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News Release
March 5, 1998
CRTC RELEASES PRICE CAP
IMPLEMENTATION DECISION
OTTAWA-HULL - The CRTC released today its final decision on the implementation
of the price cap regime (Telecom Decision CRTC 98-2).
This decision includes minor adjustments to the interim residential telephone rate
increases permitted last December, and implemented 1 January 1998, by most of the Stentor
companies. It also sets out:
- contribution charges to be paid by long distance and wireless service providers
- residential subsidy requirements to compensate for the high cost of providing service in
certain areas
- assignment of services to various price cap categories
Based on today's decision, the telephone companies may choose to implement the minor
adjustments effective 1 January 1998, defer them to a later date or not implement them at
all. They must advise the Commission by 31 March 1998 whether they elect to adjust back to
1 January 1998. MT&T has already proposed to defer any increase beyond the one
permitted last December to a later date.
Telephone Average Rate Average Additional
Company Increase Interim Rate Average
Requested Increase Increase
Effective 1 Implemented on Announced
January 1998 1 January 1998 Today
BC TEL $ 3.00 $ 2.84 $ 0.36
BELL $ 2.97 $ 2.57 $ 0.15
ISLAND TEL $ 3.00 $ 2.05 $ 0.55
MT&T $ 2.00 $ 2.00 $ 1.19
MTS $ 3.00 $ 0.35 $ 0.49
NBTEL $ 0.00 $ 0.00 $ 0.00
NEWTEL $ 6.40 $ 2.50 $ 0.14
TCI $ 3.00 $ 1.10 $ 0.23
The Commission arrived at the permitted rate increases set out above by applying the
same principles to each company while considering their particular circumstances. This
resulted in different rate increases for each, rather than a uniform increase for all.
Rates
In determining the overall rates for each company, the Commission took into
consideration such factors as:
- the appropriate rate of return for local and access services
- increased depreciation charges on local facilities investment
- expenses relating to Year 2000 technology requirements
- other company-specific considerations, such as Bell Canada's Service Improvement Program
(SIP) and MTS' proposed shareholder entitlement
The telephone companies had requested further flexibility to increase rates over and
above the $3.00 increase announced last May. These requests have been denied. However, BC
TEL and MT&T have been permitted to increase their residential rates by slightly more
than $3.00, in order to give customers certainty with respect to their rates during the
4-year price cap period. These increases are due in part to relatively higher equal access
costs for BC TEL than for other companies, and in the case of MT&T to inside wire
costs not previously recovered from subscribers. Under the price cap regime, any further
rate increases beyond those permitted in today's decision will be generally limited to the
rate of inflation for the next 4-year period.
"Price cap regulation will provide for the effective transition to competition in
the local market," stated CRTC Chairperson Françoise Bertrand. "We feel
confident that it will constitute the proper balance between consumer interests,
regulatory flexibility for existing telephone companies, and opportunities for new players
to the market".
Today's decision completes the final step in the rate rebalancing process announced in
1994, designed to bring residential service rates more closely in line with costs. The
Commission will monitor the price cap regime over the next four years and will undertake a
complete review before the end of this period.
Further considerations
A further process will be initiated shortly to examine the costs related to number
portability, a technology that would enable telephone customers to keep their current
phone numbers if they switched to an alternative local service provider. This process will
look at ways to recover these costs, which may ultimately have an impact on some
customers' rates beyond those permitted in this decision. In addition, a process is
underway to explore means of ensuring quality telephone service to remote and underserved
high cost areas.
- 30 -
Contact: CRTC Communications Branch, Ottawa, K1A 0N2
Tel: (819) 997-0313, TDD: (819) 994-0423,
Fax: (819) 994-0218
Copies of this decision and related documents will be available through our Internet
site ( http://www.crtc.gc.ca ) or by contacting
the public examination room of any CRTC office. These documents are available in
alternative format upon request.
City Telephone TDD Fax
Halifax (902) 426-7997 (902) 426-6997 (902) 426-2721
Montreal (514) 283-6607 (514) 283-8316 (514) 283-3689
Ottawa-Hull (819) 997-2429 (819) 994-0423 (819) 994-0218
Winnipeg (204) 983-6306 (204) 983-8274 (204) 983-6317
Vancouver (604) 666-2111 (604) 666-0778 (604) 666-8322
[français]
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