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Order CRTC 2001-217
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Ottawa, 14 March 2001 |
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CRTC grants conditional approval to Québec-Téléphone's business
rate restructuring proposal
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Reference: Tariff Notices 280,
281, 281A
and 282 |
1. |
On 1 August 2000, Québec-Téléphone filed Tariff Notices 280,
281 and 282
requesting that the applications be treated in conjunction with one
another.
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2. |
TN 280 proposed to
establish a uniform rate for QuébecTel's single line business (SLB) and
multiline business (MLB) services calculated based on a weighted average
of the existing rates. QuébecTel's supporting rationale was that:
(1) MLB customers have indicated that the current rate differential
is inappropriate given that both MLB and SLB services are almost
identical; (2) other telcos such as Bell Canada no longer make a
distinction between SLB and MLB rates; and (3) the current rate
differential serves to impede economic development in QuébecTel's
territory.
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3. |
TN 281 proposed to
create a cost-based rate structure for the company's business service.
QuébecTel's supporting rationale was that: (1) Bell Canada has a similar
business band structure in its exchanges which border QuébecTel's
territory; (2) business rates should reflect costs; and (3) it could
use the resulting margin from the business rate restructuring to prepare
for the introduction of local competition.
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4. |
TN 282 proposed a
$2.10 rate increase for both the company's single line residential and
its new Band C services. QuébecTel's supporting rationale was that: (1)
historically, its residential and business rates were established based
on value of service pricing which is no longer appropriate since the
Commission is moving towards cost-based pricing; (2) its residential
rates are not compensatory; (3) the rate increase will bring rates closer
to cost; and (4) approving the rate increase at the same time as the
business rate restructuring will ensure that the result will have no
impact on QuébecTel's contribution requirement.
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5. |
On 10 November 2000, QuébecTel filed TN 281A
updating its cost study. QuébecTel also filed a letter related to TN 282
requesting that: (1) the Commission proceed with TNs 280
amd 281; (2) any
action on TN 282 be
postponed; and (3) it be granted approval for the use of its 1998 excess
earnings, currently being held in a deferral account pursuant to Order
CRTC 2000-860, to offset the revenue
shortfall resulting from the business rate restructuring.
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6. |
The Commission notes that it received approximately 15 written
comments and numerous petitions containing a total of approximately
15,616 signatures opposing the residential rate increase aspect of
QuébecTel's proposals.
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7. |
The Commission considers that it would be inappropriate to authorise
QuébecTel to proceed with its business rate restructuring while allowing
the company to fund it through a local residential rate increase and/or
the use of the excess earnings held in the deferral account for the
following reasons:
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a) It would be inconsistent with Order 2000-860,
where the Commission determined that the excess earnings should be
returned to subscribers. In Order 2000-860,
the Commission indicated that it may consider allowing the use of excess
earnings and imputed accumulated interest to defer or reduce the need for
residential local rate increases during the transition period prior to
the introduction of price caps; and |
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b) based on the 2001 forecasted financial results submitted by
QuébecTel in TNs 280, 281 and 282, the Commission considers that the
business rate reductions can be funded through efficiency gains without
violating the contribution cap established in Order 2000-860. |
8. |
On the basis of the record of this proceeding, the Commission
considers that it would be appropriate to allow QuébecTel to proceed
with its business rate restructuring provided that it is not funded
through a local residential rate increase or the use of the excess
earnings currently held in the deferral account. The Commission is
satisfied that the proposed business rates (i.e., Band A at $39.95;
Band B at $45.90 and Band C at $58) remain compensatory.
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9. |
In light of the above, the Commission approves the changes proposed by
QuébecTel to its business rates under TNs 280, 281 and 282 subject to
the condition that the business rate restructuring not be funded through
the excess earnings currently held in the deferral account or a
residential rate increase. The Commission denies the $2.10 single line
residential rate increase proposed under TN 282. Accordingly, should
QuébecTel wish to proceed with its business rate restructuring proposal,
it is to issue the tariff pages pertaining to the business rate
restructuring proposed under TNs 280, 281 and 282. |
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Secretary General |
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Order CRTC 2001-217-1
This document is available in alternative format upon request and may
also be examined at the following Internet site: http://www.crtc.gc.ca |