ARCHIVED - Telecom Order CRTC 2002-465

Telecom Order CRTC 2002-465

Ottawa, 20 December 2002

Bell Canada

Reference: Tariff Notice 6648

Centrex data locals and Microlink service

The Commission received an application by Bell Canada, dated 15 January 2002, which proposed revisions to General Tariff item 675, Centrex III Service, General Tariff item 5210, Microlink Services; and to Exchange Services Tariff item 350, Enhanced Exchange-Wide Dial (EEWD) data locals and Microlink accesses.

Bell Canada proposed to increase the monthly rate for data local lines for both Centrex III and EEWD service by 10 % and increase the monthly rate for Microlink access by 5 %.

Bell Canada further proposed to destandardize EEWD data locals, stating that customer growth for data applications could be accommodated through EEWD Microlink accesses.

Bell Canada submitted that the proposed rate increases for data local lines and Microlink accesses were intended to help the company meet its revenue objectives for these services as well as contribute to the overall financial objectives of the company.

On 12 February 2002, Primus Telecommunications Canada Inc. (Primus) filed comments on Bell Canada's Tariff Notices (TNs) 6647 and 6648. On 14 February 2002, AT&T Canada Corp. on behalf of itself and AT&T Canada Telecom Services Company (collectively, AT&T Canada) filed comments with respect to Bell Canada's TNs 6647, 6648 and 6649. On 27 February 2002, Bell Canada filed reply comments.

Parties' comments

In their respective comments, both AT&T Canada and Primus submitted that the Commission should deny Bell Canada TN 6648.

AT&T Canada submitted that the proposed price changes underscore Bell Canada's dominant position within the local business market. AT&T Canada argued that the proposed price increases exacerbate the competitive situation since Centrex was a vehicle used by AT&T Canada and other competitors to expand their market reach and to build the critical mass of customers necessary to justify a facilities build.

Primus submitted that there was no justification for the proposed rate increases since Bell Canada had not provided evidence that costs have gone up or that improvements to these services have been made to support the increased rates.

Primus also submitted that the continued price increases of services, which are used by competitors to compete in the fiercely contested local and toll markets, was leading to competitive inequities.

Bell Canada's reply

Bell Canada submitted that the comments of AT&T Canada and Primus should be dismissed and its application should be approved.

Bell Canada submitted that AT&T Canada's arguments centre on the alleged dominant position that Bell Canada has in the business marketplace and reiterate the theme of alleged competitive inequity.

With respect to Primus' comments, Bell Canada submitted that service enhancements and increased costs, while valid reasons for applying for a rate increase, are not the only considerations for justifying such a request. Bell Canada stated that it was not obliged to justify increases to Centrex rates on the basis of cost increases. Bell Canada further submitted that the financial impact of the proposed increases on telecommunications service providers were proportionally no different than that experienced by any other large retail user of the service.

Commission determination

The Commission notes that in, Regulatory framework for the second price cap period, Telecom Decision CRTC 2002-34, 30 May 2002 (Decision 2002-34), Centrex data local lines and Microlink access used in conjunction with Centrex service were classified as uncapped services and, as a result, rate increases for these services were not required to satisfy the price cap constraints.

The Commission considers that the proposed rate increases will not cause a disproportionate financial impact on the competitive telecommunications service providers.

The Commission notes that in Decision 2002-34 Microlink service (General Tariff item 5210) was reclassified from uncapped services to other capped services. With the reclassification of Microlink service to the other capped services category, the Commission requires justification that the proposed increase meets the price cap constraints.

In light of the above, the Commission approves Bell Canada's application with the exception that the increase to the standalone Microlink access service, provided under Bell Canada's General Tariff item 5210, is denied. The revisions take effect as of the date of this order.

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