|
Telecom Order CRTC 2005-75
|
|
Ottawa, 23 February 2005 |
|
TELUS Communications Inc.
|
|
Reference: TELUS Communications Inc. TN 147
and TELUS Communications (B.C.) Inc. TN 4215 |
|
Construction charges tariff
|
|
The application
|
1. |
The Commission received an application by TELUS
Communications Inc. (TCI), dated 4 August 2004, proposing to amend the
following General Tariff items in order to grandfather its construction
subsidy programs, namely Individual Line Service (ILS) and Rural Individual
Line Charge (RILC) in Alberta and the Service Extension Program (SEP)
in British Columbia (B.C.): |
|
- the former TCI General Tariff item 202, Individual Line Service;
|
|
- the former TELUS Communications (B.C.) Inc. (TCBC) General Tariff
item 98, Construction Charges – Public Property; and
|
|
- TCI General Tariff item 204, Service Improvement Plan (SIP) for
Unserved Premises.
|
2. |
TCI also proposed to amalgamate the following
General Tariff items into new TCI General Tariff item 406, Construction
Charges: |
|
- the former TCI General Tariff item 460, Construction Charges;
|
|
- the former TCBC General Tariff item 95, Construction Charges – General;
|
|
- parts of the former TCBC General Tariff item 97, Construction Charges
– Customer's Premises; and
|
|
- parts of the former TCBC General Tariff item 98, Construction Charges
– Public Property.
|
3. |
TCI submitted that its proposal to amalgamate
its construction charges tariffs would establish, to the extent possible and
practical at this time, a common Construction Charges tariff for TCI's
operating territories of Alberta and B.C. TCI noted that the amalgamated
tariff would maintain the existing differences in public property and private
property allowances between the two provinces. |
4. |
TCI stated that the proposed amalgamated tariff
would apply in all cases where TCI provided facilities for residential and
business customers, with the exception of unserved residential premises in
TCI's operating territories of Alberta and B.C. who would qualify for service
pursuant to the SIP. |
5. |
TCI proposed to assign the amalgamated
Construction Charges tariff to the Other Capped Services basket, which TCI
stated would be consistent with the Commission's current classification for
these services. TCI submitted that it had not proposed any changes to the
existing tariff rates, therefore, there would be no impact on its price
indices. |
6. |
The Commission received no comments with respect
to this application. |
|
TCI's proposal to grandfather Individual Line Service, Rural
Individual Line Charge, and the Service Extension Program
|
7. |
TCI proposed to grandfather its existing
construction subsidy programs, namely ILS and RILC in Alberta and the SEP in
B.C. TCI proposed to apply the SIP tariff to new requests for residential
service as applicable in B.C., and beyond the Base Rate Area and also within
or beyond the Operating Exchange Boundary in Alberta. |
8. |
TCI submitted that grandfathering its existing
construction subsidy programs would have little or no impact on residential
customers, because the SIP applies equally to residential customers in
Alberta and B.C. and serves the same objective of providing exchange service
to as many residential customers as possible. TCI noted that its proposal
would have a greater impact on business customers who would no longer be
subsidized. |
|
i) Individual Line Service and Rural
Individual Line Charge in Alberta |
9. |
TCI explained that from 1986 to 1990 it received
grants from the Government of Alberta under the ILS program in order to
convert all multi-party lines in its operating territory to individual lines.
TCI noted that each customer had the choice of paying either a one-time
conversion charge of $560 or $5 per month for 20 years.1 TCI
submitted that, until June 1991, the provincial government helped to off-set
this expense by providing customers with a rebate of $110 per individual
line. TCI noted that the average cost of provisioning service to a new ILS
customer greatly exceeded $560. |
10. |
TCI, in light of the above, proposed to
grandfather the ILS and RILC charges at existing ILS and RILC customer
locations. TCI specifically proposed that: |
|
- customers that moved into an existing ILS location where the $560
conversion charge had not been paid in full would be responsible for paying
the remaining balance;
|
|
- requests for additional lines at locations with ILS would also be
charged the $560 conversion charge, which customers would be required to
pay up front and in full;
|
|
- requests for additional lines at premises with RILC service would be
assessed a RILC charge, which customers would be required to pay up front
and in full;
|
|
- the $18 per month for three years financing plan would be grandfathered
for customers currently using this payment option.
|
11. |
TCI submitted that there would be no financial
impact on residential customers as a result of grandfathering ILS and RILC.
TCI submitted that, under the current ILS tariff, the cost of service to a
residential customer is expected to always exceed $1,000, due to the ILS
charge of $560 and the average private property charge of $500 or more. In
TCI's view, such customers would be better off under the SIP tariff at a
customer charge of $1,000, assuming a capital cost limit of $25,000. |
|
ii) Service Extension Program in B.C. |
12. |
TCI indicated that the current SEP provided
service to residential and business customers' principal premises beyond
existing exchange facilities or Exchange Area Radiotelephone Service coverage
areas in B.C., pursuant to a formula which included rebates to original
customers. TCI explained that within a three-year period, as service was
provided to additional principal premises, original customers were rebated.
TCI proposed to grandfather existing SEP locations, which would permit
residential and business customers at those locations to continue to receive
the SEP rebate under the subsidy program until the expiry of the rebate
period. |
13. |
TCI submitted that it expected the impact of
grandfathering SEP to be minimal on B.C. residential customers. TCI noted
that any residential customer whose service request required less than $7,000
in construction costs would pay less than $1,000 under the SEP tariff, and
therefore would be better off under the SEP tariff than the SIP tariff. TCI
stated that it had processed 34 residential customer requests for SEP to date
in 2004, of which only nine were less than $7,000. |
14. |
TCI stated that there would be no impact on
business customers as a result of grandfathering SEP, because there were
virtually no customers outside the current allowances requesting service. |
|
TCI's proposal to amalgamate Construction Charges tariffs
|
15. |
TCI proposed to amalgamate its Alberta and B.C.
Construction Charges tariffs to clarify various terms and conditions, align
certain terms and conditions, and eliminate obsolete provisions. |
16. |
TCI noted that the company currently assumed 100
percent of the public property costs for new construction to provide service
for each central office line or trunk inside the Base Rate Area in Alberta.
TCI noted that this would remain unchanged under its proposed tariff. TCI
proposed, however, that for new construction to provide service for each
central office line or trunk outside the Base Rate Area in Alberta, the
customer would be assessed 100 percent of the public property costs incurred
by TCI. |
17. |
TCI stated that, as a result of its proposal to
grandfather ILS and RILC, business customers at new locations who would have
previously been eligible for ILS or RILC would be charged full construction
costs. TCI submitted that the majority of business customer requests for
service beyond the Operating Exchange Boundary were data applications, which
were not eligible for RILC and were assessed full construction charges under
the current tariffs. TCI submitted, therefore, that there would be minimal
financial impact on customers as a result of grandfathering this program for
new service requests outside the Operating Exchange Boundary. |
18. |
TCI proposed that customers in B.C. would be
assessed 100 percent of the costs in excess of the initial $2,000 for the
provision of each central office line or trunk, except for residential
customers who would be eligible for service under the SIP tariff. |
|
TCI's proposal to withdraw financial payment options
|
19. |
TCI proposed to withdraw the financial payment
options currently available to Alberta and B.C. customers requesting
extension of service. TCI was of the view that the impact to customers would
be negligible, since those who qualified for the SIP would have access to
TCI's Installment Payment Plan. TCI noted that customers could also make
payment arrangements through financial institutions that usually offered more
attractive interest rates and terms. |
|
Commission's analysis and determination
|
|
TCI's proposal to grandfather Individual Line Service, Rural Individual
Line Charge, and the Service Extension Program
|
20. |
In Regulatory framework for second price cap
period, Telecom Decision CRTC
2002-34, 30 May 2002
(Decision 2002-34), the
Commission approved the SIP tariffs for the incumbent local exchange carriers
for construction charges associated with extending service to residential
customers in unserved areas. The SIP tariffs serve to provide customers with
telephone service where the maximum average cost per residential premise is
$25,000, including a customer capital contribution of $1,000. The Commission
determined that during the period of the SIP (i.e. from 2003 to 2006), for
localities where outside plant had already been installed before the
commencement of the SIP, each new customer who requested service in that
locality was to have a choice between the lesser of a contribution cost
calculated pursuant to the current subsidy program tariff (i.e. ILS, RILC or
SEP), or $1,000, assuming a capital cost limit of $25,000. |
21. |
In Follow-up to price cap Decision
2002-34: TELUS' revised
service improvement plan, Telecom Decision CRTC
2003-64, 25 September 2003
(Decision 2003-64), the
Commission approved amendments to TCI's SIP. These amendments addressed
specific cost inclusions in TCI's SIP in relation to unserved communities in
B.C. and unserved individuals in Alberta and B.C., which included unserved
premises that had not previously subscribed to TCI's SEP. The Commission
noted that TCI would be fully compensated for the costs associated with the
capital expenditures in question, either through its total subsidy
requirement for its high-cost serving areas (HCSAs) or its deferral account
for non-HCSAs. |
22. |
Consistent with its previous determinations, in
Decision 2003-64 the
Commission found that during the period of the SIP, for localities where
outside plant had already been installed before the commencement of the SIP,
each new residential customer who requested service was 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. The Commission
stated that this would be consistent with its objective of serving as many
premises as possible through the SIP. |
23. |
The Commission notes that TCI identified that a
limited number of cases exist where residential customers would be better off
under the current subsidy programs rather than under the SIP. The Commission
notes that TCI's proposal to grandfather ILS, RILC and the SEP would
therefore be contrary to the Commission's determinations in Decisions
2002-34 and
2003-64, as residential
customers would no longer have the benefit of the lesser contribution cost
over the period of the SIP. The Commission is of the view, therefore, that
TCI's proposal to grandfather these subsidy programs for residential
customers is not appropriate at the current time. |
|
TCI's proposal to amalgamate Construction Charges tariffs
|
24. |
In regard to TCI's proposal to amalgamate its
Construction Charges tariffs the Commission notes that, except for aligning
certain terms and conditions, TCI has not proposed to amalgamate its
methodologies used to determine the amount of construction charges applicable
to customers in Alberta and B.C. The Commission is of the view that most of
the changes proposed by TCI to its methodologies used to determine the
construction charges applicable to customers are a result of its proposal to
grandfather ILS, RILC and the SEP. The Commission is concerned that, under
TCI's proposed tariff, there remain significant differences in the treatment
of customers between Alberta and B.C. in determining the construction charges
applicable on public and private property. |
|
TCI's proposal to withdraw financial payment options
|
25. |
With respect to TCI's proposal to withdraw or
grandfather various payment plan options available to Alberta and B.C.
construction customers, the Commission notes that in Bell Canada –
Construction charges, Order CRTC 2000-351,
28 April 2000 (Order 2000-351), it
considered that it might be a significant disincentive to request a service
extension if the customer was required to pay the full cost of the extension
in advance or in full when the account was billed. The Commission determined
that a reasonable instalment option for service extensions not covered by a
SIP would be appropriate. |
26. |
The Commission considers that requiring a
customer to pay for service extensions in a lump sum or by securing financing
through a financial institution, as proposed by TCI, could be a disincentive
to request an extension. The Commission is therefore of the view that
circumstances have not changed significantly since the issuance of Order
2000-351 to allow the withdrawal or
grandfathering of payment plan options in TCI's tariffs. |
27. |
In light of the above, the Commission denies
TCI's application. |
|
Secretary General |
|
This document is available in alternative
format upon request, and may also be examined in PDF
format or in HTML at the following Internet site:
http://www.crtc.gc.ca |