to the BSO. The
Commission notes that customers in 41 exchanges are currently unable to
access the Internet via a local call. The Commission has determined that Bell
Canada must provide the necessary toll-free links for the exchanges
indicated below. |
881. |
The 41 exchanges are broken down as
follows: 25 Band G Satellite Exchanges; 10 Band G Analogue and Digital Radio
Exchanges; and six Band E Digital Radio Exchanges. |
882. |
With respect to the 25 Band G
exchanges, Bell Canada proposed a plan costing $4.2 million. The Commission
is concerned with the slow data transmission speed for the proposed plan to
provide toll-free Internet access by satellite (9.6-14.4 kbps). Also, the
Commission finds that, as set out above, the plan is not reasonable due to
the high cost and the expected low penetration rate. In light of the
foregoing, the Commission denies the plan for the 25 Band G exchanges. |
883. |
The Commission notes that Bell
Canada has proposed a plan costing $3.6 million for 136 customers in one Band
G analogue exchange. Again, the Commission finds that the plan is not
reasonable due to the high cost and the expected low penetration rate.
Accordingly, the Commission denies this part of the Bell Canada SIP. |
884. |
The Commission notes that Bell
Canada has proposed a plan costing $1.3 million for 688 customers in nine
Band G digital radio exchanges. Again, the Commission finds that the plan is
not reasonable due to the high cost and the expected low penetration rate.
Accordingly, the Commission denies this part of the Bell Canada SIP. |
885. |
The Commission notes that Bell
Canada has proposed a plan costing $0.3 million for six Band E digital radio
exchanges. The Commission approves the plans for Pickle Lake, Gull Bay and
Armstrong, since the average cost per prospective subscriber, even with a low
penetration rate, is reasonable. The plans for Savant Lake, Oba, and
Chute-des-Passes are denied due to the high cost and the expected low
penetration rate. |
886. |
The Commission directs Bell Canada
to add the costs related to upgrading underserved premises in Pickle Lake,
Gull Bay, and Armstrong to its funding requirement and to commence this
portion of its SIP in 2002. These costs are identified in Table 2 of the
response to interrogatory Bell(CRTC)26Jun01-1600. |
887. |
The Commission is of the view that
Pickle Lake, Gull Bay, and Armstrong should have toll-free access to the
Internet in 2003. Accordingly, the Commission directs Bell Canada to track
the status of Internet service in these communities and include this
information in its tracking reports. |
|
TELUS |
888. |
In response to interrogatory
TELUS(CRTC)27Apr01-613, TELUS stated that there were a number of exchanges in
British Columbia where customers had to access an ISP via a toll call. TELUS
provided a plan to provide these exchanges with Internet access via a local
call. |
889. |
The Commission has reviewed TELUS'
plan on an exchange-by-exchange basis, and has determined that the costs are
reasonable in the following exchanges: Bella Bella, Granisle, Greenville,
Hemlock Valley, Kitkatla, Kitwanga, Klemtu, Stewart and Zeballos. The
Commission approves these portions of the TELUS SIP, and directs TELUS to
carry out those projects that it has approved. The Commission denies TELUS'
plan regarding Internet access for the remaining exchanges. |
890. |
TELUS stated that the cost to
upgrade the network in Alberta for Internet access would be $20.6 million in
capital expenditures for 3,302 NAS. The Commission finds that the plan is not
reasonable due to the high cost and the expected low penetration rate.
Accordingly, the Commission denies this part of the TELUS SIP. |
891. |
TELUS stated that the cost to
upgrade the network in British Columbia for additional CMS features on a
stand-alone basis would be $26.8 million in capital expenditures for 25,096
NAS. The Commission finds that the plan is not reasonable due to the high
cost and the expected low penetration rate. Accordingly, the Commission
denies this part of the TELUS SIP. |
892. |
TELUS also stated that the cost to
upgrade a portion of the network in British Columbia to allow toll-free
Internet access would be $18.1 million in capital expenditures for 5,288 NAS.
The Commission finds that the plan is not reasonable due to the high cost and
the expected low penetration rate. Accordingly, the Commission denies this
part of the TELUS SIP. |
893. |
The Commission is of the view that
the exchanges identified above should have toll-free access to the Internet
in 2003. Accordingly, the Commission directs TELUS to track the status of
Internet service in these exchanges and include this information in its
tracking reports. |
|
Aliant Telecom |
894. |
In a 17 March 2000 letter, the
Commission directed Aliant Telecom to implement a Network Enhancement Plan
(NEP) in Newfoundland and provide quarterly progress reports to the
Commission. The Commission ordered the implementation of the NEP to relieve
toll traffic congestion on certain routes to allow the carriage of emergency
service calls during busy periods. |
895. |
Aliant Telecom stated in its
proposed SIP that upon completion of its NEP in Newfoundland, the standard
service throughout its serving territory would be individual line local
service with Touch-Tone dialling, provided by a digital switch with
capability to connect via low speed data transmission to the Internet at
local rates. However, Aliant Telecom stated that seven party-line customers
had asked that their service be upgraded to individual line. Aliant Telecom
stated that the proposed SIP included upgrading these customers. |
896. |
Aliant Telecom indicated that upon
completion of the NEP, almost all customers will be provided with some
enhanced calling features. Only two exchanges (Wild Cove and Rigolet) would
have no enhanced calling features. There are fewer than 200 NAS in total in
these exchanges. |
897. |
Aliant Telecom stated that, while
all other customers in Aliant Telecom's territory would have access to some
enhanced calling features, they would not have access to all of them.
However, Aliant Telecom noted that customers who do not have access to
enhanced features requiring CCS7 signalling would still have their privacy
protected since their name and number would not be available to other
customers. Therefore, Aliant Telecom submitted that its enhanced calling
features offering still meets the requirement of the BSO. |
898. |
Aliant Telecom stated that its
practice had been to provide expanded enhanced calling features in areas
where the expected revenue flow would justify the capital expenditures.
Aliant Telecom submitted that the smaller communities in its serving area
were very similar to these smaller communities in Northwestel's serving area.
Aliant Telecom submitted that the roll-out of the enhanced calling features
to communities with low-line sizes should remain part of the normal
provisioning process and should not be included as part of the SIP. Aliant
Telecom submitted that this was consistent with the Commission's
determination in paragraph 25 of Decision
2000-746. |
899. |
Aliant Telecom indicated that a plan
to provide CMS features to underserved customers would cost $12.13 million in
capital expenditures. Aliant Telecom stated that the estimated expenditures
cover 56 exchanges (46 in Newfoundland, nine in Nova Scotia, and one in New
Brunswick). Given the significant cost involved, Aliant Telecom submitted
that it should not be required to provide a full suite of enhanced calling
features to these locations. |
900. |
The Commission agrees with Aliant
Telecom's submission that the cost to provide CMS is significant.
Accordingly, due to the high cost and the expected low penetration rate, the
Commission finds that the plan is not reasonable and denies that part of the
Aliant Telecom SIP. |
901. |
Aliant Telecom stated that there
were 26 exchanges where a customer must make a toll call to access an ISP.
The Commission finds that the costs are reasonable for 18 of the exchanges
and approves this portion of the plan. The Commission denies the portion of
the plan for the remaining eight exchanges since the costs are high and the
expected penetration is low. |
902. |
The eight communities whose projects
are denied are: Black Tickle, Fairhaven, Great Harbour Deep, Nipper's
Harbour, Norman's Bay, Paradise River, Pinset's Arm, and Williams Harbour. |
903. |
The 18 communities whose projects
are approved are: English Harbour West, Makkovik, Port Hope Simpson,
Churchill Falls, Belleoram, Burlington, Charlottetown Labrador, Coomb's Cove,
Cottrell's Cove, Davis Inlet, Grey River, Ladle Cove, Leading Tickles, Little
Bay Islands, Millertown, Rigolet, Terrenceville, and Wild Cove. |
904. |
In light of the foregoing, the
Commission has reduced the net cost of the approved plan by the aggregate
amount of capital costs identified in response to interrogatory
Aliant(CRTC)27Apr01-609 for the denied exchanges indicated above. Aliant
Telecom is directed to commence the plan in 2002. |
905. |
The Commission is of the view that,
where approved, the exchanges identified above should have toll-free access
to the Internet in 2003. Accordingly, the Commission directs Aliant Telecom
to track the status of Internet service in these exchanges and include this
information in its tracking reports. |
|
SaskTel |
906. |
SaskTel proposed $4.0 million in
capital expenditures for underserved premises, an amount that included both
up-front capital and installation costs. SaskTel stated that it had no
unserved premises, but that there were approximately 200 underserved
residence customers in its territory. SaskTel stated that it must plan to
upgrade services to these underserved customers not only to meet the BSO, but
also more generally because the technology supporting current radio telephone
services was antiquated and not feasible to sustain in the longer term. |
907. |
SaskTel's proposal provides for the
deployment of satellite earth station technology to serve approximately 30
residence subscribers of Garson Lake and Descharme, in addition to
approximately 175 residence subscribers to SaskTel's Northern Radio Telephone
Service (NRTS) and Exchange Radio Telephone Service (ERTS) services in areas
generally north of the 54th parallel. SaskTel submitted that deployment of
satellite earth station technology would result in the use of the most
cost-effective technology to meet the BSO requirement for Descharme, Garson
Lake and current fixed station ERTS and NRTS applications. |
908. |
SaskTel estimated that the total
capital cost for deployment of Telesat's rural Anikom Access service would be
approximately $2.1 million. Additional costs of approximately $1.9 million
were expected to be incurred for installation, maintenance, satellite space
rental, and other expenses during the roll-out period, assuming 200 customers
subscribe to the service. |
909. |
Accordingly, under SaskTel's
proposed plan, it would cost $20,000 per line to upgrade the network for the
provision of CMS and Internet access. |
910. |
SaskTel noted that it was open to
the Commission to postpone implementation of SaskTel's SIP in anticipation of
the development of more cost-effective technologies. |
911. |
The Commission finds that SaskTel's
proposed cost of $20,000 per line to improve service to underserved
subscribers is too high and denies SaskTel's SIP. The Commission is of the
view that faster and less expensive products will likely be available in the
near future. The Commission directs SaskTel to monitor the marketplace for
these new products and to submit a new plan for Commission approval when
appropriate. |
|
Conclusions regarding Internet access
|
912. |
As noted above, the Commission
disagrees with Bell Canada's interpretation of the BSO as it relates to
making Internet access available at local rates. The BSO is not intended to
describe a theoretical level of service which might be available if other
facts existed. The BSO describes an actual level of service which should be
available to subscribers. |
913. |
In the sections above, the
Commission has required Aliant Telecom, Bell Canada and TELUS to implement
upgrades to ensure that customers in certain exchanges have toll-free
Internet access available to them. However, the Commission notes that, if
there is no ISP providing toll-free Internet access to these exchanges by the
first quarter of 2003, it will consider whether the ILECs' obligation to
serve includes an obligation to provide toll-free access to the Internet. |
914. |
In order to assess the feasibility
of providing toll-free Internet access, the Commission also directs Aliant
Telecom, Bell Canada, SaskTel and TELUS to monitor the marketplace for
faster, less expensive satellite products, or other serving methodologies, to
report the results; and to submit a new plan to serve any exchanges currently
without access to the Internet via a local call, when appropriate, for
Commission consideration. |
|
Implementation
|
|
Roll-out plans
|
915. |
Bell Canada originally proposed a
two-year roll-out plan, from 2002 to 2003. However, Bell Canada stated that
it would require up to a four-year roll-out plan, from 2002 to 2005, if the
Commission decided to expand the scope of the SIP. |
916. |
The Commission has expanded the
scope of the Bell Canada SIP to include more unserved premises, as well as
provision access to the Internet via a local call in a small number of
switching centres. The Commission has determined that a new four-year
roll-out plan is reasonable. Accordingly, the Commission approves a four-year
plan from 2002 to 2005, and directs Bell Canada to file a revised plan on
this basis by 13 September 2002. |
917. |
The Commission further directs Bell
Canada to file at the same time detailed reports in a spreadsheet format
(including information on number and types of premises, upfront cost to serve
and aggregated cost allowance, for the unserved localities in its territory),
that support the estimated up-front costs for: (a) $75.3 million; and (b) the
plan as approved in this Decision. |
918. |
TELUS proposed a five-year roll-out
period for its SIP, from 2002 to 2006, based on resource constraints. TELUS
stated that this schedule would also allow some flexibility for communities
to formally enroll in the SIP in a timeframe that suits the ability of
residents to pay the amounts involved. The Commission has determined that
TELUS' proposed roll-out plan should be reduced to four years, as the
Commission has significantly reduced the scope of the plan. Accordingly, the
Commission approves a four-year plan, from 2002 to 2005, and directs TELUS to
file a revised plan on this basis by 13 September 2002. |
919. |
In accordance with the Commission's
direction in Decision 99-16, Aliant Telecom
stated that the proposed roll-out schedule targets larger communities first,
serves permanent customers before seasonal customers, and serves unserved
areas prior to providing service upgrades. Aliant Telecom's proposed roll-out
schedule is four years, from 2002 to 2005. Since the Commission has not
significantly increased the scope of the SIP, the Commission finds that
Aliant Telecom's plan is reasonable and approves it. |
|
Tracking plans
|
920. |
Bell Canada proposed a tracking plan
similar to the one approved by the Commission for the small ILECs in Ontario
and Quebec. Bell Canada proposed to file tracking reports on 31 March of each
year, which would provide the following information: |
|
- a list of localities scheduled for completion in the previous year and
those actually completed;
|
|
- the forecasted and actual number of premises to which service was made
available in the previous year;
|
|
- the total capital investment for the previous year;
|
|
- the projected service extensions for the upcoming year; and
|
|
- any changes to the yearly program with supporting reasons.
|
921. |
TELUS proposed to file a tracking
report for its SIP on 31 March of each year, but provided few details of what
the report would encompass. SaskTel proposed a tracking plan that was
somewhat similar to Bell Canada's plan, although it was directed towards
underserved premises. |
922. |
Aliant Telecom stated that it
proposed to file an annual tracking plan with the Commission by 31 March of
each year throughout the life of the SIP. Aliant Telecom's proposed plan was
similar to Bell Canada's, but had the additional requirement of tracking the
incremental operating expense causal to the SIP. |
923. |
The Commission notes that the
tracking plans of Aliant Telecom and Bell Canada are similar to the plans
approved for the small ILECs. The Commission considers that these plans would
be suitable for SaskTel and TELUS. |
924. |
However, the Commission considers it
appropriate to add a number of reporting requirements to track the efficiency
and effectiveness of the roll-out as well as to track additional premises
that will be added to the SIPs. This information would support a request for
additional capital funding. |
925. |
The Commission therefore directs
Aliant Telecom, Bell Canada, SaskTel and TELUS to adopt Bell Canada's
tracking plan, modified to include the following requirements: |
|
- operating expenses for the previous year related to the SIP;
|
|
- the number and location of new customers requesting service;
|
|
- the number of customers whose past requests have been reassessed and
now qualify for service;
|
|
- the number of customers requesting service who do not qualify because
of cost;
|
|
- the number of customers who have been offered service but refused
because of cost;
|
|
- the status of new ISPs locating in upgraded exchanges; and
|
|
- the status of a new plan to serve residents in those remaining
exchanges that currently do not have access to the Internet via a local
call, using new or alternative technologies.
|
926. |
Further to Bell Canada's description
of planned improvements to CDMA technology in its proposed SIP, the
Commission directs only Bell Canada to report on its progress in its annual
tracking report. |
|
Tariff pages
|
927. |
The Commission directs Aliant
Telecom, Bell Canada, and TELUS to file tariff pages to implement the
Commission's determinations related to unserved premises in its SIP. These
tariff pages must be filed for approval by 2 July 2002 and should include: |
|
a) the SIP period; |
|
b) conditions for a project start up
($25,000 capital criterion, 100% take rate, and one customer service
request); |
|
c) the installment plan for the
$1,000 customer contribution; |
|
d) the treatment of new premises
built during the roll-out period; |
|
e) the reassessment of premises
denied in the past; |
|
f) the opportunity for customers to
pay additional charges in the case of large construction projects; |
|
g) the installment plans for large
construction charges; and |
|
h) the treatment of service requests
in localities where the company has already installed outside plant before
the commencement of the SIP. |
|
SIP cost recovery
|
928. |
In Decision
99-16, the Commission determined that SIPs
must also include proposals to fund service improvements. The Commission
noted that ILECs could fund SIPs in a number of ways, including through rate
increases. The Commission stated that when funding proposals include rate
increases, a reasonable balance should be achieved between the speed and cost
of implementation and the need to maintain affordable rates. |
929. |
The Companies and TELUS submitted
that the recovery of proposed SIP costs was built into their respective
pricing flexibility proposals, which would allow them to increase rates for
various services up to specified maximum limits. |
930. |
TELUS proposed that, in HCSAs, its
SIP costs be recovered through a combination of rate increases and increased
subsidy requirement. In non-HCSA bands, TELUS stated that a portion of its
proposed rate increases would be used to fund SIP initiatives in those areas. |
931. |
The Companies made the following
proposals for explicit recovery of SIP costs in the event that their pricing
flexibility proposals were denied. |
932. |
Bell Canada proposed rate increases
to recover SIP costs in HCSAs, but did not propose any rate increases to
recover SIP costs in non-HCSAs. Aliant Telecom proposed to recover its SIP
costs in both HCSAs and non-HCSAs by means of rate increases. |
933. |
MTS and SaskTel indicated that their
proposed service improvements impacted HCSAs only. MTS did not propose any
specific rate increases for SIP costs. MTS was of the view that its subsidy
requirement already reflected the costs of the upgraded equipment that would
be installed under its proposed SIP. SaskTel submitted that the costs of the
ILECs' proposed SIPs that could be recovered by acceptable increases to rates
in HCSAs should be recovered by means of the National Contribution Fund. |
934. |
The Commission has determined in
Part IV of this Decision that it would not be appropriate to provide the
ILECs with their proposed level of pricing flexibility and rate increases.
The Commission has also decided to establish a deferral account for each ILEC
as discussed in Part IV of this Decision. In the Commission's view, the
deferral account should be drawn down for costs associated with the
implementation of SIPs in non-HCSAs, and it will accordingly allow the
explicit recovery by the ILECs of the Phase II costs associated with their
SIPs in non-HCSAs, by means of a draw-down on their respective deferral
accounts. |
935. |
For HCSAs, the Commission notes that
the expiry of certain time-limited exogenous factors permitted in the initial
price cap period, as discussed in Part V of this Decision, would lower the
level of the subsidy requirement since rates would be higher than otherwise.
Since residence rates in HCSAs do not recover their associated Phase II
costs, the Commission is of the view that it would be inappropriate to reduce
these rates. |
936. |
On the other hand, the addition of
SIP-related costs to the TSR calculation will increase the subsidy
requirement. The net impact of these two changes will be a reduction in the
overall subsidy requirement. Consequently, the Commission considers that it
would not be appropriate to increase residence rates in HCSAs to recover SIP
costs, but rather to use the time-limited exogenous adjustments in HCSAs to
offset the costs of the SIPs in these areas. |
937. |
Accordingly, the Commission directs
each company to add its Phase II SIP costs for HCSAs to the costs that flow
into its TSR calculation. |
938. |
The Commission also directs each of
the companies to identify, at the time that it files its revised SIP
proposal, pursuant to the determinations in this Decision, the related Phase
II SIP costs. These Phase II costs should be separated by band. |
939. |
With respect to the revised SIP for
2003 to 2007 that MTS will be submitting by 30 June 2002, the Commission has
determined that MTS will be allowed to recover any additional expenditures
that are mandated by the Commission with respect to the revised SIP, in a
manner consistent with the SIP recovery approved in this Decision for the
other ILECs. |
|
|
|
Background
|
940. |
In Decision
2000-745, the Commission introduced a
new national contribution collection mechanism to subsidize the high cost of
local service in rural and remote areas. Under the new mechanism, effective
1 January 2001, a revenue-percent charge is levied on revenues from eligible
telecommunications service providers (TSPs). |
941. |
In Decision
2000-745, the Commission also introduced
a new subsidy requirement calculation that would establish the appropriate
amount of subsidy payable to LECs which provide service in HCSAs. In brief,
the subsidy requirement consists of the sum of the average annual residential
PES revenue and an annual implicit contribution target amount of $60 less the
average annual PES costs, established on the basis of Phase II costs with an
approved mark-up, per residence NAS in each high-cost band. The TSR for each
ILEC territory is the total of the annual subsidy requirements for all
residential NAS in all high-cost bands. This TSR calculation methodology
became effective 1 January 2002. |
942. |
In PN
2001-37, the Commission
invited comments on any remaining implementation issues for 2002, such as
changes to the basis for the distribution of the subsidy. The Commission also
requested that the ILECs submit their proposed 2002 TSR calculations, based
on their proposals for adjustments to residential rates and costs. Other
implementation issues addressed included the reduction of the subsidy
requirement during the price cap period, a change in the effective date of
the annual revenue-percent charge, and consideration of quarterly adjustments
to the revenue-percent charge when the actual revenue collected varies from
the forecast. |
|
The calculation of the TSR
|
943. |
In Decision
2000-745, the Commission outlined the
various components of the TSR for HCSAs, and determined that the TSR
calculation would be updated annually. Each year, each ILEC is to modify its
average cost component using a pre-determined productivity adjustment and to
ensure that the average revenue component reflects realized changes to the
PES rates that occurred in the previous year. The Commission further
determined that the specific timing of the annual TSR updates would depend on
the nature of the regulatory mechanism after 1 January 2002, and would be
established during this proceeding. |
944. |
In Decision
2001-238, the Commission defined the
areas that would be considered high cost for purposes of receiving subsidies.
The HCSAs were identified as specific costing bands in each ILEC territory. |
|
Appropriate revenues
|
945. |
The Companies noted that under the
current subsidy arrangement the subsidy available from the National
Contribution Fund compensates ILECs for the shortfall between costs and
revenues. Accordingly, there may be an incentive for ILECs to forego revenues
from allowable price increases and instead draw on the equivalent subsidy
revenues from the National Contribution Fund, which would be paid by all
TSPs. The Companies submitted that calculating the subsidy requirement based
on the maximum allowable rates, rather than the actual rates in effect at the
time, would eliminate this incentive and would reduce each ILEC's TSR. |
946. |
In its evidence, TELUS argued that
the actual rates approved for the period should be used to calculate the
average revenue per NAS per band. TELUS stated that artificially reducing the
subsidy requirement could undermine the Commission's objective to provide
competitive choices for customers in HCSAs. The subsidy collected may be
insufficient to make it viable to provide service in that area at prevailing
rates. |
947. |
TELUS noted that the ILECs have an
obligation to provide service and must absorb the costs. TELUS submitted that
there would be no incentive to encourage new entry since the subsidy would
almost certainly be insufficient for a CLEC to recover the costs it will
incur to provide service. |
948. |
AT&T Canada submitted that the
maximum allowable rate level for each HCSA band should be the rate used when
updating the TSR each year to ensure that the TSR would be reduced in a
predictable manner over the course of the next price cap period. |
949. |
The Commission recognizes that there
may be, in some cases, an incentive for ILECs to forego rate increases, which
would have the effect of maintaining the subsidy at a higher level than
necessary. However, the Commission is also concerned that if the maximum
allowable rates proposed by the parties were used for the subsidy calculation
but not actually implemented, the available subsidy per NAS would be
significantly reduced. The Commission agrees with TELUS that this, in turn,
would impair the ability of new entrants to provide service in that area at
the prevailing rates since they may not be able to recover their costs . The
Commission is also of the view that the use of rates other than those in
effect would break the direct link between revenues, costs and subsidies.
This, in turn, would undermine the effectiveness of the subsidy mechanism. |
950. |
The Commission notes that in
Decision 2000-745, it determined that
the average revenue component of the TSR is to reflect realized changes to
residential PES rates occurring in the previous year as well as any known
rate changes that have been determined for the upcoming year. |
951. |
Accordingly, the Commission
continues to be of the view that the average revenue component of the TSR
should be based on actual residential PES rates. |
|
Adjusting the PES costs
|
952. |
In Decision
2001-238, the Commission applied uniform
costing methods and assumptions to the Phase II PES cost studies submitted by
the ILECs. The Commission employed a uniform process to establish the base
average PES costs for each high-cost band in each ILEC territory. These base
average PES costs are to be used as the base costs in the determination of
each ILEC's TSR. |
953. |
The base average PES costs
established in Decision 2001-238
excluded the adjustments for the inflation factor, the annual productivity
offset, and the costs associated with the revenue-percent charge established
in Decision 2000-745. |
954. |
In Part V of this Decision, the
Commission directed the ILECs to apply a 3.5% productivity factor and an
inflation factor based on the chain-weighted GDP-PI annually in the TSR
formula. |
955. |
With regard to the adjustment for
the impact of the revenue-percent charge, the Companies proposed that the
cost of the revenue-percent charge should be added directly to the base
average PES costs. They estimated these costs on the basis of the rates in
each band. |
956. |
In calculating the appropriate cost
adjustments for the TSR, the Commission considers that the adjustment for the
revenue-percent charge should be the net change in the revenue-percent charge
from year to year. The Commission notes that this will eliminate the
cumulative effect of adding the annual revenue-percent charge directly to the
base average PES cost each year. |
957. |
In Decision
2000-745, the Commission allowed an
exogenous factor adjustment of 4.5% in the 2001 price cap filings for the
ILECs to recover the revenue-percent charge applicable to their capped
services. The Commission notes that the ILECs generally adjusted the rates in
each high-cost band for the 4.5% revenue-percent charge implemented in 2001. |
958. |
In Interim 2002 revenue-percent
charge, national subsidy requirement and procedures for the revenue-based
contribution regime, Order CRTC
2001-876, 14 December 2001 (Order 2001-876), the Commission approved an
interim revenue-percent charge of 1.4%, effective 1 January 2002. |
959. |
Based on the foregoing, the
adjustment to the 2002 TSR calculation should reflect the change to the
revenue-percent charge from 4.5% to 1.4%. In order to put this into effect,
the average PES cost will be adjusted for each band for 2002 as follows: |
|
- assume a 4.5% reduction in the average revenue per NAS;
|
|
- calculate 1.4% of the reduced revenue; and
|
|
- add that amount to the average PES cost per NAS.
|
|
A similar approach is to be used in
subsequent year adjustments. |
960. |
In the TSR formula, the PES costs
are to be adjusted in the following sequence: |
|
- the base average PES costs will be adjusted by inflation minus the
annual productivity offset of 3.5%;
|
|
- the 15% mark-up, established in Decision
2000-745, will then be applied to the
adjusted average PES costs; and
|
|
- the net cost adjustment related to the revenue-percent charge will be
included.
|
|
Distribution of the subsidy
|
961. |
The Companies and TELUS proposed
that the distribution of the subsidy be based on a fixed monthly amount of
subsidy per NAS, per band and per territory. |
962. |
The Commission considers that the
ILECs' distribution proposal would provide more competitive certainty and
would also require less reconciliation between the subsidy that is collected
and the subsidy that is distributed. The Commission notes that as set out in
Order 2001-876, the Central
Fund Administrator (CFA) has been distributing a specified per NAS subsidy to
the ILECs since 1 January 2002, on an interim basis. The Commission directs
the CFA to continue to distribute the calculated subsidy to local exchange
carriers (LECs) based on a fixed amount per NAS per month, adjusting from
month to month as set out in the approved CFA procedures. |
963. |
The Commission directs each ILEC to
file its revised 2002 total subsidy requirement and the monthly subsidy per
NAS per band by 6 August 2002. This calculation must incorporate all of the
Commission's determinations in this Decision concerning residential rates in
HCSAs and residential PES cost adjustments. The ILECs are to identify
separately the cost adjustments for the inflation factor, the productivity
offset and the revenue-percent charge. As discussed in Part VIII of this
Decision, the ILECs should also include, and identify separately, an estimate
of the Phase II cost impact of any SIP expenditures in HCSAs. |
|
The timing of the annual updates to the TSR
|
964. |
The Companies proposed that the
effective date of the annual TSR calculation and the associated
revenue-percent charge should be changed from 1 January to 1 May, from 2002
onward. This would coincide with the assumed requirement for annual price cap
filings. The Companies claimed that this would streamline the administration
of the filing requirements and provide a degree of certainty in the
marketplace. |
965. |
In Decision
2000-745, the Commission determined that
certain information is to be filed annually with the Commission, by 31 March
of each year, by all TSPs or groups of related service providers. Updated
TSRs and NAS counts by band are also required from the ILECs on the same
date. This allows the Commission to verify the contribution amounts remitted
the previous year, review the calculation of contribution-eligible revenues,
determine which companies will be required to pay contribution and calculate
the revenue-percentage charge for the current year. |
966. |
In Decision
2000-745, the Commission determined that
the national revenue-based contribution collection mechanism would be
implemented, effective 1 January 2001, using an interim 2001 revenue-percent
charge. The annual filing date was set at 31 March of each year. The
Commission also determined that, based on the previous calendar year's
financial information filed by the LECs and by all of the other TSPs, the
revenue-percent charge would be finalized and be effective from 1 January of
the year in question. |
967. |
The Commission notes that only the
ILECs are required to submit annual price cap filings; other TSPs who are
part of the contribution collection mechanism are not affected by this
requirement. The Commission also notes that the calendar year is an integral
part of the revenue-percent charge calculation. For example, the
revenue-percent charge is based on the contribution-eligible revenues for the
previous calendar year. As well, the subsidy per NAS is based on costs
adjusted for the previous calendar year's inflation rate and on the NAS per
band at 31 December of the previous year. |
968. |
In the Commission's view, the
Companies have not demonstrated that the change in timing will simplify the
administration of the national subsidy framework, or that this change in
timing would provide more marketplace certainty. The determination of the
final revenue-percent charge is dependent on information filed by many
parties, in addition to the ILECs. The Commission is of the view that setting
the subsidy requirement on a calendar year basis facilitates filing, business
planning and auditing requirements for the majority of TSPs. |
969. |
Accordingly, the Commission upholds
the 1 January effective date for the annual revenue-percent charge and the
31 March date for the annual filing of revenue information by all TSPs. |
|
Monitoring and adjustment of the revenue-percent charge
|
970. |
The Companies and TELUS submitted
that the Commission should undertake periodic adjustments to the
revenue-percent charge for over- or under-funding of the national subsidy.
The ILECs expressed concern that the surplus or shortfall might be so
significant that the Commission should make adjustments more frequently than
annually. The ILECs supported quarterly adjustments to the revenue-percent
charge, and proposed various thresholds that would trigger such adjustments. |
971. |
With respect to adopting thresholds
as a trigger for making adjustments, the Companies submitted that if the
difference between the subsidy collected and subsidy distributed in that
quarter were to exceed 2% relative to the amount distributed, then an
adjustment to the revenue-percent charge would be appropriate. TELUS proposed
to increase the revenue-percent charge if the National Contribution Fund had
a negative balance, and to decrease the revenue-percent charge if the
National Contribution Fund had a positive balance, greater than one month's
average disbursement. |
972. |
The Companies further submitted that
the updated revenue-percent charge should be implemented on a going-forward
basis. This would take into account the difference in time between the
distribution date of the subsidy per NAS from the CFA and the implementation
date of the updated revenue-percent charge. The Companies also noted that the
revenue-percent charge was included in the adjustment to the average cost
component of the TSR, which was in turn used in the calculation of amounts
distributed from the CFA. |
973. |
The Commission notes that the
financial data provided to the CFA for any given month is filed at the end of
the following month. The subsidy is distributed in the second month after the
data has been collected, and subsequently, data input adjustments are
allowed, beginning in the third month. For any reasonable analysis of under-
or over-collection, the data would therefore not be available for more than
three months. The Commission notes that all eligible contributors have the
option to adjust for any previous month filings if corrections are required.
The Commission also notes that calendar months are not constant and there is
significant seasonal variation in revenue reported. |
974. |
Accordingly, the Commission has
determined that quarterly updates to the revenue-percent charge are not
appropriate, due to the time lag between the reporting of revenues and the
subsidy distribution, as well as seasonal variation in revenue reported. |
975. |
The Commission notes that the two
thresholds proposed by the ILECs vary significantly. The Companies proposed a
trigger mechanism based on a target threshold of 2% of the revenue
distributed, which represents approximately $500,000 per month. TELUS'
proposed trigger mechanism would result in a surplus of approximately $25
million on average, based on the 2002 subsidy requirement of $300 million. |
976. |
The Commission is of the view that
the the Companies' and TELUS' proposals would result in an unduly large
number of adjustments to the revenue-percent charge. The Commission would
consider making an adjustment to the revenue-percent charge if the variance
was significant in any given quarter. However, this determination would
depend on various considerations, including the possibility of the variances
being caused by errors in the data filed. |
977. |
The Commission notes that the
current process established in Decision
2000-745 for finalizing the revenue-percent charge, based on financial
data filed on 31 March each year, allows for a possible adjustment based on
actual revenue collected at that point. The Commission also notes the true-up
process that was established in Decision
2000-745, whereby if the subsidy collected is more or less than the
subsidy that should have been distributed, the adjustment is carried over to
the next year's subsidy requirement. Any further adjustment required can be
accommodated in the annual true-up process applied at year-end. |
978. |
The Commission also notes that
CRTC gives final approval to procedures for the revenues-based contribution
regime, Order CRTC 2001-738,
21 September 2001 (Order 2001-738), provides for the monitoring of any
considerable increases or decreases in the fund on a quarterly basis based on
reports prepared by the CFA. The procedures state that the Commission will
provide direction to the CFA in regard to the modification of the
revenue-percent charge, if deemed necessary. The Commission concludes that
the processes set out in Decision 2000-745
and Order 2001-738 represent an
appropriate mechanism for making any required adjustments to the
revenue-percent charge. |
|
|
|
Phase III/SRB and intercorporate transaction reports
|
979. |
In Decision
95-21, the Commission established a revised
regulatory regime that segmented the telephone companies' operations into a
Utility Segment and a Competitive Segment. In connection with this change,
the Commission introduced new reporting requirements. Specifically, Phase
III/SRB reports were introduced to provide the companies' Income Statement,
Average Net Investment Base, Capitalization Report and Return on Average
Common Equity Report results separated into the two segments. |
980. |
The current Phase III/SRB reporting
requirements for the ILECs include: |
|
- filing of annual historical Phase III/SRB results on or before 30
September of the following year;
|
|
- filing of Phase III/SRB manual updates, along with any changes to
Accounting Manuals, annually on 31 March, with such updates considered
approved after 60 days from filing, unless the Commission indicates
otherwise; and
|
|
- filing of actual financial results for the Utility and Competitive
Segments on a semi-annual year-to-date basis, 45 days after the end of the
period.
|
981. |
The Commission has also directed the
ILECs, in various decisions over the years, to file intercorporate
transaction reports. The ILECs, except SaskTel, file the reports
semi-annually, with the six-month report submitted by 1 October of each year
and the annual report by 1 April of the following year. The reports identify
all significant non-tariffed financial transactions between an ILEC and any
of its affiliates. The purpose of the reports is to safeguard against any
potential cross-subsidies from the regulated operations of the ILEC to an
affiliated company. |
982. |
SaskTel, under its current
transitional regulatory framework implemented in Decision 2000-150,
files its Phase III/SRB reports and intercorporate transaction reports on a
quarterly basis. Annual audited Phase III/SRB results are filed by 31 October
of the following year and SRB manual updates annually by 31 March of
each year. |
983. |
The Companies submitted that Phase
III/SRB reports, and the supporting intercorporate transaction reports, were
no longer needed because: |
|
- commencing in 2002, the contribution requirement will be calculated
using Phase II costs rather than SRB results;
|
|
- the regulatory framework should focus on prices rather than earnings;
|
|
- the reports are strictly a regulatory construct and have no utility to
the Companies themselves;
|
|
- financial accounting data is not required for rate-setting purposes, as
was done to establish going-in rates for the initial price cap period; and
|
|
- preparation of such reports consumes significant company resources.
|
984. |
TELUS submitted that there was no
longer a need for Phase III/SRB reports or any other type of financial
monitoring and reporting of the Utility Segment, for the following reasons: |
|
- with price caps in place, monitoring the financial performance of the
Utility Segment was no longer necessary;
|
|
- there should not be any need to re-establish new going-in revenue
requirements and rates, and thus no need for Phase III/SRB; and
|
|
- under price caps, there was no incentive for the company to
artificially inflate Utility Segment investments and costs in the hope of
justifying rate increases; therefore, the potential for cross-subsidization
of Competitive Segment services by Utility Segment services no longer
exists.
|
985. |
With respect to intercorporate
transaction reporting, TELUS submitted that the objective of these reports
was to identify instances where a Utility Segment subscriber may be
subsidizing other services offered through an affiliate. TELUS was of the
view that price cap regulation, by its nature, did not offer the possibility
that capped services could be used to offset unauthorized price breaks given
to, or investments undertaken by, an affiliate. TELUS argued that the
termination of rate of return regulation had removed any theoretical
incentive for an ILEC to underwrite an affiliate's operations in the
expectation of raising Utility Segment rates to maintain earnings at some
Commission-specified allowable return on equity. |
986. |
TELUS submitted that the only
monitoring requirement needed in the next price cap period related to the
development of competition in the local market. |
987. |
ARC et al. submitted that without
the discipline inherent in robust competition, continued regulation was a
necessity, and that for effective regulation, some minimum level of reporting
was required for the Commission to be satisfied that rates were just and
reasonable. ARC et al. also submitted that such reporting was needed to
assess the reasonableness and effectiveness of the price cap regime. ARC et
al. noted that company-wide results, while broadly indicative of performance
under price caps, included revenues and costs related to non-regulated
services. |
988. |
AT&T Canada argued that the limited
extent of local competition at this time did not support the elimination of
existing monitoring and reporting requirements. AT&T Canada supported
retaining the Phase III/SRB and other reporting requirements so that the
Commission would be able to properly assess the extent to which its
objectives for the next price cap regime had been met by the end of that
period. |
989. |
CAC Alta submitted that the industry
was in transition and that reporting requirements were an important yardstick
in assessing the success or failure of this transition. CAC Alta also noted
that rates of return were a widely used measurement of corporate performance
in both regulated and unregulated industries. |
990. |
Calgary argued that if market forces
were insufficient to discipline prices and quality of service on their own,
then monitoring and reporting were important to maintain accountability to
the Commission and the public. Calgary also submitted that in order to assess
the effectiveness of price caps, the Commission needed to maintain
appropriate measurement standards in order to receive readily accessible,
meaningful information from the ILECs. However, Calgary was of the view that
the reliability should be improved, noting that SRB results were not audited
and therefore could be subject to manipulation. |
991. |
RCI submitted that reviewing ILEC
earnings was entirely appropriate in a price cap review, and argued that
Phase III/SRB reports provided useful information for monitoring the economic
status of the telephone company and the Utility Segment in particular. |
992. |
The Commission considers that the
concept of a Utility Segment no longer has relevance. This is due, in part,
to the introduction of a Phase II-based determination of the subsidy
requirement starting in 2002. Previously, the contribution requirement was
based on a Phase III Utility Segment shortfall calculation. As well, as
discussed in Part IV of this Decision, the Commission has determined that the
price cap framework will be extended to non-forborne services currently in
the Competitive Segment. |
993. |
The Commission also considers that
the distinction between the Utility Segment and Competitive Segment is no
longer relevant. The meaningful distinction in the next price regulation
regime is between tariffed services and forborne services. |
994. |
In light of the revised regulatory
framework, there is no longer a need for Phase III/SRB inputs on a
going-forward basis. Therefore, the Commission determines that the
requirement for Aliant Telecom, Bell Canada, MTS, SaskTel and TELUS to report
their financial results on a Phase III/SRB basis is eliminated effective
immediately. |
995. |
The Commission recognizes that ILEC
financial results will need to be available for the purpose of the review of
the next regime. Sufficient information must be reported to allow the
Commission to gauge the financial state of ILECs in order to ensure that the
objectives of the price cap regime are being met. |
996. |
The Commission notes that the
information provided by all telecommunications companies as part of the
Commission's annual monitoring process includes, among other things, ILEC
financial data. |
997. |
With respect to intercorporate
transaction reporting, the Commission notes that the existing reporting
requirements were introduced when the ILECs were under rate of return
regulation to reduce the incentive for ILECs to overstate the amount of
Utility Segment intercorporate transactions, and thus reduce Utility Segment
earnings. |
998. |
The Commission considers that under
the structure of the next price cap regime, the incentive to overstate
intercorporate transactions is reduced. Accordingly, the Commission has
determined that the current intercorporate transaction reports for
Aliant Telecom, Bell Canada, MTS, SaskTel and TELUS are no longer required,
effective immediately. |
|
Reliability and verification of Phase II costs
|
999. |
The ILECs have been required to file
Phase II costs in a number of situations, most notably as the basis for
determining appropriate price levels for ILEC services and in connection with
the imputation test applied to certain services. |
1000. |
Several interveners raised concerns
as to the reliability of the ILECs' Phase II costs, and the lack of
transparency in the current Phase II processes. |
1001. |
ARC et al. and BCOAPO et al. urged
the Commission to establish a process for the ongoing tracking, reporting and
independent auditing of the ILECs' Phase II cost studies. |
1002. |
AT&T Canada submitted that the Phase
II methodology was initially developed to assess forward-looking incremental
costs for new services. AT&T Canada argued that this methodology was not well
suited to setting rates for a broad set of services such as those provided by
ILECs to their competitors. While AT&T Canada also questioned the reliability
of the ILECs' Phase II cost estimates. However, it did not propose that the
Commission initiate a review of the ILECs' cost studies, noting that such a
proceeding would be extremely time-consuming and complex, and would not
address overall incumbency advantages enjoyed by ILECs. |
1003. |
Group Telecom argued that it was
critical that the rates for essential and near-essential services be based on
an accurate estimate of causal costs and that the Phase II-based imputation
test represents a reliable and accurate price floor. Group Telecom was of the
view that the single most important safeguard for ensuring the reliability of
Phase II costs was a careful and detailed review by the Commission and
interveners, in the context of a public proceeding to deal with proposed
changes to cost-based rates. Group Telecom also considered tracking to be a
useful tool for assessing the ongoing appropriateness of rates based on
previous cost studies. |
1004. |
Group Telecom submitted that
updating and maintaining Phase II manuals would enhance the ability of the
Commission and parties to assess cost studies and thereby increase the
effectiveness of public proceedings. Finally, Group Telecom expressed its
concerns about too much reliance being placed on independent audits,
particularly where the existence of audits might curtail discussion of Phase
II costing methods in the context of any public processes. |
1005. |
RCI opposed a review of Phase II
costing. Although RCI argued that Phase II costing is unreliable,
non-transparent and subject to misallocation, the company nonetheless
submitted which rates for Competitor Services, which are based on Phase II
costing, should be accepted, and then reduced each year by inflation minus a
productivity offset. |
1006. |
The Companies considered the Phase
II principles and methodology to be fundamentally sound. They noted that the
Phase II approach had been the subject of Commission scrutiny and refinements
for many years. They argued that the Phase II process was rigorous, since
Phase II studies were used both for regulatory purposes and for business
decision-making. However, to alleviate parties' concerns, the Companies
indicated that they favoured implementing various means to improve the Phase
II process or to provide more assurance of the reliability of its results. |
1007. |
TELUS noted that, given the
Commission's commitment to the Phase II costing methodology to calculate the
subsidy requirement and the imputation test, as well as to price Competitor
Services, it was imperative that Phase II costs be transparent, reliable and
based on the actual costs of each ILEC. TELUS recommended that the Commission
retain an independent auditing firm to examine and audit the Phase II costing
methodologies and supporting data sources for each ILEC. Key stakeholders
should in TELUS' view be permitted to designate third-party experts in this
regard. |
1008. |
The Commission notes the concern
expressed by some parties that adequate checks on the reasonableness of the
ILECs' Phase II costs currently do not exist. In order to increase the
reliability and transparency of the Phase II process, the Commission is of
the view that a thorough examination of the Phase II costing approach would
be appropriate. Accordingly, the Commission intends to initiate a review, in
the fourth quarter of 2002, based on a collaborative approach, such as a
round table consultation, that would involve all stakeholders. |
1009. |
The purpose of the Phase II costing
approach review will be to develop an updated Phase II manual to set out
directives and guidelines with respect to costing processes and
methodologies, underlying assumptions, models and tracking systems used by
the industry. |
1010. |
The Commission considers that upon
the completion of an updated Phase II manual that sets out clear and
consistent directives and guidelines within the industry, it will be in a
position to conduct random audits of Phase II costing results as indicated in
Decision 2000-745. |
|
Other reporting requirements
|
1011. |
The Commission directed Bell Canada
and TELUS to provide Optical Fibre Availability reports in Optical Fibre
Service, Telecom Decision CRTC 98-11,
16 July 1998 (Decision 98-11). That decision dealt with the ILECs' provision
of optical fibre service to competitors based on the availability of these
facilities in the ILECs' central offices (COs). The Commission directed that
a report be prepared, providing information on the availability of fibre
service in the ILECs' COs, and that the report be updated every six months. |
1012. |
In the current proceeding, the
Companies requested that the periodic, six-month updates to the reports
required by the Commission further to Decision
98-11 be reduced or discontinued. The Companies submitted that the
information on the public record is adequate for competitors' needs. |
1013. |
The Commission notes that the
information on the public record, on the availability of fibre service at the
ILECs' COs, shows that an increasing number of COs are equipped with fibre
service. The Commission agrees that the information on the public record is
adequate for competitors' needs. Accordingly, the Commission determines that
there should no longer be a requirement for Bell Canada and TELUS to file the
periodic updates to the Optical Fibre Availability reports. |
1014. |
The Companies also proposed that the
Commission introduce service standards and related annual reports for its
telecommunications activities, similar to its broadcasting service standard
reports. These service standards would cover activities such as the
processing of applications for international telecommunications licenses and
intercarrier agreements filed for approval, and of tariff filings. |
1015. |
The Companies stated that the
establishment of performance standards for the Commission's
telecommunications activities would be an important step forward in
objectively addressing the industry perceptions and concerns regarding the
speed of Commission decision-making. The Companies reiterated in final
argument that, while no party commented on these proposals, the Companies'
view was that adoption of their proposed standards for telecommunications
matters would assist in reducing regulatory delay. |
1016. |
The Commission notes that on 11
April 2002, service standards for processing the following types of
telecommunications applications were introduced: |
|
- international telecommunications services licences;
|
|
|
|
|
|
- Part VII applications (including Commission-initiated proceedings).
|
1017. |
Quarterly and annual reports will be
posted on the Commission's web site outlining the performance in meeting
these service standards. The first report will outline the performance for
the period 1 April 2002 to 30 June 2002. In the Commission's view, this
initiative addresses the Companies' concern regarding the establishment of
Commission service standards for telecommunications activities. |
1018. |
TELUS proposed that the Commission
implement a streamlined process to approve ILEC proposals for depreciation
life changes, so that such changes could flow through to Phase II studies on
a timely basis. The Commission considers, however, that the issue of the
depreciation life characteristics of the ILECs is beyond the scope of the
proceeding. |
|
|
1019. |
A number of procedural matters arose
during the course of the present proceeding as discussed below. |
|
Opportunity to file further evidence declined
|
1020. |
On 1 October 2001, prior to
commencement of cross-examination, Vice-Chairman Colville inquired whether
any party wished to raise any preliminary matters. TELUS and Bell Canada
expressed concern about statements made in Decision
2001-618 regarding Competitor Services.
Both parties indicated that they were not aware of these issues at the time
they filed their evidence, and that they would have filed different evidence
had they been aware. |
1021. |
The Commission gave TELUS and Bell
Canada several opportunities over the course of the first three days of the
oral hearing to indicate whether they wished to file additional evidence. |
1022. |
However, both TELUS and Bell Canada
declined the opportunity to file further evidence. |
|
Objections to evidence
|
|
TELUS |
1023. |
In its reply, ARC et al. argued that
certain evidence of TELUS' expert witness, Dr. Weisman, regarding telephone
calls he had made to various state regulators about Q-factor plans,
constituted hearsay and should be accorded the weight deserved. |
1024. |
The Commission, unlike a court, may
admit hearsay evidence. Greater or lesser weight will be placed on such
evidence depending on whether there is direct evidence supporting or
contradicting the hearsay. |
1025. |
The Commission considers that this
evidence constitutes hearsay, and accordingly has given it little weight. |
|
Group Telecom |
1026. |
In its reply, Call-Net argued that
Group Telecom had introduced a number of new facts in final argument which
should be accorded no weight, particularly where those facts were not
corroborated by evidence properly submitted pursuant to the procedures
established by the Commission. Call-Net argued that Group Telecom's statement
in final argument that it sold more services to TELUS than it bought from
TELUS could not be tested in terms of the identity of the customer or the
nature or significance of the services. |
1027. |
Given that this evidence is
untested, the Commission has given it little weight. |
|
Commissioner of Competition
|
1028. |
TELUS and the Companies submitted
that the argument filed by the Commissioner of Competition included new
evidence. The Companies stated that the Commissioner of Competition chose not
to participate in the hearing and therefore avoided having its views
subjected to the normal process of interrogatories and cross-examination.
TELUS stated that the Commissioner of Competition did not participate in any
cross-examination of witnesses and was not an active participant in the
proceeding. TELUS and the Companies argued that the Commissioner of
Competition's proposals to revisit both the definition of essential facility
and a review of the list of essential facilities were outside the scope of
the proceeding. TELUS and Group Telecom also argued that the Commissioner of
Competition's submissions regarding resale of local services are outside the
scope of the proceeding and should be disregarded, with TELUS arguing that
this proposal would require a review and variance of Decision
97-8. |
1029. |
The Companies stated that the
Commissioner of Competition, in his argument, had made many recommendations
to the Commission that substantially amounted to proposals that should have
been filed on 20 August 2001, when all other parties had been required to
file proposals, in order to be available for examination through
interrogatories and cross-examination. Accordingly, the Companies argued that
the Commissioner of Competition's opinions and views that were within the
scope of the proceeding should only be accorded limited weight, not having
been tested. The Companies stated that the Commissioner of Competition had
the same rights as any other party to the proceeding, and should accordingly
be subject to the process that was set out in PN
2001-37. |
1030. |
TELUS and the Companies submitted
that specific paragraphs of the Commissioner of Competition's comments should
be stricken from the record on the basis that they either constituted new
evidence or referred to matters that are outside the scope of the proceeding.
In their view, paragraphs 42, 100, 107, 116, 117, 146 to 150, 177, 197 to 203
and 214 should be stricken on the grounds that they constituted untested
economic expert evidence. Paragraphs 24, 25, and 186 to 196, in their
submission, should be stricken because they proposed a redefinition of
essential facilities that would be beyond the scope of the proceeding. |
1031. |
TELUS also considered that
paragraphs 220 to 233 should be stricken as they contemplated a review and
variance of mandated resale discounts denied in the Decision
97-8 framework. In addition, the Companies
considered that paragraphs 74, 101,102, and 204 to 218 should not be taken
into account in any fashion on the grounds that they were based on economic
evidence that did not form part of the record of the proceeding. |
1032. |
TELUS argued that the only way to
ensure that the Commission's decision-making process was not tainted by
concerns about influence from the Commissioner of Competition, was to allow
parties an opportunity to address interrogatories and to cross-examine the
Commissioner of Competition and its expert witness, Dr. Church. TELUS stated
that as this would be difficult to accommodate at this point, the Commission
must make very clear to parties which parts of the Commissioner of
Competition's comments, if any, it has relied upon. |
1033. |
In his reply, the Commissioner of
Competition stated that he had not intended to include new evidence. Rather,
by including references to publicly available economic literature, he had
only intended to provide the Commission with a reference to full
documentation if it required further elaboration on certain aspects of the
Commissioner of Competition's proposal. |
1034. |
With regard to the issue of
essential facilities, the Commissioner of Competition submitted that the
issue of repricing of certain services fell within the scope of the present
proceeding. In his view, the issue of repricing could lead to a de facto
definition of the elements classified as essential. |
1035. |
The Commisioner of Competition
submitted that his suggestions on the issue of resale of local services were
appropriate as parties to the present proceeding had raised the issue of the
relationship between the current regulatory framework, the state of local
competition and the need to facilitate local competition. |
1036. |
The Commission considers that the
Commissioner of Competition is subject to the same rules and procedures as
are applicable to all parties to a Commission proceeding. In the present
proceeding, all parties that made proposals, other than the Commissioner of
Competition, filed them, along with their supporting evidence, either on
31 May 2001 (the ILECs) or 20 August 2001 (the remaining parties), as
required by PN 2001-37. These
submissions were subject to interrogatories by other parties and the
Commission, and to cross-examination at the hearing. |
1037. |
The objections put forward by TELUS,
the Companies and Group Telecom raise four issues, each of which will be
dealt with in turn below. |
|
Admissibility of expert evidence
and economic literature |
1038. |
The first issue related to the
admissibility of the following expert evidence of Dr. Church and academic
economic literature not otherwise already on the record: |
|
- evidence relating to the Commissioner of Competition's proposal for a
zero mark-up (paragraphs 177, 197 to 203, and 204 to 218);
|
|
- evidence relating to the Commissioner of Competition's price cap
proposal (paragraphs 100 to 102; 107; 116; 117; and Appendix A); and
|
|
- other submissions that cited academic literature not otherwise already
on the record (paragraphs 42; 74; 146 to 150; 209; and 214).
|
1039. |
The Commission considers that the
filing of new evidence as part of final argument can be unfair to parties.
Depending on the circumstances, in some cases it may be appropriate to give
such evidence less weight, while in other cases, such evidence should be
stricken from the record. |
1040. |
In this instance, the evidence in
question relates to issues of core significance to the proceeding. The
process established in PN 2001-37
was intended to allow all parties the opportunity to challenge such evidence
through interrogatories and cross-examination. |
1041. |
In the circumstances, the Commission
concludes that it is appropriate to strike the following portions of the
Commissioner of Competition's final argument from the record, as they
introduce new evidence: paragraphs 100; 107; 116; 117; 147; 148; 177; 197;
199; 200; 203; 209; 214; and Appendix A. |
1042. |
The following paragraphs, while
objected to by TELUS and the Companies, do not contain new evidence, and
accordingly have not been stricken from the record for this reason:
paragraphs 42; 74; 101; 102; 146; 149; 150; 198; 201; 202; 204; 205; 206;
207; 208; 210; 211; 212; 213; 215; 216; and 217. |
|
Admissibility of the Commissioner
of Competition's proposals |
1043. |
The key proposals to which TELUS and
the Companies have objected are: |
|
a) to include, in the context of an
overall price cap constraint, an HCSA sub-basket, which would give the ILECs
flexibility to reduce the subsidy required for HCSAs, as an alternative to
raising rates, in order to meet their price cap commitment; |
|
b) to create a Competitor Services
sub-basket of essential and near-essential facilities; |
|
c) to price essential facilities at
incremental cost without a markup, absent compelling evidence that the ILECs
will not break even; |
|
d) to set an X-factor that is larger
than the total factor productivity estimate; and |
|
e) a "Global Price Cap" proposal,
whereby the current regime would be modified by adding Competitor Services
and subsidies in HCSAs to the Capped Services basket. |
1044. |
Some of these proposals are
variations of proposals already made by other parties on the record of the
proceeding, while others are new proposals. |
1045. |
The first proposal is a variation of
an approach proposed by RCI. While both proposals would result in the same
mandated revenue shedding, RCI's proposal is more restrictive as it is
proposing that the subsidy first be eliminated as a precondition to changing
residence and business prices. Under the Commissioner of Competition's
proposal, the ILECs could choose whether to reduce or eliminate the subsidy. |
1046. |
The second proposal, regarding the
services to be included in a Competitor Services sub-basket, is new and not
otherwise on the record of the proceeding. |
1047. |
The third proposal, for a zero
mark-up, was also proposed by Call-Net. The fourth proposal, in relation to
the X-factor, is similar to that made by ARC et al., and also responds to
proposals made by the ILECs. While the third and fourth proposals are the
same in result as those made by other parties, the Commissioner of
Competition's evidence and rationale in support of its proposed approach are
not identical. |
1048. |
Finally, the fifth proposal, in
relation to the addition of Competitor Services and subsidies to HCSAs to a
Capped Services basket that would be subject to a Global Price Cap, is new
and is not similar to any proposals already made by other parties earlier in
the process. |
1049. |
The key issue with respect to these
proposals is whether their admission would be prejudicial to the rights of
other parties. The Commission considers that there is a distinction to be
made between new proposals not otherwise on the record and proposals that are
similar to those already made by other parties earlier in the proceeding. |
1050. |
Parties would not have had a full
opportunity to challenge new proposals introduced in argument. They would not
have had the opportunity to test such proposals through interrogatories or
cross-examination, and would be limited to responding through reply argument.
Further, it would clearly be to the advantage of parties to wait to submit
their proposals until the end of the proceeding, to avoid such challenge. For
these reasons, the Commission considers that the admission of new proposals
at the argument stage would be unfair to other parties, and would inhibit a
full development of the record. Accordingly, the Commission has stricken from
the record the Commissioner of Competition's proposal related to the services
to be included in a Competitor Services sub-basket, and the proposal to add
Competitor Services and subsidies to HCSAs to the Capped Services basket.
Specifically, paragraphs 12; 16; 17; 22; 105; 106; 112; 113; 114; 115; 217;
and the first sentence of 218 have been stricken from the record. |
1051. |
A different approach, however, is
warranted with respect to proposals made by the Commissioner of Competition
that are similar to those made by other parties earlier in the proceeding. To
the extent that the Commissioner of Competition's proposals are similar to
those of other parties, these ideas have been subject to challenge through
interrogatories and cross-examination. Proposals that have the same results
as others on the record can be characterized as an expression of agreement
with the proposals and evidence put forward by other parties. Arguments in
support of or against proposals made on the record of the proceeding can
constitute proper final argument. |
1052. |
The Commission notes that the
proposals made in argument by the Commissioner of Competition that are
similar to those proposed by other parties fall into two categories: (i)
proposals similar to (or referring to) those of other parties, but with no
new evidence; and (ii) proposals similar to (or referring to) those of other
parties, which also introduce new evidence. |
1053. |
The Commission considers that
proposals in the first category should remain on the record, and be accorded
the weight deserved in the circumstances. These proposals can properly be
characterized as an expression of agreement with proposals put forward by
other parties. These proposals do not introduce new evidence, and other
parties cannot be said to be prejudiced by inclusion of this material on the
record. Rather, they constitute proper final argument. Accordingly, the
following paragraphs, notwithstanding the objections of the Companies and
TELUS, have been retained on the record: 18; 25; 108; 110; 188; 198; 201;
202; 204 to 208; 210 to 213; 215; and 216. |
1054. |
The proposals in the second
category, however, introduce new evidence, and the relevant paragraphs (147;
148; and 209) have been stricken from the record for that reason, as
discussed in the previous section. |
|
Whether the Commissioner of
Competition's submissions relating to essential facilities are within
the scope of the proceeding (paragraphs 24; 25; 149; and 186 to 196) |
1055. |
In paragraph 178 of his submission,
the Commissioner of Competition stated that "Decision CRTC
2001-618 ruled that the definition of
essential services and the current classification of essential services is
not under consideration in this proceeding. However, since pricing of
"competitor services" is within the scope of the proceeding, and essential
services are competitor services, the pricing of essential services is within
the scope of this proceeding. In determining whether certain services should
be classified as competitor services, consideration of the appropriate
principles regarding what is essential for competition must be considered." |
1056. |
TELUS and the Companies argued that
the paragraphs set out above should be stricken because they contemplate an
out-of-scope redefinition of essential facilities. |
1057. |
The Commission considers that the
issue of modifying the definition for essential facilities as established in
Decision 97-8 is outside the scope of the
proceeding. In its view, paragraphs 24; 149; 193; 194; 195 and 196
contemplate such a modification, and are therefore outside the scope of the
proceeding. Accordingly, they have been stricken from the record. |
1058. |
The remaining paragraphs, however,
are not outside the scope of the proceeding, or are similar to other
proposals, as discussed above. The Commission considers that these paragraphs
merely provide background information. Accordingly, paragraphs 25; and 186 to
192 have not been stricken from the record. |
|
Whether the Commissioner of
Competition's submissions relating to resale of local services are is
within the scope of the proceeding (paragraphs 220 to 233) |
1059. |
TELUS argued that the Commissioner
of Competition's submissions in paragraphs 220 to 233 should be stricken
because they contemplate a review and variance of the Commission's
determination in Decision 97-8 not to
require mandated wholesale resale. Group Telecom also argued that these
submissions should be removed from the record. |
1060. |
At paragraph 231 of its argument,
the Commissioner of Competition stated that the Commission should "revisit
its resale decision and consider whether a policy of mandating avoidable cost
discounts for residential and business services is appropriate for assisting
in the creation of the competitive process." |
1061. |
The Commissioner of Competition
further suggested that if the Commission concludes that such a policy is
appropriate, "… the Commission should initiate a separate proceeding to
consider all aspects of introducing such a policy, including the appropriate
terms and conditions." |
1062. |
The Commission considers that the
Commissioner of Competition's proposal that the Commission change its policy
regarding mandated wholesale resale is outside the scope of the proceeding.
Accordingly, paragraphs 220 to 233 have been stricken from the record. |
|
Evidence for residential PES costs
in HCSAs |
1063. |
SaskTel, in its argument, submitted
that the Commission was not provided with any empirical evidence to establish
a reliable productivity offset for residential PES in HCSAs. |
1064. |
The Commission notes that in
response to interrogatory The Companies(CRTC)16Mar01-105, the Companies
proposed approximating the unit cost trend in the newly defined HCSAs using
the unit cost trends observed in residence PES as a whole, as the underlying
technologies and business operations are essentially the same across all
bands. |
1065. |
The Commission considers that there
is a sufficient evidentiary foundation to support the productivity offset for
residential PES in HCSAs. It would not be expected that there would be
materially significant differences in unit cost trends as between residence
PES as a whole and residence PES in HCSAs. |
|
Secretary General |
|
This document is available in
alternative format upon request and may also be examined at the following
Internet site: http://www.crtc.gc.ca |
Aliant Telecom
Inc. |
A1. Co-location services |
Tariff |
Item no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
27750 |
301.4 |
Entrance Conduit
Space |
I |
-8% |
I-X |
27750 |
301.4 |
Floor Space Physical
Co-location Arrangement |
I |
Note 1 |
I-X |
27750 |
301.4 |
Floor Space Virtual
Co-location Arrangement |
I |
Note 1 |
I-X |
27750 |
301.4 |
Power Consumption |
I |
-8% |
I-X |
27750 |
301.4 |
Riser Space |
I |
-8% |
I-X |
27750 |
301.4 |
Service Order Charge |
I |
-8% |
I-X |
27750 |
301.4 |
Construction Charges
: Contracted |
I |
Note 5 |
Note 5 |
A2. Toll network interconnection and ancillary services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
10008 |
70.1 |
Service Order Charges
per DS-0 Interconnecting Circuits |
I |
-8% |
I-X |
10008 |
70.3 |
Direct Connection
Service |
I |
Note 1 |
Note 2 |
10008 |
70.3 |
Access Tandem
Connection Service |
I |
-8% |
I-X |
10008 |
70.3 |
800/888 Carrier
Identification Charge |
I |
-8% |
Note 2 |
10008 |
70.4 |
PIC Processing
Charges |
I |
-8% |
I-X |
10008 |
70.6 |
Equal Access Start-Up
Charge |
I |
Note 3 |
Note 3 |
10008 |
70.7 |
Carrier Network
Profile Change |
I |
-8% |
I-X |
10008 |
72.3 |
Billing and
Collection : Account Receivable Management (ARM) Discount |
I |
Note 4 |
Note 4 |
10008 |
72.3 |
Billing and
Collection Charges Excluding ARM Discount |
I |
-8% |
I-X |
10008 |
100 |
Network Announcements
for Customers of Disconnected IXCs with Group Feature D Service |
I |
-8% |
I-X |
10008 |
105 |
Bulk Transfer of
Customer Base between IXCs having Feature Group D Service |
I |
-8% |
I-X |
10008 |
200.3 |
800 Carrier Access
Multi-Carrier Selection Capability |
I |
-8% |
I-X |
10008 |
205 |
Dialed Number
Transport Capabality |
I |
-8% |
I-X |
11008 |
70.1 |
Service Order Charges
per DS-0 Interconnecting Circuits |
I |
-8% |
I-X |
11008 |
70.3 |
Direct Connection
Service |
I |
Note 1 |
Note 2 |
11008 |
70.3 |
Access Tandem
Connection Service |
I |
-8% |
I-X |
11008 |
70.3 |
800/888 Carrier
Identification Charge |
I |
-8% |
Note 2 |
11008 |
70.4 |
PIC Processing
Charges |
I |
-8% |
I-X |
11008 |
70.6 |
Equal Access Start Up
Charge |
I |
Note 3 |
Note 3 |
11008 |
70.7 |
Carrier Network
Profile Change |
I |
-8% |
I-X |
11008 |
72.3 |
Billing and
Collection : Accounts Receivable Management (ARM) Discount |
I |
Note 4 |
Note 4 |
11008 |
72.3 |
Billing and
Collection Charges Excluding ARM Discount |
I |
-8% |
I-X |
11008 |
100 |
Network Announcements
for Customers of Disconnected IXCs with Group Feature D Service |
I |
-8% |
I-X |
11008 |
105 |
Bulk Transfer of
Customer Base between IXCs having Feature Group D Service |
I |
-8% |
I-X |
11008 |
200.3 |
800 Carrier Access
Multi-Carrier Selection Capability |
I |
-8% |
I-X |
11008 |
205 |
Dialed Number
Transport Capabality |
I |
-8% |
I-X |
12001 |
800.6 |
Service Order Charges
per DS-0 Interconnecting Circuits |
I |
-8% |
I-X |
12001 |
800.6 |
Direct Connection
Service |
I |
Note 1 |
Note 3 |
12001 |
800.6 |
Access Tandem
Connection Service |
I |
-8% |
I-X |
12001 |
800.6 |
800/888 Carrier
Identification Charge |
I |
-8% |
Note 2 |
12001 |
800.6 |
PIC Processing |
I |
-8% |
I-X |
12001 |
800.6 |
Equal Access Start Up
Charge |
I |
Note 3 |
Note 3 |
12001 |
800.6 |
Carrier Network
Profile Change |
I |
-8% |
I-X |
12001 |
800.6 |
Billing and
Collection : Account Receivable Management (ARM) Discount |
I |
Note 4 |
Note 4 |
12001 |
800.6 |
Billing and
Collection Charges Excluding ARM Discount |
I |
-8% |
I-X |
12001 |
800.9 |
Network Announcements
for Customers of Disconnected IXCs with Group Feature D Service |
I |
-8% |
I-X |
Aliant Telecom Inc. (cont'd) |
12001 |
800.10 |
Bulk Transfer of
Customer Base between IXCs having Feature Group D Service |
I |
-8% |
I-X |
12001 |
800.11 |
800 Carrier Access
Multi-Carrier Selection Capability |
I |
-8% |
I-X |
12001 |
800.12 |
Dialed Number
Transport Capabality |
I |
-8% |
I-X |
13001 |
299.3 |
Equal Access Start up
Charge |
I |
Note 3 |
Note 3 |
13001 |
299.3.70 |
Direct Connection
Service |
I |
Note 1 |
Note 2 |
13001 |
299.3.70 |
Access Tandem
Connection Service |
I |
-8% |
I-X |
13001 |
299.3.70 |
800/888 Carrier
Identification Charge |
I |
-8% |
Note 2 |
13001 |
299.3.70 |
PIC Processing |
I |
-8% |
I-X |
13001 |
299.3.70 (c) |
Service Order Charges
per DS-0 Interconnecting Circuits |
I |
-8% |
I-X |
13001 |
299.3.70.8 |
Carrier Network
Profile Change |
I |
-8% |
I-X |
13001 |
299.3.72 |
Billing and
Collection : Account Receivable Management (ARM) Discount |
I |
Note 4 |
Note 4 |
13001 |
299.3.72 |
Billing and
Collection Charges Excluding ARM Discount |
I |
-8% |
I-X |
13001 |
299.3.92 |
Network Announcements
for Customers of Disconnected IXCs with Group Feature D Service |
I |
-8% |
I-X |
13001 |
299.3.95 |
Bulk Transfer of
Customer Base between IXCs having Feature Group D Service |
I |
-8% |
I-X |
13001 |
299.3.100 |
800 Carrier Access
Multi-Carrier Selection Capability |
I |
-8% |
I-X |
13001 |
299.3.110 |
Dialed Number
Transport Capabality |
I |
-8% |
I-X |
A3. Local network interconnection and ancillary services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
27750 |
300.4 |
Unbundled Loops Type
A & B |
I |
-8% |
Note 2 |
27750 |
300.4 |
Unbundled Loop
Service Charge per Order |
I |
-8% |
I-X |
27750 |
300.4 |
Unbundled Loop
Service Charge per Loop |
I |
-8% |
I-X |
27750 |
300.4 |
Unbundled Loop
Selection |
I |
-8% |
I-X |
27750 |
300.4 |
Unbundled Loop
Modification |
I |
-8% |
I-X |
27750 |
300.4 |
Unbundled Loop
Connecting Link service |
I |
-8% |
I-X |
27750 |
300.4 |
Traffic termination |
I |
-8% |
I-X |
27750 |
300.4 |
Transit Services |
I |
-8% |
Note 2 |
27750 |
300.4 |
Relay Service |
I |
-8% |
I-X |
27750 |
300.4 |
9-1-1 Service |
I |
-8% |
I-X |
27750 |
300.4 |
Compensation for
Traffic Termination |
I |
-8% |
I-X |
27750 |
300.4 |
Compensation for
Transiting Service |
I |
-8% |
I-X |
A4. Other interconnection arrangements |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
27750 |
302 |
Local Number
Portability (LNP) Access to Service Control Point (SCP) |
II |
0% |
0% |
27750 |
303 |
Link Arrangements for
Interconnecting Canadian Carriers and Digital Subscriber Line Service
Providers |
I |
-8% |
I-X |
27750 |
304 |
Billed Number
Screening (BNS) Database Service |
I |
-8% |
I-X |
27750 |
305 |
Basic Listing
Interchange File |
I |
-8% |
Note 2 |
27750 |
505 |
Zero-Dialed Emergency
Call Routing Service |
I |
-8% |
I-X |
B. Wireless access services (WAS) |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
10001 |
1270.1 |
Wireless Access
Service (WAS) : Telephone Numbers Line-side Access |
I |
-8% |
I-X |
10001 |
1270 |
WAS : Other |
I |
-8% |
I-X |
|
|
|
|
|
|
11001 |
922.1 (b) |
WAS : Line-side
Access – Telephone Numbers |
I |
-8% |
I-X |
11001 |
922 |
WAS : Other |
I |
-8% |
I-X |
Aliant Telecom Inc. (cont'd) |
12001 |
805.2 A |
WAS : Line-side
Access |
I |
-8% |
I-X |
12001 |
805.2 B |
WAS : Trunk-side
Access |
I |
-8% |
I-X |
|
|
|
|
|
|
13001 |
295.2 (i) i/ii |
WAS : Line-side
Access – Telephone Numbers |
I |
-8% |
I-X |
13001 |
295.3 (f) i |
WAS : Trunk-side
Access – 1000 Block Routing |
I |
-8% |
I-X |
13001 |
295 |
WAS : Other |
I |
-8% |
I-X |
C. Other services |
Tariff |
Item no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
7400 |
790 |
Enhanced Card Swipe
Access |
II |
0% |
0% |
7400 |
901 |
Support Structure
Service |
II |
0% |
0% |
7400 |
909 |
Card Swipe Access |
II |
0% |
0% |
10001 |
1155 |
Directory File
Service |
I |
-8% |
I-X |
10001 |
1350 |
Network Paging Access
Service |
I |
-8% |
I-X |
10001 |
1625.2 (a) |
Call Forward Busy/No
Answer |
I |
-8% |
I-X |
10001 |
1625.2 (b) |
Integrated Voice
Messaging Service (IVMS) – Data Access Ports |
I |
-8% |
I-X |
10001 |
4100 |
Asymmetric Digital
Subscriber Line (ADSL) Access to Individual Line Service |
II |
0% |
0% |
10006 |
4 |
Tariff for
Interconnection with Telesat |
I |
-8% |
I-X |
10008 |
71 |
Operator Services |
II |
0% |
0% |
10008 |
90 |
Standby Circuits |
I |
-8% |
I-X |
11001 |
815.1 (a) |
Call Forward Busy/No
Answer |
I |
-8% |
I-X |
11001 |
815.1 (b) |
Integrated Voice
Messaging Service (IVMS) – Data Access Ports |
I |
-8% |
I-X |
11001 |
835.1 |
Directory File
Service |
I |
-8% |
I-X |
11001 |
925 |
Network Paging Access
Service |
I |
-8% |
I-X |
11001 |
7000 |
Internet Service
Provider (ISP) Access to Individual Line Service |
II |
0% |
0% |
11006 |
4 |
Tariff for
Interconnection with Telesat |
I |
-8% |
I-X |
11008 |
71 |
Operator Services |
II |
0% |
0% |
11008 |
90 |
Standby Circuits |
I |
-8% |
I-X |
|
|
|
|
|
|
12001 |
140 |
Operator Services |
II |
0% |
0% |
12001 |
630.1 |
Asymmetric Digital
Subscriber Line (ADSL) Access Line Service |
II |
0% |
0% |
12001 |
800.7 |
Standby Circuits |
I |
-8% |
I-X |
12001 |
820.1 |
Radio Paging Access
Service |
I |
-8% |
I-X |
12002 |
5069.1 |
Directory File
Service |
I |
-8% |
I-X |
12002 |
5800.2 |
Call Forward Busy/No
Answer |
I |
-8% |
I-X |
13001 |
45.2 |
Directory File
Service |
I |
-8% |
I-X |
13001 |
46 |
Operator services |
II |
0% |
0% |
13001 |
290 |
Dial Access to Radio
Paging Service |
I |
-8% |
I-X |
13001 |
299.2 |
Tariff for
Interconnection with Telesat |
I |
-8% |
I-X |
13001 |
325 |
Asymmetric Digital
Subscriber Line (ADSL) Access Service |
II |
0% |
0% |
13001 |
370.25 |
Call Forward Busy/No
Answer |
I |
-8% |
I-X |
27750 |
201.2 (e) |
Internet Service
Provider (ISP) Link Connectivity |
II |
0% |
0% |
27750 |
306 |
Compensation per Call |
I |
-8% |
I-X |
27750 |
503 |
Electronic Directory
Database Access Service |
II |
0% |
0% |
27750 |
504.4 |
Payphone Basic Access
Line Service |
II |
0% |
0% |
Bell
Canada |
A1. Co-location services |
Tariff |
Item no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
7516 |
110 |
Entrance Conduit
Space |
I |
-8% |
I-X |
7516 |
110 |
Floor Space Physical
Co-location Arrangement |
I |
Note 1 |
I-X |
7516 |
110 |
Floor Space Virtual
Co-location Arrangement |
I |
Note 1 |
I-X |
7516 |
110 |
Power Consumption |
I |
-8% |
I-X |
7516 |
110 |
Riser Space |
I |
-8% |
I-X |
7516 |
110 |
Service Order Charge |
I |
-8% |
I-X |
7516 |
110 |
Construction Charges
: Contracted |
I |
Note 5 |
Note 5 |
A2. Toll network interconnection and ancillary services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
7516 |
40.1 (g) |
Service Order Charges
per DS-0 Interconnecting Circuits |
I |
-8% |
I-X |
7516 |
40.1 (h) |
Signalling Transfer
Point (STP) Port Connection Services |
I |
-8% |
I-X |
7516 |
40.4 |
Direct Connection
Service |
I |
Note 1 |
Note 2 |
7516 |
40.4 |
Access Tandem
Connection Service |
I |
-8% |
I-X |
7516 |
40.4 |
800/888 Carrier
Identification Charge |
I |
-8% |
Note 2 |
7516 |
40.5 |
PIC Processing
Charges |
I |
-8% |
I-X |
7516 |
40.6 |
Billed Number
Screening (BNS) Database Access |
I |
-8% |
Note 2 |
7516 |
40.7 |
Equal Access Start-Up
Charge |
I |
Note 3 |
Note 3 |
7516 |
40.8 |
Carrier Network
Proile Change |
I |
-8% |
I-X |
7516 |
41 |
Operator Services
Excluding 800/888 Services |
II |
0% |
0% |
7516 |
41.5 |
800/888 Directory
Assistance Service |
I |
-8% |
I-X |
7516 |
42.3 |
Billing and
Collection : Accounts Receivable Management (ARM) Discount |
I |
Note 4 |
Note 4 |
7516 |
42.3 |
Billing and
Collection : Charges Excluding ARM Discount |
I |
-8% |
I-X |
7516 |
70 |
800/888 Carrier
Access : Multi-Carrier Selection Capability |
I |
-8% |
I-X |
7516 |
75 |
Dialed Number
Transport Capability |
I |
-8% |
I-X |
7516 |
80 |
Network Announcements
for Customers of Disconnected IXCs with Feature Group |
I |
-8% |
I-X |
7516 |
85 |
Bulk Transfer of
Costumer Base between IXCs having Feature Group D Service |
I |
-8% |
I-X |
A3. Local network interconnection and ancillary services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
7516 |
105 |
Unbundled Loops Type
A & B |
I |
-8% |
Note 2 |
7516 |
105 |
Unbundled Loop
Service Charge per Order |
I |
-8% |
I-X |
7516 |
105 |
Unbundled Loop
Service Charge per Loop |
I |
-8% |
I-X |
7516 |
105 |
Unbundled Loop
Selection |
I |
-8% |
I-X |
7516 |
105 |
Unbundled Loop
Modification |
I |
-8% |
I-X |
7516 |
105 |
Unbundled Loop
Connecting Link Service |
I |
-8% |
I-X |
7516 |
105 |
CCS-7 Signalling
Services |
I |
-8% |
I-X |
7516 |
105 |
Traffic Termination |
I |
-8% |
I-X |
7516 |
105 |
Transit Services |
I |
-8% |
Note 2 |
7516 |
105 |
Relay Service |
I |
-8% |
I-X |
7516 |
105 |
Emergency Service
(9-1-1) |
I |
-8% |
I-X |
Bell
Canada (cont'd) |
A4. Other interconnection arrangements |
Tariff |
Item no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
7516 |
115 |
Local Number
Portability (LNP) Access to Service Control Point (SCP) |
II |
0% |
0% |
7516 |
120 |
Link Arrangements for
Interconnecting Canadian Carriers and Digital Subscriber Line Service
Providers |
I |
-8% |
I-X |
7516 |
200 |
Customer Information
Reports |
I |
-8% |
I-X |
7516 |
300 |
Advanced Intelligent
Network (AIN) Interconnection Services |
II |
0% |
0% |
7516 |
305 |
Billed Number Screen
(BNS) Database Service |
I |
-8% |
I-X |
7516 |
310 |
Basic Listing
Interchange File |
I |
-8% |
Note 2 |
7516 |
315 |
Zero-Dialed Emergency
Call Routing Service |
I |
-8% |
I-X |
B. Wireless access services (WAS) |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
7396 |
G6, G8, G14 |
Connection of
Customer – Provided Equipment |
I |
-8% |
I-X |
7396 |
G12 |
Connection of
Customer – Provided Equipment : Co-location Services |
I |
Note 6 |
Note 6 |
7396 |
G12 |
Connection of
Customer – Provided Equipment : Other Components |
I |
-8% |
I-X |
7396 |
G15 |
Wireless Access
Services – Other |
I |
-8% |
I-X |
7396 |
G15 (b)(1)a |
Line-side WAS
Telephone Number Services |
I |
Note 1 |
I-X |
7396 |
G16 |
Cellular Voice
Channels |
I |
-8% |
I-X |
7396 |
G17 |
Cellular Access
Service Types II & III |
I |
-8% |
I-X |
7396 |
G18 |
Directory Information
Service for Wireless Service Providers |
I |
-8% |
I-X |
7396 |
G19 |
Mini Cell Site for
Wireless Service Operators |
I |
-8% |
I-X |
7396 |
G21 |
Wireless Service
Provider Enhanced 9-1-1 Service |
I |
-8% |
I-X |
C. Other services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
6716 |
26.2 |
Directory File
Service |
I |
-8% |
I-X |
6716 |
84 |
Wholesale Automated
Alternative Billing Service |
II |
0% |
0% |
6716 |
87 |
Directory Information
Service |
II |
0% |
0% |
6716 |
88 |
Local Operator
Assistance Service ( LOAS) |
II |
0% |
0% |
6716 |
89 |
Connection Service |
II |
0% |
0% |
6716 |
315 |
Payphone Basic Access
Line Service |
II |
0% |
0% |
6716 |
1985 |
Network Portability
Access Service |
I |
-8% |
I-X |
6716 |
2025.4 |
Intregrated Voice
Messaging System Access Arrangements |
I |
-8% |
I-X |
6716 |
2025.7 |
Call Forward Busy /
No Answer |
I |
-8% |
I-X |
6716 |
4190 & 1990 |
Paging/Telephone
Nunber Access (TNA) Services : Telephone Number Access Service |
I |
Note 1 |
I-X |
6716 |
4190 & 4195 |
Paging /TNA Services
: Radio Systems Operators Services and Other Services |
I |
-8% |
I-X |
6716 |
4195 |
Switched Network
Access for Conventional Radio System Operators and Privat |
I |
-8% |
I-X |
6716 |
4695 |
Internet Service
Provider (ISP) Link Service |
II |
0% |
0% |
6716 |
4698 |
Managed Internet
Protocol Service (MIPS) |
II |
0% |
0% |
6716 |
4910 |
Partial
Cable-distribution System |
II |
0% |
0% |
6716 |
5400 |
Asymmetric Digital
Subscriber Line (ADSL) Access Service |
II |
0% |
0% |
6716 |
5400 |
ADSL Loop
Administration and Support |
I |
-8% |
I-X |
7400 |
700 |
Co-located Customer
Provided Equipment in TELCO Central-Office |
I |
-8% |
I-X |
Bell
Canada (cont'd) |
7400 |
704 |
Mobile Satellite
Access Service |
I |
-8% |
I-X |
7400 |
790 |
Enhanced Card Swipe
Access |
II |
0% |
0% |
7400 |
901 |
Support Structure
Service |
II |
0% |
0% |
7400 |
909 |
Card Swipe Access |
II |
0% |
0% |
7516 |
43 |
Compensation per Call |
I |
-8% |
I-X |
7516 |
60 |
Standby Circuits |
I |
-8% |
I-X |
7516 |
100 |
Electronic Directory
Database Access Service |
II |
0% |
0% |
MTS
Communications Inc. |
A1.
Co-location services |
Tariff |
Item no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
24006 |
110 |
Entrance Conduit
Space |
I |
-8% |
I-X |
24006 |
110 |
Floor Space Physical
Co-location Arrangement |
I |
Note 1 |
I-X |
24006 |
110 |
Floor Space Virtual
Co-location Arrangement |
I |
Note 1 |
I-X |
24006 |
110 |
Power Consumption |
I |
-8% |
I-X |
24006 |
110 |
Riser Space |
I |
-8% |
I-X |
24006 |
110 |
Service Order Charge |
I |
-8% |
I-X |
24006 |
110 |
Construction Charges
: Contracted |
I |
Note 5 |
Note 5 |
A2. Toll network interconnection and ancillary services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
24006 |
40.1 G |
Service Order Charges
per DS-0 Interconnecting Circuits |
I |
-8% |
I-X |
24006 |
40.3.D |
Direct Connection
Service |
I |
Note 1 |
Note 2 |
24006 |
40.3.D |
Access Tandem
Connection Service |
I |
-8% |
I-X |
24006 |
40.3.F |
800/888 Carrier
Identification Charge |
I |
-8% |
Note 2 |
24006 |
40.4 H |
PIC Processing |
I |
-8% |
I-X |
24006 |
40.6 D |
Equal Access Start-Up
Charge |
I |
Note 3 |
Note 3 |
24006 |
40.8 C |
Carrier Network
Profile Change |
I |
-8% |
I-X |
24006 |
42.3.B |
Billing and
Collection : Accounts Receivable Management (ARM) Discount |
I |
Note 4 |
Note 4 |
24006 |
42.3.C |
Billing and
Collection Charges Excluding ARM Discount |
I |
-8% |
I-X |
24006 |
70 |
800 Carrier Access
Multi-Carrier Selection Capability |
I |
-8% |
I-X |
24006 |
75 |
Dialed Number
Transport Capabality |
I |
-8% |
I-X |
24006 |
80 |
Network Announcements
for Customers of Discontinued IXCs with Feature Group D Service |
I |
-8% |
I-X |
24006 |
85 |
Bulk Transfer of
Customer Base between IXCs having Feature Group D Service |
I |
-8% |
I-X |
A3. Local network interconnection and ancillary services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
24006 |
105.4 B (5) |
Relay Service |
I |
-8% |
I-X |
24006 |
105.4 B (6) |
9-1-1 Service |
I |
-8% |
I-X |
24006 |
105.4 C |
Unbundled Loops Type
A & B |
I |
-8% |
Note 2 |
24006 |
105.4 C |
Unbundled Loop
Service Charge per Order |
I |
-8% |
I-X |
24006 |
105.4 C |
Unbundled Loop
Service Charge per Loop |
I |
-8% |
I-X |
24006 |
105.4 C |
Unbundled Loop
Selection |
I |
-8% |
I-X |
24006 |
105.4 C |
Unbundled Loop
Modification |
I |
-8% |
I-X |
24006 |
105.4 C |
Unbundled Loop
Connecting Link Service |
I |
-8% |
I-X |
24006 |
105.4 D |
Compensation for
Traffic Terminations |
I |
-8% |
I-X |
24006 |
105.4 E (2) |
Compensation for
Transiting Service |
I |
-8% |
Note 2 |
MTS
Communications Inc. (cont'd) |
A4. Other interconnection arrangements |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
24006 |
115 |
Local Number
Portability (LNP) Access to Service Control Point (SCP) |
II |
0% |
0% |
24006 |
120 |
Link Arrangements for
Interconnecting Canadian Carriers and Digital Subscriber Line Service
Providers |
I |
-8% |
I-X |
24006 |
305 |
Billed Number
Screening (BNS) Database Service |
I |
-8% |
I-X |
24006 |
310.4 |
Basic Listing
Interchange File |
I |
-8% |
I-X |
24006 |
320 |
Zero-Dialed Emergency
Call Routing Service |
I |
-8% |
I-X |
B. Wireless access services (WAS) |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
24001 |
3000.3 E |
Wireless Mobile Radio
Network Access Service : Telephone Number Services |
I |
-8% |
I-X |
24001 |
3000.3 |
Wireless Mobile Radio
Network Access Service : Other Services Excluding Sub-Item 3000.3 E |
I |
-8% |
I-X |
C. Other services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
7400 |
790 |
Enhanced Card Swipe
Access |
II |
0% |
0% |
7400 |
901 |
Support Structure
Service |
II |
0% |
0% |
7400 |
909 |
Card Swipe Access |
II |
0% |
0% |
24001 |
250 |
Resale and Sharing |
I |
-8% |
I-X |
24001 |
360 |
Directory File
Service |
I |
-8% |
I-X |
24001 |
1610.3 |
Operator Services |
II |
0% |
0% |
24001 |
1705 |
Payphone Basic Access
Line Service |
II |
0% |
0% |
24001 |
2143.3 |
Call Forward Busy/No
Answer |
I |
-8% |
I-X |
24001 |
2600 |
Mobile Telephone
Service |
I |
-8% |
I-X |
24001 |
2950 |
Dial Access for Radio
Paging Service |
I |
-8% |
I-X |
24001 |
3100 |
Conventional Mobile
Radio Network Access Service |
I |
-8% |
I-X |
24001 |
3150.3 B |
Dial Access for
Customer-Owned Telephone Answering Equipment : Trunks |
I |
-8% |
I-X |
24002 |
5800 |
Asymmetric Digital
Subscriber Line (ADSL) Line Enhancement |
II |
0% |
0% |
24002 |
5810 |
ADSL Access to
Individual Line Service |
II |
0% |
0% |
|
|
|
|
|
|
24006 |
43.3 |
Compensation per Call |
I |
-8% |
I-X |
24006 |
60 |
Standby Circuits |
I |
-8% |
I-X |
24006 |
100 |
Electronic Directory
Database Access Service |
II |
0% |
0% |
Saskatchewan Telecommunications |
A1. Co-location services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
21414 |
610.16 |
Entrance Conduit
Space |
I |
-8% |
I-X |
21414 |
610.16 |
Floor Space Physical
Co-location Arrangement |
I |
Note 1 |
I-X |
21414 |
610.16 |
Floor Space Virtual
Co-location Arrangement |
I |
Note 1 |
I-X |
21414 |
610.16 |
Power Consumption |
I |
-8% |
I-X |
21414 |
610.16 |
Riser Space |
I |
-8% |
I-X |
21414 |
610.16 |
Service Order Charge |
I |
-8% |
I-X |
21414 |
610.16 |
Construction Charges
: Contracted |
I |
Note 5 |
Note 5 |
A2. Toll network interconnection and ancillary services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
21414 |
610.04 |
Billing and
Collection : Accounts Receivable Management (ARM) Discount |
I |
Note 4 |
Note 4 |
21414 |
610.04 |
Billing and
Collection Charges Excluding ARM Discount |
I |
-8% |
I-X |
21414 |
610.06.1 |
Service Order Charges
per DS-0 Interconnecting circuits |
I |
-8% |
I-X |
21414 |
610.06.2 |
Direct Connection
Service |
I |
Note 1 |
Note 2 |
21414 |
610.06.2 |
Access Tandem
Connection Service |
I |
8% |
I-X |
21414 |
610.06.2 |
800/888 Carrier
Identification Charge |
I |
-8% |
Note 2 |
21414 |
610.06.3 |
PIC Processing |
I |
-8% |
I-X |
21414 |
610.06.5 |
Equal Access Start-Up
Charge |
I |
Note 3 |
Note 3 |
21414 |
610.06.6 |
Carrier Network
Profile Change |
I |
-8% |
I-X |
21414 |
610.08 |
Network Announcements
for Customers of Disconnected IXCs with Feature Group D Service |
I |
-8% |
I-X |
21414 |
610.10 |
Bulk Transfer of
Customer Base between IXCs having Feature Group D Service |
I |
-8% |
I-X |
21414 |
610.12 |
Operator Services |
II |
0% |
0% |
A3. Local network interconnection and ancillary services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
21414 |
610.18.4 (1)(a) |
CCS-7 Signalling
Interconnection |
I |
-8% |
I-X |
21414 |
610.18.4 (2)(a) |
Unbundled Loops Type
A & B |
I |
-8% |
Note 2 |
21414 |
610.18.4 (2)(a) |
Unbundled Loop
Service Charge per Order |
I |
-8% |
I-X |
21414 |
610.18.4 (2)(a) |
Unbundled Loop
Service Charge per Loop |
I |
-8% |
I-X |
21414 |
610.18.4 (2)(a) |
Unbundled Loop
Modification |
I |
-8% |
I-X |
21414 |
610.18.4 (2)(b) |
Other Loop Related
Charges |
I |
-8% |
I-X |
21414 |
610.18.4 (2)(c) |
Unbundled Loop
Connecting Link service |
I |
-8% |
I-X |
21414 |
610.18.4 (2)(e) |
Message Relay Service |
I |
-8% |
I-X |
21414 |
610.18.4 (2)(f) |
Emergency Service
9-1-1 |
I |
-8% |
I-X |
21414 |
610.18.4 (3) |
Compensation for
Traffic Termination |
I |
-8% |
I-X |
21414 |
610.18.4 (4) |
Compensation for
Transiting Services |
I |
-8% |
Note 2 |
A4. Other interconnection arrangements |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
21414 |
610.20 |
Link Arrangements for
Interconnecting Canadian Carriers |
I |
-8% |
I-X |
21414 |
610.26 |
Interconnection
Arrangements for Digital Subscriber Line (DSL) Service Providers |
I |
-8% |
I-X |
21414 |
650.02 |
Basic Listing
Interchange File |
I |
-8% |
Note 2 |
Saskatchewan Telecommunications (cont'd) |
21414 |
650.08 |
Billed Number
Screening (BNS) Database Service |
II |
0% |
0% |
21414 |
650.22 |
Zero-Dialed Emergency
Call Routing Service |
I |
-8% |
I-X |
B. Wireless access services (WAS) |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
21414 |
650.20 |
Wireless Service
Provider – Network Access Service : Telephone Numbers |
I |
-8% |
I-X |
21414 |
650.20 |
Wireless Service
Provider – Network Access Service : Other Services Excluding Telephone
Numbers |
I |
-8% |
I-X |
C. Other services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
21412 |
550.08.3 |
Call Forward Busy/No
Answer |
I |
-8% |
I-X |
21414 |
610.22 |
Standby Circuits |
I |
-8% |
I-X |
21414 |
650.04 |
Directory File
Service |
I |
-8% |
I-X |
21414 |
650.06 |
Pay Telephone Basic
Access Line Service |
II |
0% |
0% |
21414 |
650.12 |
Busy Line
Verification |
II |
0% |
0% |
21414 |
650.14 |
Digital Sunscriber
Line (DSL) Access Capability |
II |
0% |
0% |
21414 |
650.16 |
Support Structure
Service |
II |
0% |
0% |
21414 |
650.18 |
Radio Paging Access
Service |
I |
-8% |
I-X |
21414 |
650.24 |
Payphone Compensation
per Call |
I |
-8% |
I-X |
TELUS
Communications Inc. |
A1. Co-location services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
1017 |
110 |
Entrance Conduit
Space |
I |
-8% |
I-X |
1017 |
110 |
Floor Space Physical
Co-location Arrangement |
I |
Note 1 |
I-X |
1017 |
110 |
Floor Space Virtual
Co-location Arrangement |
I |
Note 1 |
I-X |
1017 |
110 |
Power Consumption |
I |
-8% |
I-X |
1017 |
110 |
Riser Space |
I |
-8% |
I-X |
1017 |
110 |
Service Order Charge |
I |
-8% |
I-X |
1017 |
110 |
Construction Charges
: Contracted |
I |
Note 5 |
Note 5 |
18008 |
250 |
Entrance Conduit
Space |
I |
-8% |
I-X |
18008 |
250 |
Floor Space Physical
Co-location Arrangement |
I |
Note 1 |
I-X |
18008 |
255 |
Floor Space Virtual
Co-location Arrangement |
I |
Note 1 |
I-X |
18008 |
250 |
Power Consumption |
I |
-8% |
I-X |
18008 |
250 |
Riser Space |
I |
-8% |
I-X |
18008 |
250 |
Service Order Charge |
I |
-8% |
I-X |
18008 |
250 |
Construction Charges
: Contracted |
I |
Note 5 |
Note 5 |
A2. Toll network interconnection and ancillary services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
1017 |
70 A |
Service Order Charges
per DS-0 Interconnecting Circuits |
I |
-8% |
I-X |
1017 |
70 A(8) |
Signalling Transfer
Point (STP) Port Connection Services (PCS) |
I |
-8% |
I-X |
1017 |
70 E(5) |
Direct Connection
Service |
I |
Note 1 |
Note 2 |
1017 |
70 E(5) |
Access Tandem
Connection Service |
I |
-8% |
I-X |
1017 |
70 E(7) |
800/888 Carrier
Identification Charge |
I |
-8% |
Note 2 |
1017 |
70 F |
PIC Processing |
I |
-8% |
I-X |
1017 |
70.G.4 |
Equal Access Start-Up
Charge |
I |
Note 3 |
Note 3 |
1017 |
70 H |
Carrier Network
Profile Change |
I |
-8% |
I-X |
1017 |
70 I |
Billed Number
Screening (BNS) Database Access Query |
I |
-8% |
Note 2 |
1017 |
73 |
800/888 Carrier
Access Multi-Carrier Selection Capability |
I |
-8% |
I-X |
1017 |
75 |
Dialed Number
Transport Capabality |
I |
-8% |
I-X |
1017 |
90 |
Network Recorded
Announcements for Customers of Disconnected Interexchange Carriers (IXCs) |
I |
-8% |
I-X |
18008 |
220 |
800 Carrier Access
Multi-Carrier Selection Capability |
I |
-8% |
I-X |
18008 |
225 |
Dialed Number
Transport Capabality |
I |
-8% |
I-X |
18008 |
270.1 |
Service Order Charges
per DS-0 Interconnecting Circuits |
I |
-8% |
I-X |
18008 |
270.2 |
Direct Connection
Service |
I |
Note 1 |
Note 2 |
18008 |
270.2 |
Access Tandem
Connection Service |
I |
-8% |
I-X |
18008 |
270.2 |
800/877/888 Carrier
Identification Charge |
I |
-8% |
Note 2 |
18008 |
270.2 |
Signalling Transfer
Point (STP) Port Connection Service (PCS) |
I |
-8% |
I-X |
18008 |
270.3 |
Equal Access Start-Up
Charge |
I |
Note 3 |
Note 3 |
18008 |
270.4 |
PIC Processing Charge |
I |
-8% |
I-X |
18008 |
270.5 |
Billed Number
Screening (BNS) Database Access |
I |
-8% |
Note 2 |
18008 |
270.6 |
Carrier Network
Profile Change |
I |
-8% |
I-X
|
21462 |
200 |
Bulk Transfer of
Customer Base between IXCs having Feature Group D Service |
I |
-8% |
I-X |
21462 |
201 |
Network Recorded
Announcements for Customers of Disconnected IXCs with Trunk Side Access |
I |
-8% |
I-X |
21462 |
207 |
Billing and
Collection : Accounts Receivable Management (ARM) Discount |
I |
Note 4 |
Note 4 |
21462 |
207 |
Billing and
Collection Charges Excluding ARM Discount |
I |
-8% |
I-X |
TELUS Communications Inc. (cont’d) |
A3. Local network interconnection and ancillary services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
1005 |
209 |
Transit Services |
I |
-8% |
Note 2 |
1017 |
105 |
Unbundled Loops Type
A & B |
I |
-8% |
Note 2 |
1017 |
105 |
Fixed Rate Service
Order Charge per Order |
I |
-8% |
I-X |
1017 |
105 |
Variable Rate Service
Order Charge per loop |
I |
-8% |
I-X |
1017 |
105 |
Unbundled Loop
Selection |
I |
-8% |
I-X |
1017 |
105 |
Unbundled Loop
Modification |
I |
-8% |
I-X |
1017 |
105 |
Unbundled Loop
Connecting Link Services |
I |
-8% |
I-X |
1017 |
105 |
CCS-7 Signalling
Services |
I |
-8% |
I-X |
1017 |
105 |
Compensation for
traffic termination |
I |
-8% |
I-X |
1017 |
105 |
Relay Service |
I |
-8% |
I-X |
1017 |
105 |
Emergency Service
(9-1-1) |
I |
-8% |
I-X |
18008 |
215 |
Unbundled Loops Type
A & B |
I |
-8% |
Note 2 |
18008 |
215 |
Fixed Rate Service
Order Charge per Order |
I |
-8% |
I-X |
18008 |
215 |
Variable Rate Service
Order Charge per Loop |
I |
-8% |
I-X |
18008 |
215 |
Unbundled Loop
Selection |
I |
-8% |
I-X |
18008 |
215 |
Unbundled Loop
Modification |
I |
-8% |
I-X |
18008 |
215 |
Unbundled Loop
Connecting Link Services |
I |
-8% |
I-X |
18008 |
215 |
CCS-7 Signalling
Services |
I |
-8% |
I-X |
18008 |
215 |
Traffic Termination |
I |
-8% |
I-X |
18008 |
215 |
Transit Services |
I |
-8% |
Note 2 |
18008 |
215 |
Relay Service |
I |
-8% |
I-X |
18008 |
215 |
9-1-1 Service |
I |
-8% |
I-X |
A4. Other interconnection arrangements |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
1017 |
75 |
Dialed Number
Transport Capability |
I |
-8% |
I-X |
1017 |
115 |
Local Number
Portability (LNP) Access to Service Control Point (SCP) |
II |
0% |
0% |
1017 |
120 |
Link Arrangements for
Interconnecting Carriers and DSL Providers |
I |
-8% |
I-X |
1017 |
205 |
Billed Number
Screening (BNS) Database Service |
I |
-8% |
I-X |
1017 |
210 |
Basic Listing
Interchange File |
I |
-8% |
Note 2 |
18008 |
225 |
Dialed Number
Transport Capability |
I |
-8% |
I-X |
18008 |
230 |
Intelligent Network
Interconnection |
II |
0% |
0% |
18008 |
235 |
Central Office Link
Arrangements for Interconnecting Canadian Carriers |
I |
-8% |
I-X |
18008 |
265 |
Local Number
Portability (LNP) Access to Service Control Point (SCP) |
II |
0% |
0% |
18008 |
300 |
Basic Listing
Interchange File |
I |
-8% |
Note 2 |
18008 |
310 |
Billed Number
Screening (BNS) Database Service |
I |
-8% |
I-X |
B. Wireless access services (WAS) |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
1005 |
196 |
Terminal Network
Access (TNA) for Local Service |
I |
-8% |
I-X |
1005 |
197 |
Switched Access Types
for Conventional Public Mobile Radio Systems |
I |
-8% |
I-X |
1005 |
197 A |
Wireless Access
Service (WAS) |
I |
-8% |
I-X |
1005 |
197 A (D)(1) d/e |
SAT-1 Digital
Wireless Service : Telephone Numbers |
I |
-8% |
I-X |
1005 |
197 C |
Wireless Service
Provider Enhanced Provincial 9-1-1 Network Access Service |
I |
-8% |
I-X |
TELUS Communications Inc. (cont’d) |
18001 |
255 |
Interconnection with
Private Mobile Telephone Systems – Network Access |
I |
-8% |
I-X |
18001 |
555 |
Wireless Service
Providers (WSP) – Network Access Service |
I |
-8% |
I-X |
18001 |
555.4 (10) b/c |
WSP – Network Access
Service : Line Side Interconnection, Telephone Numbers |
I |
Note 1 |
I-X |
18001 |
555.4 (11) |
WSP – Network Access
Service : Emergency 9-1-1 Service |
I |
-8% |
I-X |
18001 |
695 |
Wireless System
Operators (WSO) – Tower Service |
I |
-8% |
I-X |
25721 |
2220 |
Radio Paging System
Access |
I |
-8% |
I-X |
C. Other services |
Tariff |
Item
no. |
Description |
Category |
Change in rates due to: |
|
|
|
|
Mark-up |
Pricing constraint |
7400 |
790 |
Enhanced Card Swipe
Access |
II |
0% |
0% |
7400 |
909 |
Card Swipe Access |
II |
0% |
0% |
1005 |
23 |
Directory File
Service |
I |
-8% |
I-X |
1005 |
179 |
Directory Information
Services for Carriers and Non-Carriers |
II |
0% |
0% |
1005 |
180 |
Local Operator
Assistance Service for Carriers and Non-Carriers |
II |
0% |
0% |
1005 |
185 |
Pay Telephone Basic
Access Line Service |
II |
0% |
0% |
1005 |
206 |
Integrated Voice
Messaging Service (IVMS) Access |
I |
-8% |
I-X |
1005 |
209 C (2) |
CCS-7 Transit
Services |
I |
-8% |
I-X |
1005 |
471 |
Internet Service
Provider (ISP) Connection Service |
II |
0% |
0% |
18001 |
245 |
Network Portability
Access Service (NPAS) |
I |
-8% |
I-X |
18001 |
295 |
Inbound Data Access
(IDA) Service |
II |
0% |
0% |
18001 |
300 |
Integrated Voice
Messaging – Underlying Network Components |
I |
-8% |
I-X |
18001 |
475 |
Directory File
Service |
I |
-8% |
I-X |
18001 |
535 |
Electronic Directory
Database Access Service |
II |
0% |
0% |
18008 |
205 |
Directory Information
Services (DIS) |
II |
0% |
0% |
18008 |
210 |
Local Operator
Assistance Service |
II |
0% |
0% |
18008 |
280 |
Call Routing – Local
Routing Number Absent |
I |
-8% |
I-X |
18808 |
416 |
Public Telephone
Access Line |
I |
-8% |
I-X |
21461 |
300.3 |
Call Forwarding –
Wholesale |
I |
-8% |
I-X |
21461 |
404 |
Support Structure
Service |
II |
0% |
0% |
21462 |
202 |
Standby Circuits |
I |
-8% |
I-X |
21462 |
203 |
Dedicated Access Line
Facilities |
II |
0% |
0% |
21462 |
205 |
Payphone per Call
Compensation |
I |
-8% |
I-X |
21462 |
210 |
Asymmetric Digital
Subscriber Line (ADSL) Access to Individual Line Service |
II |
0% |
0% |
25721 |
5075 |
Public Telephone
Access Line |
II |
0% |
0% |
NOTES TO APPENDIX
1:
Note 1 See Part III of this Decision for explicit rates
Note 2 0% : Exempt because the study includes explicit productivity factor
Note 3 0% : Exempt because the rate is for the recovery of Equal Access
Start-Up Costs
Note 4 0% : Exempt because the ARM discount reflects percentage of
uncollectible revenues
Note 5 0% : Exempt because the charges are flow-through charges passed on to
carriers
Note 6 Refer to rate treatment of co-location services Tariff 7516, Item no.
110 |
Appendix 2
Classification of Services
Aliant Telecom Inc. |
Residential local services in
non-HCSas |
Residential local exchange
services in non-HCSAs |
Tariff |
Item no. |
Description |
10001 |
520 |
Service Charge Schedule –
(Residence) |
10001 |
630 |
Network Exchange Service – Single
Line – (Residence) |
10001 |
920 |
One-Party Mileage – (Residence) |
10001 |
1000 |
Temporary Discontinuance of Service
– (Residence) |
11001 |
280 |
Network Exchange Service –
(Residence) |
11001 |
365 |
Service Charge Schedule –
(Residence) |
11001 |
400 |
Temporary Discontinuance of Service
– (Residence) |
11001 |
1510 |
Telephone Sets |
12001 |
22.9 |
Suspension of Service – (Residence) |
12001 |
45 |
Residence Single Line Access Service |
12001 |
110.2 A |
Service Charges – (Residence) |
13001 |
50.10 (a) |
Rate Schedule for Primary Exchange
(Local) Service – (Residence) |
13001 |
50.11 |
Extended Area Service – (Residence) |
13001 |
50.15 |
Short-Term Service – (Residence) |
13001 |
50.16 |
Community Calling Plan – (Residence) |
13001 |
80 |
Service Charge Rate Schedule –
(Residence) |
13001 |
330 |
Telephone Sets for Party-Line
Services |
Residential optional local
services in non- HCSAs |
Tariff |
Item no. |
Description |
10001 |
1700 |
Residential Service Packages |
10001 |
1600 |
Enhanced Local Services with the
Exception of 1-Time Charge Services – (Residence) |
10001 |
1625.1 |
Enhanced Local Services –
Information Manager – (Residence) |
11001 |
855 |
Residential Service Packages |
11001 |
800 |
Enhanced Local Services with the
Exception of Call Guardian Services – (Residence) |
12001 |
47 |
Residence Single Line Access Service
– Packages |
Aliant Telecom Inc. (cont'd) |
12001 |
48 |
Residential Prime Packs |
12001 |
49 |
Second Line Package |
12001 |
200 |
Calling Features – Residence |
12001 |
205 |
Call Trace Service (Residence) |
12002 |
5066 |
TalkMail Service – (Residence) |
12002 |
5067 |
Call Answer Service |
13001 |
370.24 |
Voice Information Service –
(Residence) |
13001 |
400 |
Residence Service Package |
13001 |
405 |
Residential Prime Packs |
13001 |
385 |
Calling Features – (Residence) |
21491 |
308 |
Internet Call Manager – (Residence) |
Residential local services in
HCSAs |
Residential local exchange
services in HCSAs |
Tariff |
Item no. |
Description |
10001 |
520 |
Service Charge Schedule –
(Residence) |
10001 |
630 |
Network Exchange Service – Single
Line – (Residence) |
10001 |
920 |
One-Party Mileage – (Residence) |
10001 |
1000 |
Temporary Discontinuance of Service
– (Residence) |
11001 |
280 |
Network Exchange Service –
(Residence) |
11001 |
365 |
Service Charge Schedule –
(Residence) |
11001 |
400 |
Temporary Discontinuance of Service
– (Residence) |
11001 |
1510 |
Telephone Sets |
12001 |
22.9 |
Suspension of Service – (Residence) |
12001 |
45 |
Residence Single Line Access Service |
12001 |
110.2 A |
Service Charges – (Residence) |
13001 |
50.10 (a) |
Rate Schedule for Primary Exchange
(Local) Service – (Residence) |
13001 |
50.11 |
Extended Area Service – (Residence) |
13001 |
50.15 |
Short-Term Service – (Residence) |
13001 |
50.16 |
Community Calling Plan – (Residence) |
13001 |
80 |
Service Charge Rate Schedule –
(Residence) |
13001 |
330 |
Telephone Sets for Party-Line
Services |
Aliant Telecom Inc. (cont'd) |
Residential optional local
services in HCSAs |
Tariff |
Item no. |
Description |
10001 |
1700 |
Residential Service Packages |
10001 |
1600 |
Enhanced Local Services with the
Exception of 1-Time Charge Services – (Residence) |
10001 |
1625.1 |
Enhanced Local Services –
Information Manager – (Residence) |
11001 |
855 |
Residential Service Packages |
11001 |
800 |
Enhanced Local Services with the
Exception of Call Guardian Services – (Residence) |
12001 |
47 |
Residence Single Line Access Service
– Packages |
12001 |
48 |
Residential Prime Packs |
12001 |
49 |
Second Line Package |
12001 |
200 |
Calling Features – (Residence) |
12001 |
205 |
Call Trace Service (Residence) |
12002 |
5066 |
TalkMail Service – (Residence) |
12002 |
5067 |
Call Answer Service |
13001 |
370.24 |
Voice Information Service –
(Residence) |
13001 |
400 |
Residence Service Package |
13001 |
405 |
Residential Prime Packs |
13001 |
385 |
Calling Features – (Residence) |
21491 |
308 |
Internet Call Manager – (Residence) |
Single and Multi-Line business
local exchange services |
Tariff |
Item no. |
Description |
10001 |
520 |
Service Charge Schedule – (Business
– Single Line and Multiline) |
10001 |
720 |
Network Exchange Service –
(Multiline) |
10001 |
740 |
Hotel Service |
10001 |
1000 |
Temporary Discontinuance of Service
– (Business – Single Line and Multi-Line) |
11001 |
266 |
Business Service at Reduced Rates |
11001 |
365 |
Service Charge Schedule – (Business) |
11001 |
720 (a) |
Network Exchange Service – Multiline |
12001 |
22.9 |
Suspension of Service – (Business –
Single Line and Multi-Line Access) |
12001 |
100 |
Business Multi-Line Access Service |
12001 |
110.2 A |
Service Charges – (Business – Single
Line and Multi-Line) |
12001 |
50.2.A |
Business Single-Line Access Service |
Aliant Telecom Inc. (cont'd) |
21491 |
205.2 |
Single-Line Access Service |
13001 |
50.10 (a) |
Rate Schedule for Primary Exchange
(Local) Service – (Multi-Line Access) |
13001 |
50.11 |
Extended Area Service – (Business –
Single Line and Multi-Line) |
13001 |
50.15 |
Short-Term Service – (Business –
Single Line and Multi-Line) |
13001 |
50.16 |
Community Calling Plan – (Business –
Single Line and Multi-Line) |
13001 |
80 |
Service Charge Rate Schedule –
(Business – Single Line and Multi-Line) |
13001 |
330 |
Telephone Sets for Party-Line
Services – (Business) |
Other capped services |
Tariff |
Item no. |
Description |
7400 |
15 |
Sale of Tariff |
7400 |
301 |
Digital Network Access |
7400 |
303 |
Managed Digital Private Line Service |
7400 |
304 |
Digital Private Line Solutions
Service Extension Features |
7400 |
305 |
Digital Private Line Solutions
Service Extension |
7400 |
306 |
Customer Volume Pricing Plan |
7400 |
307 |
Inter-Office Digital Channels |
7400 |
308 |
Access Special Routing |
7400 |
310 |
High Capacity 45 Service |
7400 |
311 |
Bandwidth Data Service |
7400 |
380 |
Digital Private Line Satellite
Access |
7400 |
382 |
Digital Private Line Large Business |
7400 |
401 |
Dataroute Service |
7400 |
402 |
Broadcast and Image for Occasional
Use – Domestic and Cross-Border |
7400 |
403 |
Broadcast and Image Full Time
Inter-Exchange Broadcast-Quality
Video Transmission Channel Service |
7400 |
515 |
Advantage 900 with the exception of
900 Call Denial/Blocking |
10001 |
4 |
Tariff Subscription and Exchange
Information |
10001 |
530 |
Other Service Charges – Other than
Centrex Related |
10001 |
585 |
Hourly Labour Rates |
10001 |
592 |
Non-Sufficient Funds (NSF) Cheque
Charge |
10001 |
731 |
Answer Supervision |
10001 |
810 |
Direct-In-Dial Service |
10001 |
930 |
Exchange Private Line Mileage |
10001 |
940 |
Extension Line Mileage |
Aliant Telecom Inc. (cont'd) |
10001 |
950 |
Private Property Circuit Mileage |
10001 |
951 |
Miscellaneous Circuit Mileage |
10001 |
952 |
Wired Music circuits |
10001 |
953 |
Alarm Security Narrowband Service |
10001 |
1150 |
Directory and Listings with the
exception of Non-Published Listings
Without Automated per Line Blocking – (Residence) |
10001 |
1160 |
Operator Services |
10001 |
1400 |
Telephone Answering Service |
10001 |
1500 |
Hospital Patient Telephone Service |
10001 |
2100 |
Conference Service – Local |
10001 |
2350 |
Remote Call Forwarding |
10001 |
2510, 2520, 2530 & 2540 |
Inter-Exchange Circuit Mileage |
10001 |
2900 |
Telpak Service |
10001 |
3070 |
Teleroute 200 Service |
10001 |
3120 |
Maintenance |
10001 |
4050 |
Datalink Service |
10001 |
4090 |
Province-Wide Dial Access Service |
10001 |
4110 |
Local Data Channels – Loaded and
Unloaded |
10001 |
4130 |
Multicom Service |
10001 |
4400 |
Digital Channel Service |
10001 |
4450 |
128 Kbps fractional DS-1 |
10001 |
4460 |
Digital Network Access – 100 Mbps |
10001 |
4470 |
Digital Network Access – OC-3 |
10001 |
4480 |
Digital Network Access – Gigabit |
10001 |
4510 |
Microlink Service |
10001 |
4550 |
Digital Exchange Access Service |
10001 |
6010 |
Lease of Channels/Channels for
Program Transmission |
11001 |
5 |
Company Tariffs |
11001 |
385 |
Labour Rates |
11001 |
391 |
Set Loss Charge |
11001 |
392 |
Non-Sufficient Funds (NSF) Cheque
Charge |
11001 |
400 |
Temporary Discontinuance of Service |
11001 |
450 |
Exchange Private Line Mileage |
11001 |
460 |
Extension Line Mileage |
11001 |
470 |
Private Property Mileage |
11001 |
660 |
Off Premise Extension |
11001 |
692 |
Answer Supervision |
Aliant Telecom Inc. (cont'd) |
11001 |
700 |
Hotel Service |
11001 |
760 |
Telephone Answering Service |
11001 |
764 |
Telephone Answering Access Service |
11001 |
775.2 |
Hospital Patient Telephone Service |
11001 |
766 |
Direct-In-Dial Service |
11001 |
775 |
Hospital Patient Telephone Service |
11001 |
825 |
Directory Listings – Extra Listings |
11001 |
825 |
Directory Listings – Non-Listed
Service |
11001 |
825 |
Directory Listings – Non-Published
Service except Residence Non-Published
Service Without Automated per Line Blocking |
11001 |
850 |
Operator Services |
11001 |
915 |
Local Conference Service |
11001 |
1220 |
Interexchange Private Line |
11001 |
1240 |
Foreign Exchange Service |
11001 |
1260 |
Out-of-Province Inter-Exchange
Circuit Mileage |
11001 |
1471 |
Telpak Service |
11001 |
1820 |
Maintenance |
11001 |
1840 |
Customer Provided Equipment –
Company Provided Interface |
11001 |
2900 |
Digital Channel Service |
11001 |
2950 |
Megalink Service |
11001 |
3000/3010 |
Microlink Service |
11001 |
3050 |
Digital Exchange Access Service |
11001 |
6010 |
Channels for Program Transmission |
11003 |
1000 |
Access Service Arrangements |
11003 |
4001 |
Channels for Data Transmission |
11003 |
6701 |
Special Channels – Digital Access to
the PSTN |
12001 |
25 |
Tariff Subscription Service |
12001 |
102 |
Digital Switched Service (DSS) |
12001 |
105.2 |
Extra Listings |
12001 |
105.2 |
Non-Published Telephone Number |
12001 |
110.2 C |
Diagnostic Maintenance Charge |
12001 |
140.2 |
Directory Assistance Service |
12001 |
150 |
Toll Access Service |
12001 |
175 |
Direct Inward Dialing for Access
service (DID -AS) |
12001 |
180 |
Network Access line Busy-Out Feature |
12001 |
190 |
Automatic Dialing Service |
12001 |
210 |
Suppressed Ringing Service |
Aliant Telecom Inc. (cont'd) |
12001 |
211 |
Province Wide Switched Suppressed
Ringing Service (SRS) Access Service |
12001 |
215 |
Answer Supervision Service |
12001 |
216 |
Name Inquiry Service |
12001 |
217 |
Music on Hold |
12001 |
220 |
Hospital Patient Service |
12001 |
225 |
TAS ID Service |
12001 |
230.2 B |
Business Toll Restriction Service |
12001 |
232 |
Data Line Support Services |
12001 |
235 |
Switched Digital Data Service |
12001 |
240 |
Automatic Line Service |
12001 |
280 |
Jack Service |
12001 |
610 |
Local Mileage |
12001 |
700 |
Conference 300 Service |
12001 |
750 |
Remote Call Forwarding Service |
12001 |
780 |
Foreign Exchange Service |
12001 |
790 |
Inter-Exchange Mileage |
12001 |
3370 |
Key Telephone Service |
12001 |
3600 |
Rates for Regular Private Automatic
Branch Exchange Service Trunk Lines |
12001 |
3640 |
Hotel and Motel Private Branch
Exchange Service |
12001 |
3795 |
Special Billing Codes |
12001 |
3850 |
Connection of Customer-Owned
Circuits with Company-Owned P(A)BX Switchboards |
12002 |
1002 |
Tariff Subscription Service |
12002 |
1005 |
Local Private Line Circuits |
12002 |
1010 |
Intra-New Brunswick Inter-exchange
Voice-Grade Transmission Facilities |
12002 |
1015 |
Inter-Provincial Voice-Grade
Transmission Facilities |
12002 |
1040 |
Data, Alarm and Signal Transmission
Facilites |
12002 |
1050 |
Program Broadcast Transmission
Facilities |
12002 |
3770 |
Digital Channel Service |
12002 |
3775 |
Digital Network Access – 100Mbps or
155 Mbps (OC-3) |
12002 |
3776 |
Digital Network Access – OC-48 |
12002 |
3777 |
Digital Network Access – OC-48
Special Tariff for Health and Education |
12002 |
3960 |
Corporate LAN Extention Service |
12002 |
5500 |
Province Wide Digital Access and
Transmission Service |
Aliant Telecom Inc. (cont'd) |
12002 |
6030 |
Private Line Voice Service |
12002 |
6040 |
Telpak Service |
13001 |
15.1.5 |
Non-Sufficient Funds (NSF) Cheque
Charge |
13001 |
30 |
Tariff Subscription Service |
13001 |
46.2 |
Operator Services |
13001 |
50.10 (b) |
Equivalent Line Service |
13001 |
50.12 (b) |
Omission of Directory Listings –
(Business) |
13001 |
50.18 |
Name That Number Service |
13001 |
170 |
Public Mobile Telephone Service |
13001 |
180 |
Hospital Patient Service |
13001 |
195 |
DMS Data Service |
13001 |
200 |
Digital Exchange Access |
13001 |
215 |
Microlink Service |
13001 |
230 |
Tie Trunks |
13001 |
235 |
Direct-In-Dial Service |
13001 |
260 |
Intercommunicating Systems |
13001 |
270 |
Intercommunicating Circuits |
13001 |
310 & 320 |
Circuits Charges |
13001 |
331 |
Set-Loss Charge for Party-Line
Services |
13001 |
335 |
Answer Supervision |
13001 |
370.4 |
Jack and Plug Equipment |
13003 |
Section A |
Local Program Circuits or Channels |
13003 |
Section A |
Interexchange Program Circuits or
Channels |
13003 |
Section A |
Telephone Directories |
13003 |
Section A |
Public Facsimilie Service |
13003 |
Section A |
Investigative Maintenance Service
Charges |
13003 |
Section A |
Interexchange Voice-Grade Channels |
13003 |
Section A |
Interexchange Channels Discount |
13003 |
Section A |
Omnidata Service |
13003 |
Section A |
Data Channels |
13003 |
Section A |
Data Channels Conditioning
Arrangement |
13003 |
Section A |
Datalink |
13003 |
Section A |
Miscellaneous Data Equipment |
13003 |
Section A |
Data equipment – Teletype – Network
Access |
Aliant Telecom Inc. (cont'd) |
13003 |
Section A |
Digital Channel Service |
13003 |
Section A |
10/100/155 Mbps Access Service |
21491 |
122 |
Tariff Subscription Service |
27750 |
10 |
Tariff Subscription Service |
27750 |
200 |
Full-Time Local Broadcast-Quality
Video Transmission Channel Service |
27750 |
201 |
Megalink Service except 201.2 (e)
ISP Link Connectivity |
Public telephone services |
Tariff |
Item |
Description |
10001 |
1300 |
Public Telephone Service |
10001 |
1310 |
Semi-Public Telephone Service |
10001 |
1320 |
Inmate Service |
11001 |
500 |
Public and Semi-Public Telephone
Service |
12001 |
55 |
Public Telephone Service |
12001 |
56 |
Inmate Service |
12001 |
60 |
Semi-Public Telephone Service |
13001 |
130 |
Coin Telephone Service |
13001 |
140 |
Inmate Service |
Services with frozen rate
treatment |
Tariff |
Item |
Description |
7400 |
515.3 (k) |
Advantage 900 – 900 Call
Denial/Blocking |
10001 |
1600 |
Enhanced Local Services – 1-Time
Charge Services – (Residence) |
10001 |
511 |
Partial Payment Provision |
10001 |
280 |
Provincial 9-1-1 Service |
10001 |
3075 |
Maritime Relay Service |
11001 |
267 |
Provincial 9-1-1 Service |
11001 |
361 |
Partial Payment Provision |
11001 |
800 |
Enhanced Local Services – Call
Guardian Services |
11001 |
825.6 |
Residence Non-Published Service
Without Automated per Line Blocking |
11001 |
961 |
Island Relay Service |
12001 |
105.2 |
Limited Non-Published Telephone
Number |
12001 |
110.3 |
Service Charges – Installment
Payment Plan |
12001 |
140.3 B |
Message Relay Service |
Aliant Telecom Inc. (cont'd) |
12001 |
620 |
Provincial Enhanced 911 Service |
12001 |
230.2 A |
Residence Toll Restriction Service |
13001 |
46.2 (c) |
Message Relay Service |
13001 |
50.12 (b) |
Omission of a Directory Listing –
(Residence) |
13001 |
70.7 |
Partial Payment Provision |
13001 |
391 |
Residence Toll Restriction |
13001 |
390 |
900 Call Denial Service |
Uncapped services |
Tariff |
Item |
Description |
7400 |
Part 7 |
Special Facilities
Services (Special Assemblies) |
7400 |
Part 11 |
Special Facilities
Services (Special Assemblies) |
10001 |
530 |
Other Service Charges –
Centrex Related |
10001 |
590 |
Late Payment Charge |
10001 |
780 |
Centrex Business Service |
10001 |
975 |
Small Business Network
Service |
10001 |
985 |
Small Business Network
Service Offers |
10001 |
1010 |
Temporary Discontinuance
of Service – (Centrex Business Service) |
10001 |
1390 |
Metro Transit Access
Service |
10001 |
1600 |
Enhanced Local Services
– (Business) |
10001 |
1625.1 |
Enhanced Local Services
– Information Manager – (Business) |
10001 |
1920 |
Connecting Companies |
11001 |
370.1 |
Other Service Charges –
Centrex |
11001 |
390 |
Miscellaneous Charges –
Late Payment Charge |
11001 |
698 |
Centrex Business Service |
11001 |
800 |
Enhanced Local Services
– (Business) |
11001 |
1120 |
Remote Call Forwarding |
11003 |
1000 |
Access Service
Arrangements – Activation of Network Routing Capabilty |
11003 |
4001 |
Channels for Data
Transmission – Digital Transmission facilities at 1.544 Megabits a Second |
11003 |
6701 |
Special Channels –
Digital Access to the Public Switched Telephone Network |
11004 |
All Items |
Special Facilities
Tariffs |
11005 |
|
Tariff for
interconnection with the equipment and facilities of Unitel |
11006 |
|
Tariff for
interconnection with the equipment and facilities of Telesat |
11007 |
|
Cellular Mobile
Telephone service |
12001 |
23 |
Late Payment Charge |
12001 |
70 |
Business Communications
Service |
Aliant Telecom Inc. (cont'd) |
12001 |
80 |
National Centrex Service |
12001 |
110.2 A |
Service Charges – (BCS and Centrex) |
12001 |
165 |
Enhanced Business Communications
Service (BCS) |
12001 |
170 |
Enhanced BCS – Automatic Call
Distribution Service |
12001 |
171 |
Enhanced BCS – Feature Networking |
12001 |
172 |
Enhanced National Centrex Service |
12001 |
173 |
Guest Voice Service |
12001 |
174 |
Basic Call Centre Service |
12001 |
200 |
Calling Features – (Business) |
12001 |
205 |
Call Trace Service – (Business) |
12002 |
5065 |
Message-Net Service – (Business) |
12002 |
5066 |
TalkMail Service – (Business and
Education) |
12002 |
5066 |
Messenger Return Service |
12003 |
All items |
Special Assembly Tariff |
13001 |
15.1.4 |
Late Payment Charge |
13001 |
190 |
Provincial Centrex Service |
13001 |
194 |
National Centrex Service |
13001 |
196 |
Centrex Per Agent Service |
13001 |
370.24 |
Voice Information System –
(Business) |
13001 |
385 |
Calling Features – (Business) |
13001 |
410 |
Business Service Package |
13003 |
Section B |
Custom Built Equipment and
Arrangements |
13003 |
Section D |
Interconnection with Sealink |
13003 |
Section D |
Hibernia Site Centrex |
21491 |
302.1 |
Business Loyalty Program |
21491 |
308 |
Internet Call Manager – (Business) |
27750 |
10 |
Tariff Subscription Service |
27750 |
200 |
Full-Time Local Broadcast-Quality
Video Transmission Channel Service |
27750 |
201 |
Megalink Service except 201.2 (e)
ISP Link Connectivity |
27750 |
Section 4 |
Special Facilities Services |
27750 |
400 |
Large Capacity Digital Network |
27750 |
401 |
Arrangements for Data Transmission |
27750 |
410 |
Large Capacity OC-12 Digital Network |
27750 |
415 |
Large Capacity OC-3 Digital Network |
Aliant Telecom Inc. (cont'd) |
27750 |
500 |
Electronic Transfer Capability for
Centrex |
27750 |
501 |
Eligibility for Exclusive Tariffs
for Health and Education Entities |
27750 |
502 |
Universal Messaging |
27750 |
700 |
Small Business Bundles |
27750 |
701 |
Single Line Business Bundle |
Bell Canada |
Residential local services in
non- HCSAs |
Residential local exchange
services in non- HCSAs |
Tariff |
Item no. |
Description |
6716 |
70.1 |
Rate Schedule for Primary Exchange
(Local) Service – (Residence) |
6716 |
100.4 (b) |
Service Charges Work Function
Structure – (Residence) |
6716 |
1130 |
Suspension of Service (General) –
(Residence) |
6716 |
1430 |
Exchange Radio-Telephone Service –
(Residence) |
6716 |
2150 |
Push-Button Dialing (Touch-Tone) –
(Residence) |
6716 |
2300 |
Telephone Station Equipment |
Residential optional local
services in non- HCSAs |
Tariff |
Item no. |
Description |
6716 |
2025.6/.8/.9 |
Integrated Voice Messaging Service
(IVMS) – (Residence) |
6716 |
2165 |
Calling Features – (Residence) |
6716 |
2170 |
Calling Features Bundles –
(Residence) |
6716 |
2210 |
SimplyOne Service – (Residence) |
6716 |
2220 |
Consumer Solutions (Simple
Connections) |
6716 |
4699 |
Internet Call Display Service –
(Residence) |
Residential local services in
HCSAs |
Residential local exchange
services in HCSAs |
Tariff |
Item no. |
Description |
6716 |
70.1 |
Rate Schedule for Primary Exchange
(Local) Service – (Residence) |
6716 |
100.4 (b) |
Service Charges Work Function
Structure – (Residence) |
6716 |
1130 |
Suspension of Service (General) –
(Residence) |
6716 |
1430 |
Exchange Radio-Telephone Service –
(Residence) |
6716 |
2150 |
Push-Button Dialing (Touch-Tone) –
(Residence) |
6716 |
2300 |
Telephone Station Equipment |
Bell Canada (cont'd) |
Residential optional local
services in HCSAs |
Tariff |
Item no. |
Description |
6716 |
2025.6/.8/.9 |
Integrated Voice Messaging Service
(IVMS) – (Residence) |
6716 |
2165 |
Calling Features – (Residence) |
6716 |
2170 |
Calling Features Bundles –
(Residence) |
6716 |
2210 |
SimplyOne Service – (Residence) |
6716 |
2220 |
Consumer Solutions (Simple
Connections) |
6716 |
2210 |
SimplyOne Service |
6716 |
2220 |
Consumer Solutions (Simple
Connections) |
6716 |
4699 |
Internet Call Display Service –
(Residence) |
Single and multi-line business
local exchange services |
Tariff |
Item no. |
Description |
6716 |
70.2 |
Rate Schedule for Primary Exchange
(Local) Service – (Business) |
6716 |
70.2 |
Microlink – Voice plus packet
channel |
6716 |
100.4 (a) |
Service Charges Work Function
Structure – (Business) |
6716 |
1030 |
Short-Term Service |
6716 |
1130 |
Suspension of Service (General) –
(Business) |
6716 |
1430 |
Exchange Radio-Telephone Service –
(Business) |
6716 |
2150 |
Push-Button Dialing (Touch-Tone) –
(Business) |
6716 |
2300 |
Telephone Station Equipment |
Other capped services |
Tariff |
Item no. |
Description |
6716 |
160 |
Trench Provisioning |
6716 |
180 |
Interior construction (no rate
element) |
6716 |
295 |
Repertory Dialer Service |
6716 |
26.1 |
Sale of Bell Canada Tariffs |
6716 |
28 |
NSF Cheque Charge |
6716 |
29 |
Telephone Set Loss Charge |
6716 |
70.3 |
Rate Schedule for Primary Exchange
(Local) Service – (Equivalent Service) |
6716 |
73 |
Telephone Number Services |
6716 |
85 |
Operator Services |
6716 |
110 |
Service Charges – Other than
Work-Function Structure |
Bell Canada (cont'd) |
6716 |
150 |
Construction on public thoroughfares
and private property |
6716 |
160 |
Trench Provisioning |
6716 |
220 |
Extra Listings |
6716 |
220 |
Omission of a Primary Exchange
Listing – (Business) |
6716 |
295 |
Repertory Dialer Service |
6716 |
310 |
Toll Telephones |
6716 |
430 |
Private Branch Exchange Service |
6716 |
500 |
Direct Inward Dialing |
6716 |
950 |
Local Channels |
6716 |
1060 |
Service on Stationary Boats, Ships,
Trailers and Trains |
6716 |
1100 |
Foreign Exchange Service |
6716 |
1190 |
Service System Service (General) |
6716 |
1380 |
Telephone-Type Alerting System |
6716 |
1385 |
Individual Line -Type Reporting
System |
6716 |
1415 |
Bell Neutral Answer Service |
6716 |
1435 |
Regional Communication Service |
6716 |
2070 |
Jack and Plug Arrangements |
6716 |
2175 |
Customer Name and Address |
6716 |
2177 |
Service Provider Identification
Service |
6716 |
2205 |
Suppressed Ringing Service |
6716 |
3260 |
Remote Call Forwarding System |
6716 |
3360 |
Conference 300 |
6716 |
3520 |
Ship and Aircraft Service |
6716 |
3750 |
Monthly Distance Charges for
Interexchange Channels – Service Point Termination for Local Channels |
6716 |
3770 |
Channel Discounts (Telpak) |
6716 |
4030 |
Intercommunicating Channels
(General) |
6716 |
4140 |
Mobile Telephone Service |
6716 |
4210 |
Diagnostic Maintenance Charge |
6716 |
4480 |
Tie Trunks |
6716 |
4550 |
Lease of Channels |
6716 |
4560 |
Channels for Signal Tranmission |
6716 |
4570 |
Channels for Remote Operation of
Private Mobile and One-Way Radio-Paging Transmitters |
6716 |
4580 |
Channels for Wired-Music
Transmission |
6716 |
4590 |
Channels for Voice without
Signalling or Conditioning |
6716 |
4610 |
Channels for Program Transmission |
Bell Canada (cont'd) |
6716 |
4620 |
Broadcast-Quality Television
Channels for Occasional Use |
6716 |
4621 |
Full-Time Local Broadcast-Quality
Video Transmission Channel Service |
6716 |
4625 |
14/12 GHz Satellite Occasional Use
Video Service |
6716 |
4699 |
Internet Call Display Service –
(Business) |
6716 |
4630 |
VHF Television Channels Continuous
Use |
6716 |
4970 |
976 Service |
6716 |
5010 |
Digital Channel Service |
6716 |
5201 |
Megalink Service |
6716 |
5210 |
Microlink Services |
6716 |
5300 |
Digital Exchange Access |
7400 |
15 |
Sale of Tariff |
7400 |
301 |
Digital Network Access |
7400 |
302 |
Digital Private Line Service |
7400 |
303 |
Managed Digital Private Lines
Service |
7400 |
304 |
Digital Private Line Solutions
Service Extension Features |
7400 |
305 |
Digital Private Line Solutions
Service Extension Access Service |
7400 |
306 |
Customer Volume Pricing Plan (CVPP) |
7400 |
307 |
Inter-Office digital channels |
7400 |
308 |
Access Special Routing |
7400 |
310 |
High Capacity 45 Service |
7400 |
311 |
Bandwidth Data Service (BDS) |
7400 |
380 |
Digital Private Line Satellite
Access |
7400 |
382 |
Digital Private Line Large Business
Service |
7400 |
401 |
Dataroute Service |
7400 |
402 |
Broadcast and Image for Occasional
Use – Domestic and Cross-Border |
7400 |
403 |
Broadcast and Image Full Time
Inter-Exchange Broadcast-Quality Video Transmission Channel Service |
7400 |
515 |
Advantage 900 with the exception of
900 Call Denial/Blocking |
Public telephone services |
Tariff |
Item no. |
Description |
6716 |
250 |
Public Telephone Service (General) |
6716 |
292 |
Inmate Service |
6716 |
320 |
Semi-Public Telephone Service
(General) |
Bell Canada (cont'd) |
Services with frozen rate
treatment |
Tariff |
Item no. |
Description |
6716 |
70.4 |
Rate Schedule for Primary Exchange
(Local) Service – (Bell Canada Relay Service (BCRS)) |
6716 |
82 |
Toll Restriction |
6716 |
86 |
Call Display Blocking |
6716 |
90.7 |
Service Charges (General) – Partial
Payment Provision |
6716 |
220 |
Extra Listings – Omission of a
Primary Exchange Listing – (Residence) |
6716 |
1000 |
Foreign-Exchange Service |
6716 |
1190 |
Service-System Service |
6716 |
1395 |
9-1-1 Emergency Reporting Service |
6716 |
1400 |
9-1-1 Public Emergency Reporting
Service |
6716 |
2200 |
Call Blocking Service |
7396 |
B51 |
Custom-Designed 9-1-1 Arrangement –
Metropolitan Toronto |
7396 |
B52 |
Custom-Designed 9-1-1 Arrangement –
Communauté Urbaine de Montréal |
7396 |
B53 |
Enhanced 9-1-1 Arrangements |
7396 |
B54 |
Basic 9-1-1 System |
7396 |
B55 |
Custom-Designed Enhanced 9-1-1
Arrangement |
7400 |
515.3 (k) |
Advantage 900 – 900 Call
Denial/Blocking |
7516 |
105 |
Local Network Inteconnection and
Component Unbundling – Emergency service (9-1-1) |
7516 |
105 |
Local Network Inteconnection and
Component Unbundling – Relay Service |
7516 |
315 |
Zero-Dialed Emergency Call Routing
Service |
Uncapped services |
Tariff |
Item no. |
Description |
6716 |
25 |
Late Payment Charge |
6716 |
73 |
Telephone Number Services |
6716 |
670 |
Centrex III Service |
6716 |
675 |
Centrex III Service – Rates and
Charges |
6716 |
677 |
Electronic Transfer Capability for
Centrex |
6716 |
680 |
Local Link Package |
6716 |
685 |
Keypack |
6716 |
2025.6/.8/.9 |
Integrated Voice Messaging (IVMS) –
(Business) |
6716 |
2030 |
Universal Messaging |
Bell Canada (cont'd) |
6716 |
2165 |
Calling Features – (Business) |
6716 |
2170 |
Calling Features Bundles –
(Business) |
6716 |
2180 |
Primeline Executive |
6716 |
2210 |
SimplyOne Service – (Business) |
6716 |
2230 |
Large Customer Access Bundle |
6716 |
6000 |
Advantage SmartRoute |
7396 |
Note 1 |
Special Facilities Tariff |
7400 |
Part 7 |
Special Facilities Services (Special
Assemblies) |
7400 |
Part 11 |
Special Facilities Services (Special
Assemblies) |
7515 |
350 |
Enhanced Exchange-Wide Dial (EEWD)
Service |
Note 1 |
All items not otherwise
identified as part of either Services with Frozen Rate Treatment or
Competitor Services |
MTS Communications Inc. |
Residential local services in
non-HCSAs |
Residential local exchange
services in non-HCSAs |
Tariff |
Item |
Description |
24001 |
475.1 |
Rate Schedule Primary Exchange
Service – (Residence) |
24001 |
480 |
Community Calling Service –
(Residence) |
24001 |
490 |
Urban Unlimited (Winnipeg and
Brandon) – (Residence) |
24001 |
510 |
Service Charges – (Residence) |
24001 |
800 |
Suspension of Service – (Residence) |
Residential optional local
services in non-HCSAs |
Tariff |
Item |
Description |
24001 |
2142 |
Calling Features |
24001 |
2148 |
Voice Messaging Service –
(Residence) |
24001 |
2260 |
Messaging Bundle – (Residence) |
24001 |
2261 |
Mini Calling Features Value Pack –
(Residence) |
24002 |
6100 |
Internet Call Display – (Residence) |
Residential local services in
HCSAs |
Residential local exchange
services in HCSAs |
Tariff |
Item |
Description |
24001 |
475.1 |
Rate Schedule Primary Exchange
Service – (Residence) |
24001 |
480 |
Community Calling Service –
(Residence) |
24001 |
490 |
Urban Unlimited (Winnipeg and
Brandon) – (Residence) |
24001 |
510 |
Service Charges – (Residence) |
24001 |
800 |
Suspension of Service – (Residence) |
Residential optional local
services in HCSAs |
Tariff |
Item |
Description |
24001 |
2142 |
Calling Features |
24001 |
2148 |
Voice Messaging Service –
(Residence) |
24001 |
2260 |
Messaging Bundle – (Residence) |
24001 |
2261 |
Mini Calling Features Value Pack –
(Residence) |
24002 |
6100 |
Internet Call Display – (Residence) |
MTS Communications Inc. (cont'd) |
Single and multi-line business
local exchange services |
Tariff |
Item |
Description |
24001 |
475.2/.3 |
Rate Schedule Primary Exchange
Service – (Business) |
24001 |
480 |
Community Calling Service –
(Business) |
24001 |
490 |
Urban Unlimited (Winnipeg and
Brandon) – (Business) |
24001 |
510 |
Service Charges – (Business) |
24001 |
800 |
Suspension of Service – (Business
single line) |
24001 |
1000 |
Joint User Service |
Other capped services |
Tariff |
Item |
Description |
7400 |
301 |
Digital Network Access |
7400 |
302 |
Digital Private Line Service |
7400 |
303 |
Managed Digital Private Line Service |
7400 |
304 |
Digital Private Line Solutions
Service Extension Features |
7400 |
305 |
Digital Private Line Solutions
Service Extension |
7400 |
306 |
Customer Volume Pricing Plan |
7400 |
307 |
Inter-Office Digital Channels |
7400 |
308 |
Access Special Routing |
7400 |
310 |
High Capacity 45 Service |
7400 |
380 |
Digital Private Line Satellite
Access |
7400 |
382 |
Digital Private Line Large Business |
7400 |
401 |
Dataroute Service |
7400 |
402 |
Broadcast and Image for Occasional
Use – Domestic and Cross-Border |
7400 |
403 |
Broadcast and Image Full Time
Inter-Exchange Broadcast Quality Video Transmission channel service |
7400 |
515 |
Advantage 900 |
24001 |
300 |
Non-Sufficient Funds (NSF) Cheque
Charge |
24001 |
350 |
Tariff Subscription Service |
24001 |
510 |
Service Charges – Non-Element
Charges |
24001 |
710 |
Exchange Measurement – Telephone
Service Facilities |
24001 |
720 |
Premium Exchange Service |
24001 |
900 |
Foreign Exchange Service |
24001 |
1600.8 |
Directory Listings |
MTS Communications Inc. (cont'd) |
24001 |
1600.9 |
Directory Listings – Non-Published
Listings |
24001 |
1610 |
Operator Services |
24001 |
1990 |
Digital Exchange Access Service |
24001 |
1995 |
Microlink (ISDN Basic Rate Access) |
24001 |
1997 |
Microlink Measured Service (ISDN
Basic Rate Access) |
24001 |
2000 |
Megalink Services (ISDN Primary Rate
Access) |
24001 |
2114 |
Dial Access Computer Port |
24001 |
2115 |
Answer Supervision |
24001 |
2126 |
Label Service |
24001 |
2136 |
Rotary Service |
24001 |
2140 |
Direct Inward Dialing (DID) |
24001 |
2149 |
Universal Messaging |
24001 |
2186 |
Autoquote Service |
24001 |
2188 |
Data Service Access Line |
24001 |
2450 |
Remote Call Forwarding |
24001 |
2600 |
Mobile Telephone Service |
24001 |
2700 |
Marine Radio Telephone Service |
24001 |
2830 |
Customer-Provided Telephone Set and
Inside Wiring |
24001 |
2840 |
Multiline Terminal Attachment |
24002 |
5100 |
Channels for Occasional Radio
Program Service |
24002 |
5150 |
Channels for Occasional Video
Service |
24002 |
5160 |
Full-Time Local Broadcast-Quality
Video Transmission Channel Service |
24002 |
5200 |
Channels for Signal Transmission |
24002 |
5300 |
Channels for Data Transmission |
24002 |
5500 |
Channels for Interexchange Voice
Grade Facilities |
24002 |
5600 |
Channel Charges |
24002 |
5700 |
Teleroute 200 Service (Discontinued) |
24002 |
5705 |
Business Video Access |
24002 |
5710 |
Business Video Network Service |
24002 |
5715 |
Manitoba Education Network Access |
24002 |
5720 |
Manitoba Education Network |
24002 |
5800 |
Asymmetric Digital Subscriber Loop
(ADSL) Line Enhancement for end-users |
24002 |
5900 |
SONET Access Service |
24002 |
6020 |
LAN Access |
24002 |
6680 |
FLEX Access |
MTS Communications Inc. (cont'd) |
24002 |
6690 |
Cental Office Access |
24002 |
6700 |
Digital Network Services Access
(DNSA) |
24002 |
6800 |
Digital Channel Service (DCS) |
24002 |
7250 |
Dial Access Mobile Service |
24002 |
7260 |
Name that Number |
24002 |
9025 |
Private Branch Exchange Service –
Toll Diversion and Toll Denial (Discontinued) |
24002 |
9050 |
Departmental Billing Service |
24002 |
9100 |
Teletex Service (Discontinued) |
24002 |
9325 |
Automatic Dialing Announcing Device
(ADAD) Access |
24002 |
9350 |
Conference Access |
24002 |
9430 |
Billing Reprint Service Charge |
24002 |
9700 |
Joint-Use Buried Service Relocation |
24002 |
9710 |
Wire Watch Service |
24002 |
9720 |
Voice Processing Service |
24003 |
12400 |
Explosive Atmosphere Equipment
(discontinued) |
24003 |
12600 |
Night and Holiday Service |
24003 |
12930 |
Stop Hunt Feature |
24003 |
14030 |
Cables |
24003 |
14070 |
Loops & Facilities Equipment |
24003 |
15001 |
Dedicated technician on site |
Public telephone services |
Tariff |
Item |
Description |
24001 |
1700 |
Public Telephone Service |
24001 |
1701 |
Semi-Public Telephone Service |
Services with frozen rate
treatment |
Tariff |
Item |
Description |
24001 |
485 |
Province Wide Enhanced 9-1-1 Service |
24001 |
515 |
Residence Exchange Service Charge
Billing Option Plan |
24001 |
1610.2.B1 |
Directory Assistance (DA) Blocking |
24001 |
1610.2.B2 |
Automated Directory Assistance Call
Completion (ADACC) Blocking |
MTS Communications Inc. (cont'd) |
24001 |
2142.2.B.9 |
Calling Features (Call Display
Blocking) |
24001 |
2147 |
Manitoba Relay Service |
24001 |
2180 |
Toll Management |
24001 |
2450 |
Remote Call Forwarding |
7400 |
515.3(k) |
Advantage 900 – 900 Call
Denial/Blocking |
Uncapped services |
Tariff |
Item |
Description |
7400 |
Part 7 |
Special Facilities Services (Special
Assemblies) |
7400 |
Part 11 |
Special Facilities Services (Special
Assemblies) |
24001 |
310 |
Surcharge on Overdue Accounts |
24001 |
510.2 |
Service Charges – Centrex |
24001 |
1980 |
Centrex |
24001 |
1981 |
Electronic Transfer Capability for
Centrex |
24001 |
1982 |
Centrex 2 |
24001 |
1985 |
National Centrex Service |
24001 |
1987 |
Centrex Plus |
24001 |
2135 |
Custom Telephone Number Service |
24001 |
2142 |
Calling Features – (Business) |
24001 |
2148 |
Voice Messaging Service – (Business) |
24001 |
2250 |
Centrex (Discontinued) |
24001 |
2260 |
Messaging Bundle – (Business) |
24001 |
2261 |
Mini Calling Features Value Pack –
(Business) |
24001 |
2850 |
Customer-Provided Centrex Telephones |
24002 |
6100 |
Internet Call Display – (Business) |
24002 |
9270 |
Centrex Digital Data Service Premium |
24002 |
9275 |
Centrex 5 |
24003 |
12170 |
Centrex Miscellaneous |
24005 |
All items |
Supplementary Tariff – Special
Assemblies |
Saskatchewan Telecommunications |
Residential local services in
non- HCSAs |
Residential local exchange
services in non- HCSAs |
Tariff |
Item |
Description |
21411 |
100.30 |
Extended Area Service (EAS) –
(Residence) |
21411 |
105.05 |
Administration Charges – (Residence) |
21411 |
105.10 |
Excess Mileage Charges – (Residence) |
21411 |
110.02 |
Seasonal Service – (Residence) |
21411 |
110.10 |
Network Access Service – (Residence) |
21411 |
110.12 |
Network Access Service – (Residence) |
Residential optional local
services in non- HCSAs |
Tariff |
Item |
Description |
21411 |
150.15 |
SmartTouch Subscription Service |
21411 |
300.05 |
Smart Bundles |
21412 |
550.08 |
Message Manager – (Residence) |
21412 |
580.02 |
Internet Call Waiting – (Residence) |
Residential local services in
HCSAs |
Residential local exchange
services in HCSAs |
Tariff |
Item |
Description |
21411 |
100.30 |
Extended Area Service (EAS) –
Residence |
21411 |
105.05 |
Administration Charges – (Residence) |
21411 |
105.10 |
Excess Mileage Charges – (Residence) |
21411 |
110.02 |
Seasonal Service – (Residence) |
21411 |
110.10 |
Network Access Service – (Residence) |
21411 |
110.12 |
Network Access Service – (Residence) |
21411 |
400.05 |
Exchange Radio Telephone Service
(ERTS) – (Residence) |
21411 |
400.20 |
Northern Radio Telephone Service
(NRTS) – (Residence) |
21413 |
1000.18 |
Extended Area Service (EAS) –
Christopher Lake – (Residence) |
21413 |
1000.19 |
Extended Area Service (EAS) –
Marshall – (Residence) |
21413 |
1000.20 |
Extended Area Service (EAS) – Meath
Park – (Residence) |
21413 |
1000.21 |
Extended Area Service (EAS) –
Paddockwood – (Residence) |
Saskatchewan Telecommunications
(cont'd) |
Residential optional local
services in HCSAs |
Tariff |
Item |
Description |
21411 |
150.15 |
SmartTouch Subscription Service –
(Residence) |
21411 |
300.05 |
Smart Bundles |
21412 |
550.08 |
Message Manager – (Residence) |
21412 |
580.02 |
Internet Call Waiting – (Residence) |
Single and multi-line business
local exchange services |
Tariff |
Item |
Description |
21411 |
100.25 |
Joint User Service |
21411 |
100.30 |
Extended Area Service (EAS) –
(Business) |
21411 |
105.05 |
Administration Charges – (Business) |
21411 |
105.10 |
Excess Mileage Charges – (Business) |
21411 |
110.02 |
Seasonal Service – (Business Single
Line) |
21411 |
110.10 |
Network Access Service – (Business) |
21411 |
110.12 |
Network Access Service – (Business) |
21411 |
110.28 |
Multi-Line Access Service |
21411 |
110.30 |
Multi-Line Access Service |
21411 |
400.05 |
Exchange Radio Telephone Service
(ERTS) – (Business) |
21411 |
400.20 |
Northern Radio Telephone Service
(NRTS) – (Business) |
21413 |
1000.18 |
Extended Area Service (EAS) –
Christopher Lake – (Business) |
21413 |
1000.19 |
Extended Area Service (EAS) –
Marshall – (Business) |
21413 |
1000.20 |
Extended Area Service (EAS) – Meath
Park – (Business) |
21413 |
1000.21 |
Extended Area Service (EAS) –
Paddockwood – (Business) |
Other capped services |
Tariff |
Item |
Description |
21411 |
86 |
Tariff Subscription Service |
21411 |
105.15 |
Extra Provisioning Charges |
21411 |
105.20 |
Winter Construction Charges |
21411 |
105.25 |
Distribution and Entry Construction
Charges |
21411 |
110.04 |
Extended Network Access Service |
21411 |
110.06 |
Extended Network Access Service |
Saskatchewan Telecommunications
(cont'd) |
21411 |
110.08 |
Extended Data Access Charge |
21411 |
110.14 |
Temporary Telephone Service |
21411 |
110.16 |
Direct Customer Access and Wiretap
Services |
21411 |
110.26 |
Wireless Payphone Service |
21411 |
110.32 |
Direct-in-Dial Service |
21411 |
110.34 |
Microlink Service |
21411 |
110.36 |
Microlink Discontinued Service |
21411 |
110.38 |
Megalink Service |
21411 |
110.40 |
Digital Exchange Access Service |
21411 |
110.42 |
Digital Channel Service |
21411 |
110.46 |
Digital Network Access |
21411 |
110.44 |
Local Loop Service |
21411 |
110.48 |
Voice Grade Facilities – Local |
21411 |
110.50 |
Local Loop – Conditioning |
21411 |
110.52 |
310-XXXX Access |
21411 |
150.05 |
Rotary Hunting Service |
21411 |
150.10 |
Service Interface |
21411 |
160.10 |
Telephone Directory Service – Extra
Listings |
21411 |
160.20 |
Directory Assistance Charge |
21411 |
160.25 |
Intercept Service |
21411 |
160.30 |
Directory Assistance Call Completion |
21411 |
160.40 |
Reminder Service |
21411 |
200.05 |
Remote Message Register |
21411 |
400.10 |
General Mobile Telephone Service
(GMTS) |
21411 |
400.15 |
GMTS – 450 MHz Public Air-Ground
Radio Telephone Service |
21412 |
500.04 |
Digital Inter-Exchange Facilities |
21412 |
500.06 |
Voice Grade Facilities –
Inter-Exchange |
21412 |
500.08 |
Voice Grade Facilities – In-House |
21412 |
500.10 |
Full Period Private Line Telephone
Service |
21412 |
500.12 |
Digital Private Line Service |
21412 |
500.14 |
Managed Digital Private Line Service |
21412 |
500.16 |
Digital Private Line Solutions
Service Extension Features |
21412 |
500.18 |
Digital Private Line Solutions
Service Extension Access Service |
21412 |
500.20 |
Customer Volume Pricing Plan |
Saskatchewan Telecommunications
(cont'd) |
21412 |
500.22 |
Inter-Office Digital Channels |
21412 |
500.26 |
Access Special Routing |
21412 |
500.34 |
Tie Line Service |
21412 |
550.02 |
Wire Watch |
21412 |
585.02 |
Occasional Broadcast-Quality Video
Transmission Channel Service |
21412 |
585.04 |
Radio Program (Audio) Transmission
Channel Service |
21412 |
585.06 |
Full-Time Local Broadcast-Quality
Video Transmission Channel Service |
21412 |
585.09 |
Full-Time Inter-Exchange
Broadcast-Quality Video Transmission Channel Service |
Public telephone services |
Tariff |
Item |
Description |
21411 |
110.18 |
Public Telephone Service |
21411 |
110.21 |
Charge-A-Call Plus Service |
21411 |
110.22 |
Automated Inmate Public Telephone
Service |
21411 |
110.24 |
Semi-Public Telephone Service |
Services with frozen rate
treatment |
Tariff |
Item |
Description |
21411 |
140.05 |
Provincial Enhanced 9-1-1 Service |
21411 |
160.10 |
Telephone Directory Service –
Non-Listed and Non-Published Numbers |
21411 |
170.05 |
Residential Bill Management Tools |
21411 |
170.15 |
Toll Restrictor |
21411 |
160.35 |
Directory Assistance Call Completion
Blocking |
Uncapped services |
Tariff |
Item |
Description |
21411 |
90 |
Past Due Charges |
21411 |
110.34 |
Microlink Optional Features |
21411 |
110.36 |
Microlink Optional Features |
21411 |
150.15 |
SmartTouch Subscription Service –
(Business) |
21411 |
200.10 |
SaskTel Beyond Service –
Discontinued |
21411 |
200.15 |
Centrex Service I |
21411 |
200.20 |
Centrex Service II |
Saskatchewan Telecommunications
(cont'd) |
21411 |
200.25 |
Centrex Data Service |
21411 |
300.10 |
Business Basics Package |
21412 |
550.06 |
Message Manager One |
21412 |
550.08 |
Message Manager – (Business) |
21412 |
550.08 |
Message Manager – (Centrex) |
21412 |
550.10 |
TalkMail |
21412 |
550.12 |
Fax Overflow Service |
21413 |
Note 1 |
Special Facilities Tariffs |
Note 1 |
Includes all Special
Facilities items other than those identified above. |
TELUS Communications Inc. |
Residential local services in
non-HCSAs |
Residential local exchange
services in non-HCSAs |
Tariff
|
Item |
Description |
1005 |
29 |
Wireless Local Loop Exchange Service
– (Residence) |
1005 |
32-A |
Exchange Rates – (Residence) |
1005 |
32-B |
Radio Exchange Rates – (Residence) |
1005 |
110 |
Multi-Element Plan Service Charges –
(Residence) |
1005 |
155 |
Telephone Instruments – Party-Line
Telephone Sets – (Residence) |
1005 |
157 |
Suspension of Service – (Residence) |
1005 |
254 |
Radio Toll Station Service –
Residential |
1005 |
255 |
Exchange Area Radiotelephone Service
– (Residence) |
18001 |
425 |
Exchange Service – (Residence) |
18001 |
550 |
Service Charges – (Residence) |
21461 |
202 |
Individual Line Service (ILS) –
(Residence) |
Residential optional local
services in non-HCSAs |
Tariff
|
Item |
Description |
1005 |
279 |
Residential Additional Line Bundle |
1005 |
405 |
Internet Call Director – (Residence) |
18001 |
230 |
Voice Messaging Options Service –
(Residence) |
21461 |
300 |
Call Management Services –
(Residence) |
21461 |
301 |
Voice Mail Service (VMS) –
(Residence) |
21461 |
302 |
Residence Values Bundle |
21461 |
303 |
Residence No Limits Bundle |
21461 |
311 |
Dual Line Call Manager – (Residence) |
Residential local services in
HCSAs |
Residential local exchange
services in HCSAs |
Tariff
|
Item |
Description |
1005 |
29 |
Wireless Local Loop Exchange Service
– (Residence) |
1005 |
32-A |
Exchange Rates – (Residence) |
1005 |
32-B |
Radio Exchange Rates – (Residence) |
1005 |
110 |
Multi-Element Plan Service Charges –
(Residence) |
1005 |
155 |
Telephone Instruments – Party-Line
Telephone Sets – (Residence) |
TELUS Communications Inc.
(cont'd) |
1005 |
157 |
Suspension of Service – (Residence) |
1005 |
254 |
Radio Toll Station Service –
Residential |
1005 |
255 |
Exchange Area Radiotelephone Service
– (Residence) |
18001 |
425 |
Exchange Service – (Residence) |
18001 |
550 |
Service Charges – (Residence) |
21461 |
202 |
Individual Line Service (ILS) –
(Residence) |
Residential optional local
services in HCSAs |
Tariff
|
Item |
Description |
1005 |
279 |
Residential Additional Line Bundle |
1005 |
405 |
Internet Call Director – (Residence) |
18001 |
230 |
Voice Messaging Options Service –
(Residence) |
21461 |
300 |
Call Management Services –
(Residence) |
21461 |
301 |
Voice Mail Service (VMS) –
(Residence) |
21461 |
302 |
Residence Values Bundle |
21461 |
303 |
Residence No Limits Bundle |
21461 |
311 |
Dual Line Call Manager – (Residence) |
Single and multi-line business
local exchange services |
Tariff |
Item |
Description |
1005 |
29 |
Wireless Local Loop Exchange Service
– (Business) |
1005 |
32-A |
Exchange Rates – (Business) |
1006 |
32-B |
Radio Exchange Rates – (Business) |
1005 |
32-F |
Local Business Contract Option |
1005 |
110 |
Multi-Element Plan Service Charges –
(Business) |
1005 |
155 |
Telephone Instruments – Party-Line
Telephone Sets – (Business) |
1005 |
157 |
Suspension of Service – (Business) |
1005 |
252 |
Radio Toll Station Service –
Business |
1005 |
255 |
Exchange Area Radiotelephone Service
– (Business) |
18001 |
425 |
Exchange Service – (Business) |
18001 |
550 |
Service Charges – (Business) |
21461 |
202 |
Individual Line Service (ILS) –
(Business) |
TELUS Communications Inc.
(cont'd) |
Other capped services |
Tariff
|
Item |
Description |
1005 |
20 |
Not sufficient Funds Cheque Charge |
1005 |
95 |
Construction Charges – General |
1005 |
96 |
Construction Charges – Single-Line
Inside Wire – Stand-Alone Muti-Dwelling Units |
1005 |
97 |
Construction Charges – Customer's
Premises |
1005 |
98 |
Construction Charges – Public
Property |
1005 |
104 |
Extension Line Mileage – Voice |
1005 |
104-A |
Extension Line Mileage – Data |
1005 |
106 |
Interexchange Line Mileage – Voice |
1005 |
106-A |
Interexchange Line Mileage – Data |
1005 |
110 |
Multi-Element Plan Service Charges –
Other |
1005 |
111 |
Service Charges – Hourly Rates |
1005 |
119 |
Toll Station Service |
1005 |
122 |
Foreign Central Office Service –
Voice |
1005 |
122-A |
Foreign Central Office Service –
Data |
1005 |
124 |
Foreign Exchange Service – Voice |
1005 |
124 A |
Foreign Exchange Service – Data |
1005 |
126 |
Direct-In-Dial Service |
1005 |
130 |
Remote Call Forwarding |
1005 |
132 |
Service to Ships and Trains |
1005 |
133 |
Spacetel Service |
1005 |
136 |
Answer Supervision |
1005 |
145 |
Directory Listings with the
exception of Non-Published Telephone Numbers – (Residence) |
1005 |
150 |
Reserved Telephone Number Service |
1005 |
152 |
Off-Hook Service |
1005 |
153 |
Optional Hunting Arrangements |
1005 |
154 |
Call Info Services |
1005 |
159 |
Tie Trunk and Tie Line Service |
1005 |
164 |
Dual Tone Multi-Frequency |
1005 |
161 |
Call Guardian – (Business) |
1005 |
165 |
Transfer of Calls |
1005 |
155-D |
Telephone Instruments – Telephone
Set Loss |
1005 |
170 |
Interconnection Services – General |
1005 |
234 |
Mobile Telephone Service – Directory
Listings |
TELUS Communications Inc.
(cont'd) |
1005 |
236 |
Radiotelephone Service – VHF Mobile
Stations |
1005 |
238 |
Radiotelephone Service – VHF Marine
Radiotelephone Stations |
1005 |
242 |
Radiotelephone Service – Mobile and
Ship Stations |
1005 |
244 |
Public Radiotelephone Stations |
1005 |
250 |
Radiotelephone Service – Service
Charges |
1005 |
252 |
Radio Toll Station Service –
Business |
1005 |
254 |
Radio Toll Station Service –
Residential |
1005 |
256 |
Local Message Rate |
1005 |
261 |
Remote Radiotelephone Service |
1005 |
368 |
Data Service |
1005 |
370 |
Data Access System |
1005 |
395 |
Toll Access Service |
1005 |
400 |
Private Line Service- Voice/Local
Channels |
1005 |
400-A |
Private Line Service – Data/Local
Channels |
1005 |
401 |
Multi-Point Anti-Streaming Service |
1005 |
404 |
Optical Fibre Service |
1005 |
405 |
Internet Call Director – (Business) |
1005 |
406 |
Program Transmission Service |
1005 |
410 |
Signal Transmission Service |
1005 |
410-A |
Distribution Services |
1005 |
415-A |
14/12 GHz Satellite Occasional Use
Video Service |
1005 |
416 |
Television Transmission Service |
1005 |
416-A |
Occasional Use Broadcast Quality
Video Service – Newroute |
1005 |
416-B |
Occasional Use Broadcast Quality
Video Service – Sporting Venues General Motors Place (GM Place) & BC Place |
1005 |
416-C |
Occasional Use Broadcast Quality
Video Service – Satellite Downlink |
1005 |
421 |
Full-Time Local
Broadcast-QualityVideo Transmission Channel Service |
1005 |
422 |
Emergency Reporting and Alerting
Systems |
1005 |
435 |
Megaroute Service |
1005 |
437 |
Megastream Service |
1005 |
440 |
Digital Channel Service |
1005 |
446 |
Megaplan Service Extension Access
Service |
1005 |
447 |
Digital Network Access |
1005 |
448 |
Access Special Routing |
1005 |
465 |
Integrated Services Digital Network
– Basic Rate Interface Service |
1005 |
470 |
Integrated Services Digital Network
– Primary Rate Interface Service |
1005 |
470-A |
Integrated Services Digital Network
– Primary Rate Interface Service Monthly Non-Contracted Service |
TELUS Communications Inc.
(cont'd) |
1005 |
490 |
Datadial Service |
1005 |
495 |
Digital Exchange Access |
7400 |
401 |
Dataroute Service |
7400 |
515 |
Advantage 900 with the exception of
900 Call Denial/Blocking |
18001 |
105 |
Not Sufficient Funds Cheques |
18001 |
160 |
Emergency Reporting System |
18001 |
165 |
Digital Exchange Access |
18001 |
170 |
Direct In Dial Service |
18001 |
200 |
Directory Primary Listings excluding
Non-Published Telephone Number – (Residence) |
18001 |
215 |
Dataline Service |
18001 |
220 |
Toll Terminal Service |
18001 |
255 |
Interconnection with Private Mobile
Telephone Systems – Network Access |
18001 |
270 |
Alberta Manual 150 Mobile Telephone
Service |
18001 |
280 |
Foreign Wire Centre Service |
18001 |
305 |
Denial Service |
18001 |
320 |
Electronic Delivery Service |
18001 |
325 |
Optical Fibre Service |
18001 |
330 |
Slow Speed Channel Service |
18001 |
350 |
Interexchange Foreign Exchange
Service |
18001 |
355 |
Interexchange Off-Premise Service |
18001 |
365 |
Interexchange Tie Trunk Service |
18001 |
340 |
Answer Supervision Service |
18001 |
370 |
AltaNet 200/300 Service |
18001 |
360 |
Interexchange Private Line Service |
18001 |
380 |
Temporary Disconnect |
18001 |
385 |
Channels for Data Transmission |
18001 |
400 |
Busy Line Verification/Interruption |
18001 |
460 |
Construction Charges |
18001 |
485 |
Integrated Services Digital Network
– Basic Rate Interface Service |
18001 |
495 |
Integrated Services Digital Network
– Primary Rate Interface Service |
18001 |
500 |
Digital Network Access |
18001 |
505 |
Switched 56 Digital Service |
18001 |
535 |
Electronic Directory Database Access
Service |
18001 |
545 |
Dedicated Line Service |
18001 |
550 |
Service Charges – (Other) |
18001 |
580 |
Wireless Payphone Service |
18001 |
615 |
Local Channel Service (Outside the
City of Edmonton) |
TELUS Communications Inc.
(cont'd) |
18001 |
620 |
Local Channel Conditioning (Outside
the City of Edmonton) |
18001 |
625 |
Local Channel Service (In the City
of Edmonton) |
18001 |
630 |
Local Channel Conditioning (In the
City of Edmonton) |
18001 |
655 |
Remote Call Forwarding |
18001 |
665 |
Digital Channel Service |
18001 |
666 |
CityNet 200/300 Service |
18001 |
709 |
Megaplan Service Extension Access
Feature |
18001 |
712 |
Access Special Routing |
18001 |
410 |
Interexchange Radio Program
Transmission Service |
18001 |
415 |
Interexchange Television
Transmission Service |
18001 |
660 |
Local Broadcast Video Transmission
Service |
18001 |
670 |
Local Radio Program Cchannel Service |
18001 |
706 |
Megaroute Service |
18001 |
707 |
Megastream Service |
18001 |
709 |
Megaplan Service Extension Access
Service |
18002 |
1820 |
Network Diagnostic and Maintenance
Services |
18002 |
1825 |
Rotary Splitting Service |
21461 |
308 |
Operator Services |
21461 |
311 |
Dual Line Call Manager – (Business) |
21461 |
502 |
Local Broadcast Video Transmission –
Digital Service |
21461 |
503 |
Inter-Office Digital Channels |
21461 |
504 |
Customer Volume Pricing Plan
(discount plan for uncapped services) |
21461 |
505 |
Digital Private Line Large Business
Service |
21461 |
506 |
Digital Private Line Service
Extension Features |
21461 |
507 |
International Private Line (IPL)
Service |
21461 |
509 |
High Capacity 45 Service |
21461 |
510 |
Wired Music Transmission Service |
21461 |
513 |
Dedicated Loop Service |
25721 |
2510 |
Customer Traffic Studies |
25721 |
3090 |
Frame Relay Service |
25721 |
4025 |
Billing Analysis (Breakdown) Service |
TELUS Communications Inc.
(cont'd) |
Public telephone services |
Tariff
|
Item |
Description |
1005 |
115 |
Public Coin Telephone Service |
1005 |
117 |
Semi-Public Coin Telephone Service |
18001 |
205 |
Public Telephone Service |
18001 |
210 |
Semi-Public Telephone Service |
Services with frozen rate
treatment |
Tariff
|
Item |
Description |
1005 |
14 |
Payment of Charges – Installment
Payment Plan |
1005 |
32-D |
BC TEL Message Relay Centre |
1005 |
120 |
Centralized Emergency Reporting
Service (Dial 911) |
1005 |
120-A |
Enhanced Centralized Emergency
Reporting (Dial E-911) |
1005 |
121 |
Provincial 9-1-1 Service |
1005 |
145 |
Directory Listings – Non-Published
Telephone Numbers – (Residence) |
1005 |
161 |
Call Guardian |
7400 |
515.3 (k) |
Advantage 900 – 900 Call
Denial/Blocking |
18001 |
200 |
Directory Primary Listings –
Non-Published Telephone Number – (Residence) |
18001 |
235 |
Calling Features – Call Display
Blocking |
18001 |
280 |
Provincial E9-1-1 |
18001 |
310 |
Toll Restrict |
18001 |
455 |
Message Relay Service |
18001 |
550.5 |
Service Charges – Installment
Payment Plan |
Uncapped services |
Tariff
|
Item |
Description |
1005 |
15 |
Late Payment Charges |
1005 |
42 |
Centrex – General |
1005 |
42-B |
Centrex – C.O. |
1005 |
43 |
Centrex |
1005 |
43-A |
Centrex Call Processing Service |
1005 |
43-B |
Electronic Transfer Capability for
Centrex |
1005 |
138 |
Intelliroute Service |
TELUS Communications Inc.
(cont'd) |
1005 |
144 |
Special Number Service |
1005 |
168-C |
Voice Messaging Options Service |
1005 |
169 |
Universal Messaging |
1020 |
All Items |
Special Assembly Tariff |
1027 |
All Items |
Special Assembly Tariff for
Interconnection with the Equipment and/or Facilities of Interexchange
Carriers |
7400 |
700 |
Co-Located Customer Provided
Equipment in a Telephone Company Central-Office |
7400 |
703 |
Program Channels C.B.C. Radio |
18001 |
195 |
Special Number Service |
18001 |
230 |
Voice Messaging Options Service –
(Business) |
18001 |
235 |
Calling Features – (Business) |
18001 |
245 |
Network Portability Access Service |
18001 |
250 |
Intelliroute Service |
18001 |
285 |
Centrex Voice Activated Dialing |
18001 |
520 |
Universal Messaging |
18001 |
530 |
Electronic Transfer Capability for
Centrex |
18001 |
585 |
Centrex Service |
18006 |
All Items |
Special Assembly Tariff |
21463 |
All Items |
Special Assembly Tariff |
25723 |
All Items |
Special Assembly Tariff |
|
Retail Quality of Service Adjustment Plan
Report
(to be filed with the Commission with Q of S results)
|
|
Date: ___/____/_____
dd / mm/ yyyy |
|
Company:
___________________________________________________________
(Full Corporate Name) |
|
Contact Name:
____________________________________________________ |
|
Contact Address:
____________________________________________________ |
|
Contact Phone: ____ - ____ - _____
Contact Facsimile: ____ - ____- _____ |
|
Certification: (insert statutory
declaration language, include knowledge that Q of S results are subject to
random audits by the CRTC or its agent) |
|
Retail Quality of Service Adjustment Plan
Worksheet 1 |
|
Step 1: Calculate the Total Maximum
Adjustment Value (TMAV)
TOTAL ANNUAL LOCAL REVENUES $_______________ * 5% = ___________(A) |
|
Step 2: Calculate the Maximum Adjustment
Value (MAV) per required Q of S indicator TMAV (A) ___________ / total number
of required Quality of Service Indicators _____ = _________(B)
Transfer to Worksheet 3 – MAV Column
(For this calculation only: Q of S Indicator reported as rural and urban,
count as one required indicator when calculating MAV) |
|
Step 3: Calculate Annual Average Performance
(AAP) for each Quality of Service Indicator (Worksheet 2) |
|
Add Monthly results for each indicator / 12
(where required and not reported = 0%) |
|
Step 4: Calculate the AAP Ratio
(AAPR) for each indicator compared to the Q of S standard (Worksheet 2)
AAPR = (AAP / Q of S standard) * 10 (maximum AAPR = 10) |
|
Step 5: Calculate the Quality of Service
Adjustment (QSA) (Worksheet 3)
QSA = Standard Adjustment (SA) percent * MAV |
|
The standard adjustment is determined by
reading the AAPR into the AAPR to Standard Adjustment conversion table |
|
Step 6: Calculate the Total Annual Quality of
Service Adjustment (Worksheet 2) |
|
Retail Quality of Service Adjustment Plan
Worksheet 2
|
QUALITY OF SERVICE RESULTS REPORTED |
Sum 1-12 |
TOTAL / 12 |
AAP / QoSS *10 |
Work-sheet 3 |
MONTHLY ACTUALS |
TOTAL |
AAP |
AAPR |
QSA |
|
|
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
11 |
12 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ANNUAL QUALITY OF SERVICE ADJUSTMENT
$___________________ |
|
Retail Quality of Service Adjustment Plan
Illustrative Calculations |
|
Step 1 Calculate the Total Maximum Adjustment
Value (TMAV)
TMAV = Total Annual Local Revenues * 5 % |
EXAMPLE |
$4,500,250,000.00 |
* |
5.00% |
(A) |
|
|
|
|
$225,012,500.00 |
|
Step 2 Calculate the Maximum Adjustment Value
(MAV) per required Q of S indicator
MAV = TMAV (A) / number of required Quality of Service Indicators |
EXAMPLE |
$225,012,500.00 |
/ |
15 |
(B) |
|
|
|
|
$17,308,653.85 |
|
** Where rural and urban
indicators are reported, count as one service category |
|
|
|
Step 3 Calculate Annual Average Performance
(AAP) for each Quality of Service Indicator
Add Monthly results for each indicator / 12 (where not reported = 0%) |
EXAMPLE |
|
|
|
(C) |
INDICATOR 1 |
1035.6 |
/ |
12 |
86.30 |
INDICATOR 2 |
955.4 |
/ |
12 |
79.62 |
INDICATOR 3 |
1114.5 |
/ |
12 |
92.88 |
INDICATOR 4 |
1095.2 |
/ |
12 |
91.27 |
INDICATOR 5 |
828.5 |
/ |
12 |
69.04 |
INDICATOR 6 |
922.6 |
/ |
12 |
76.88 |
ETC |
|
|
|
|
|
Retail Quality of Service Adjustment Plan
Illustrative Calculations (cont'd)
|
|
|
|
Step 4 Calculate the AAP Ratio (AAPR) for
each indicator compared to the Q of S standard
AAPR = (AAP / Q of S standard) * 10 (maximum AAPR = 10) |
EXAMPLE |
AAP |
|
Standard |
AAP Ratio |
|
(C) |
* |
|
(D) |
INDICATOR 1 |
86.30 |
/ |
90 |
9.59 |
INDICATOR 2 |
79.62 |
/ |
80 |
9.59 |
INDICATOR 3 |
92.88 |
/ |
90 |
10 |
INDICATOR 4 |
91.27 |
/ |
90 |
10 |
INDICATOR 5 |
69.04 |
/ |
90 |
7.67 |
INDICATOR 6 |
76.88 |
/ |
80 |
9.61 |
ETC |
|
|
|
|
|
Step 5 Calculate the Quality of Service
Adjustment (QSA) for each indicator per table below
QSA = AAPR * Standard Adjustment (SA) percent * MAV |
EXAMPLE |
(B) MAV |
AAPR per table * SA per table *
MAV |
$15,000,833.33 |
AAP Ratio |
|
SA |
|
QSA |
(D) |
|
(E) |
|
(F) |
10 |
|
0% |
|
$0.00 |
9.50-9.99 |
|
25% |
|
$4,327,163.46 |
9.00-9.49 |
|
30% |
|
$5,192,596.15 |
8.50-8.99 |
|
35% |
|
$6,058,028.85 |
8.00-8.49 |
|
40% |
|
$6,923,461.54 |
7.75-7.99 |
|
45% |
|
$7,788,894.23 |
7.50-7.74 |
|
50% |
|
$8,654,326.92 |
7.25-7.49 |
|
60% |
|
$10,385,192.31 |
7.00-7.24 |
|
70% |
|
$12,116,057.69 |
6.50-6.99 |
|
80% |
|
$13,846,923.08 |
6.00-6.49 |
|
90% |
|
$15,577,788.46 |
5.50-5.99 |
|
92% |
|
$15,923,961.54 |
5.00-5.59 |
|
94% |
|
$16,270,134.62 |
4.50-4.99 |
|
96% |
|
$16,616,307.69 |
4.00-4.49 |
|
98% |
|
$16,962,480.77 |
3.00-3.99 |
|
100% |
|
$17,308,653.85 |
2.00-2.99 |
|
100% |
|
$17,308,653.85 |
1.00-1.99 |
|
100% |
|
$17,308,653.85 |
0 |
|
100% |
|
$17,308,653.85 |
|
Retail Quality of Service Adjustment Plan
Illustrative Calculations (cont'd)
|
|
Step 5a For Rural and Urban, apply 50% of
Maximum Adjustment Value to each AAP * SA
(AAP * SA) * (MAV/2) |
EXAMPLE |
(AAP = SA) |
* |
(MAV/2) |
(C) |
Rural |
(7.75 = 45%) |
* |
$8,654,326.92 |
$3,894,447.12 |
Urban |
(9.92 = 25%) |
* |
$8,654,326.92 |
$2,163,581.73 |
|
Step 6 Add all QSA results for all
indicators for the year |
Competitor Quality of Service Adjustment Plan |
CLEC
(ABC) |
Achieved performance in % |
Adjustment amount in $ payable to CLEC (ABC) |
Indi-cator # |
Stan-dard |
Title |
Month/
Year |
Month/
Year |
Month/
Year |
Month/
Year |
Month/
Year |
Month/
Year |
1.8
Final |
90% or more |
New Unbundled Type A
and B Loop Order Service Intervals Met |
P(1.8)i |
P(1.8)j |
P(1.8)k |
[90%-P (1.8)i]*
(CLEC-specific total tariffed charges for the month for the specific rate
element) |
[90%-P (1.8)j]*
(CLEC-specific total tariffed charges for the month for the specific rate
element) |
[90%-P (1.8)k]*
(CLEC-specific total tariffed charges for the month for the specific rate
element) |
Formula #1 |
1.9
Final |
90% or more |
Migrated Unbundled
Type A and B Loop Order Service Intervals Met |
P(1.9)i |
P(1.9)j |
P(1.9)k |
[90%-P (1.9)i]*
(CLEC-specific total tariffed charges for the month for the specific rate
element) |
[90%-P (1.9)j]*
(CLEC-specific total tariffed charges for the month for the specific rate
element) |
[90%-P (1.9)k]*
(CLEC-specific total tariffed charges for the month for the specific rate
element) |
Formula #1 |
1.10
Final |
90% or more |
Local Number
Portability (LNP) Order (Stand-alone) Service Interval Met |
P(1.10)i |
P(1.10)j |
P(1.10)k |
[90%-P (1.10)i]*
(CLEC-specific demand for the month) * (CRTC mandated adjustment amount per
event) |
[90%-P (1.10)j]*
(CLEC-specific demand for the month) * (CRTC mandated adjustment amount per
event) |
[90%-P (1.10)k]*
(CLEC-specific demand for the month) * (CRTC mandated adjustment amount per
event) |
Not appli-cable
for the interim regime |
1.11
Final |
90% or more |
Compe-titor
Intercon-nection Trunk Order Service Interval Met |
P(1.11)i |
P(1.11)j |
P(1.11)k |
[90%-P (1.11)i]*
(CLEC-specific demand for the month) * (CRTC mandated adjustment amount per
event) |
[90%-P (1.11)j]*
(CLEC-specific demand for the month) * (CRTC mandated adjustment amount per
event) |
[90%-P (1.11)k]*
(CLEC-specific demand for the month) * (CRTC mandated adjustment amount per
event) |
Not appli-cable
for the interim regime |
2.7
Final |
80% or more |
Compe-titor
Out-of-Service Trouble Reports Cleared within 24 Hours |
P(2.7)i |
P(2.7)j |
P(2.7)k |
[80%-P (2.7)i]*
(CLEC-specific total tariffed charges for the month for the service in
question) |
[80%-P (2.7)j]*
(CLEC-specific total tariffed charges for the month for the service in
question) |
[80%-P (2.7)k]*
(CLEC-specific total tariffed charges for the month for the service in
question) |
Formula #2 |
2.8
Final |
90% or more |
Migrated Local Loop
Comple-tion Notices to Compe-titors |
P(2.8)i |
P(2.8)j |
P(2.8)k |
[90%-P (2.8)i]*
(CLEC-specific total tariffed charges for the month for the specific rate
element) |
[90%-P (2.8)j]*
(CLEC-specific total tariffed charges for the month for the specific rate
elements) |
[90%-P (2.8)k]*
(CLEC-specific total tariffed charges for the month for the specific rate
elements) |
Formula #1 |
Competitor Quality of Service Adjustment Plan (cont'd) |
|
P(Indicator # x.y)i,j,k
= Performance for indicator x.y relative to month i,j or k |
|
Formula #1: This formula applies in the
case where the indicator is associated with a specific service or services
for which a rate is paid by the CLEC. |
|
Formula #2: This formula applies in the
case where the indicator is associated with an activity for which no specific
rate is paid by the CLEC but affects a service or services for which the CLEC
pays a rate. |
|
Indicators 1.10 and 1.11: The applicable
formula for these indicators, both associated with an activity for which no
specific rate is paid by the CLEC, requires the use of a mandated amount per
event that will be developed in a follow up proceeding. Therefore, rate
adjustments for these indicators will not be applied during the interim
regime. |
|
Notes: |
|
Competitor Quality of Service results are to be
filed quarterly. Rebates will be calculated and issued quarterly. |
|
Any adjustments owing to a CLEC are to be
provided to the CLEC within 45 calendar days following the end of each
quarter (due date). |
|
For purposes of determining rebates that are
applicable for substandard service quality, the remedy is predicated on the
rate paid by the entrant for the activity covered by the indicator. |
|
Indicators 1.8, 1.9, and 2.8 are subject to
formula #1 (case 1) so that the rate elements for the activities concerned
would be non-recurring charges. Indicator 2.7, however, does not describe an
activity for which a specific rate (or rates) is (are) paid. Rather, this
would be a formula #2 (case 2) situation in which the service quality of one
or more services would be affected by a substandard performance of Indicator
2.7. Thus, the monthly recurring rate of the affected service or services
would be applicable for adjustment purposes. |
|
Application of Rate Adjustment Plan for Competitors
Examples
|
|
|
|
1) Indicator 1.8 (New Unbundled Type A and B
Loop Order Service Intervals Met) |
|
The set standard is 90%. |
|
Example: |
|
- The CLEC orders for a given month 540 new Type A loops and 210 new Type
B loops all in band A
|
|
- The ILEC performance for indicator 1.8 was 84%
|
|
- The set objective was then missed by: 90% - 84% = 6%
|
|
- When the CLEC receives the bill for these loops (those delivered on
time and those that were delayed), the following will be shown:
|
|
a) One time charges for the Type A and B loops: |
|
Total charges (service charge per order)
(assuming a total of 550 orders and all orders were for Business): 550 *
$46.50 = $25,575.00 |
|
b) Total charges (service charge per loop):
(540+210) * $27.00 = $20,250.00 |
|
- The rate adjustment plan for that given month, excluding taxes, will
then be applied as follows: (90%-84%) * ($25,575 + $20,250) = 6% * $45,825
= $2,749.50
|
|
2) Indicator 1.9 (Migrated Unbundled Type A
and B Loop Order Service Intervals Met) |
|
The set standard is 90%. |
|
The calculation of the rate adjustment is the
same as for new loops in the example above. |
|
Application of Rate Adjustment Plan for Competitors
Examples (cont'd)
|
|
3) Indicator 2.7
(Competitor Out of Service Trouble Reports Cleared within 24 Hours) |
|
The set standard is 80%. |
|
Example: |
|
- The CLEC has sustained in a given month troubles for 200 Type A loops
and 10 Type B loops, all in band A.
|
|
- The performance of the ILEC for indicator 2.7 was 70%
|
|
- The set objective was missed by: 80% - 70% = 10%
|
|
- The calculation of the rate adjustment will be as follows:
|
|
Monthly rate for a Type A loop in band A: $9.24
|
|
Monthly rate for a Type B loop in band A: $11.59
|
|
ILEC revenue for the loops for which a trouble report was issued that
month: 200 * $9.24 + 10 * $11.59 = $1,848.00 + $115.90 = $1,963.90
|
|
Adjustment for missed standard (for trouble reports for Type A and Type
B loops not cleared within 24 hours): (80% - 70%) * $1,963.90 = $196.39
|
|
Application of Rate Adjustment Plan for Competitors
Examples (cont'd)
|
|
4) Indicator 2.8 (
Migrated Local Loop Completion Notices to Competitors) |
|
The set standard is 90% |
|
The definition of the indicator is: |
|
The total number of migrations of local loops and the number of
notifications given on time by the incumbent telephone company to the
competitors, notifying that the local loop migration is complete at the
facilities of the incumbent telephone company, with the percentage of
notifications given on time relative to this total.
|
|
The indicator measures the completions of migrated local loops and the
notifications given on time are sorted to determine the actual numbers and
the percentage of notifications given on time.
|
|
Note: The unit to be adopted to calculate a rate
adjustment in this case is the service charge for the local loops to be
migrated and for which a completion notification was not given on time. |
|
Example: |
|
- The CLEC has sent 20 orders for the migration of 250 loops (200 Type A
and 50 Type B all in band A) for business customers.
|
|
- The performance of the ILEC with regard to this indicator was 84%
|
|
- The service charges for the loops to be migrated is calculated as
follows:
|
|
a) Total charge for service charge per order: $46.50 * 20 = $930.00
|
|
b) Total charge for service charge per loop: (200 + 50) * $27.00 =
$6,750.00
|
|
- The rate adjustment plan for that given month will then be applied as
follows: (90%-84%) * ($930.00 + $6,750.00) = 6% * $7,680.00 = $460.80
|
Date Modified: 2002-05-30 |