ARCHIVED - Public Notice CRTC 2000-99

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Public Notice CRTC 2000-99

Ottawa, 14 July 2000

Proceeding to determine the scope of the price cap review

Reference: 8678-C12-09/00
This public notice initiates a proceeding to seek comments on the scope of the upcoming review of the price cap regime for the major incumbent telephone companies.
The review will take place prior to the end of the price cap period. The four-year price cap regime was established in 1998.

Current regulatory regimes


Price cap regulation and related issues, Telecom Decision CRTC 97-9, dated 1 May 1997, provides the principles and components of price cap regulation for most of the major incumbent telephone companies. These telephone companies include Bell Canada, Island Telecom Inc., Maritime Tel & Tel Limited (MTT), MTS Communications Inc., NBTel Inc., NewTel Communications Inc.; and TELUS Communications Inc. and TELUS Communications (B.C.) Inc. (formerly BC TEL) (collectively TELUS).


Decision 97-9 concluded that, rather than implementing an earnings-sharing mechanism, the length of the price cap plan should be the only self-correcting mechanism. The Commission approved for the telephone companies a true price cap plan for a period of four years commencing 1 January 1998, with a review to be completed prior to the end of the period.


Saskatchewan Telecommunications (SaskTel) joined the other major incumbent telephone companies under the Commission's jurisdiction on 30 June 2000. SaskTel - Transition to federal regulation, Decision CRTC 2000-150, dated 9 May 2000, provides the parameters for an 18-month transitional regulatory framework to federal regulation. Decision 2000-150 stated that the timing of a review of SaskTel's financial situation is likely to coincide with the price cap review of the other telephone companies.


In Decision 97-9, the Commission referred to several issues that would likely be addressed in the price cap review proceeding. For example, the Commission stated that the focus of the review of the price cap parameters prior to the end of the period should be the performance of the Canadian telecommunications market in terms of pricing and the competitive nature of the industry. The Commission also stated that the Utility segment financial results would be one of the factors examined in re-setting the price cap parameters.


Since Decision 97-9 was released, several issues were raised during the price cap regime which may need to be considered in the price cap review. These issues included:
a) the appropriateness of the frozen contribution policy;
b) the compliance with the price cap obligations when rates for capped services are at or near floor prices;
c) the impact of the price cap formula on the pricing of competitive local business services;
d) the structure of the service baskets, including the treatment of services not part of the capped services basket (e.g. optional local services); and
e) the appropriateness of the rates, terms and conditions for services used by competitors.


In addition, the price cap review will need to consider several determinations made or to be made during the price cap period by the Commission (e.g. Telephone service to high-cost serving areas, Telecom Decision CRTC 99-16, dated 19 October 1999, and in proceedings initiated by Review of contribution collection mechanism and related issues, Telecom Public Notice CRTC 99-6, dated 1 March 1999, and Restructured bands, revised local loop rates and related issues, Public Notice CRTC 2000-27, dated 18 February 2000).

Seeking input on scope of the price cap review


The Commission hereby initiates a proceeding to seek comments on the matters discussed below.


The evolution of the telecommunications market has been discussed within the context of some of the issues referenced in paragraph 5 above. The Commission seeks comments on whether price cap regulation or the current price cap regime remains appropriate to permit sustainable competition to evolve. Parties are to include in their comments their views on the relationship between the status of competition and the current price cap regime.


The price cap framework was designed to balance certain goals and objectives, such as price protection for consumers, increased flexibility for the incumbent telephone companies, competitive equity, reasonable Utility segment rates and streamlined regulation.


The Commission seeks comments on the criteria to measure the success of the price cap regime in achieving these goals and objectives. Parties are asked to address:
a) the strengths and weaknesses of the existing price cap regime measured against the objectives of the regime; and
b) the impact the regime has had on consumers, incumbents and competitors.


The Commission seeks comments on the issues to be considered and the type of process that should be used for the upcoming price cap review. Parties' comments should address:
a) what determinations made or to be made by the Commission need to be considered in the price cap review;
b) whether the issues for the price cap review raised in Decision 97-9 are still applicable;
c) the need to review some or all Utility segment rates; and
d) any other issues relevant to the price cap review.



Bell Canada, Island Tel, MTT, MTS, NBTel, NewTel, SaskTel and TELUS are all made parties to this proceeding.


Other interested parties wishing to participate in this proceeding must notify the Commission of their intention to do so by writing to the Secretary General, CRTC, Ottawa, Ontario, KIA 0N2, fax: (819) 953-0795, by 21 August 2000. Parties are to indicate in the notice their email address, where available. If parties do not have access to the Internet, they are to indicate in their notice whether they wish to receive disk versions of hard copy filings. The Commission will issue, as soon as possible after the registration date, a complete list of interested parties and their mailing address (including their email address, if available), identifying those parties who wish to receive disk versions.


All parties may file comments with the Commission on any matter within the scope of this proceeding, serving a copy on other interested parties by 11 September 2000. Submissions longer than five pages should include a summary.


All parties may file replies to any comments made pursuant to paragraph 14, serving copies on all interested parties, by 2 October 2000.


Where a document is to be filed or served by a specific date, the document must be actually received, not merely sent, by that date.


Parties wishing to file electronic versions of their submissions can do so by email or on diskette. The Commission email address is .


The electronic version should be in the HTML format. As an alternative, those making submissions may use "Microsoft Word" for text and "Microsoft Excel" for spreadsheets.


Please number each paragraph of your submission. In addition, please enter the line ***End of document*** following the last paragraph. This will help the Commission verify that the document has not been damaged during transmission.


The Commission will make submissions filed in electronic form available on its web site at in the official language and format in which they are submitted. This will make it easier for members of the public to consult the documents.


The Commission also encourages interested parties to monitor the public examination file (and/or the Commission's web site) for additional information that they may find useful when preparing their submissions.


Submissions may be examined or will be made available promptly upon request at the following Commission offices during normal business hours:
Central Building
Les Terrasses de la Chaudière
1 Promenade du Portage, Room G-5
Hull, Quebec K1A 0N2
Tel: (819) 997-2429 - TDD: 994-0423
Fax: (819) 994-0218
Bank of Commerce Building
1809 Barrington Street
Suite 1007
Halifax, Nova Scotia B3J 3K8
Tel: (902) 426-7997 - TDD: 426-6997
Fax: (902) 426-2721
405 de Maisonneuve Blvd. East
2nd Floor, Suite B2300
Montréal, Quebec H2L 4J5
Tel: (514) 283-6607 - TDD: 283-8316
Fax: (514) 283-3689
55 St. Clair Avenue East
Suite 624
Toronto, Ontario M4T 1M2
Tel: (416) 952-9096
Fax: (416) 954-6343
Kensington Building
275 Portage Avenue
Suite 1810
Winnipeg, Manitoba R3B 2B3
Tel: (204) 983-6306 - TDD: 983-8274
Fax: (204) 983-6317
Cornwall Professional Building
2125 - 11th Avenue
Room 103
Regina, Saskatchewan S4P 3X3
Tel: (306) 780-3422
Fax: (306) 780-3319
Suite 520 - 10405 Jasper Avenue
Edmonton, Alberta T5J 3N4
Tel: (780) 495-3224
Fax: (780) 495-3214
530-580 Hornby Street
Vancouver, British Columbia V6C 3B6
Tel: (604) 666-2111 - TDD: 666-0778
Fax: (604) 666-8322
Secretary General
This document is available in alternative format upon request and may also be examined at the following Internet site:
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