ARCHIVED - Telecom Decision CRTC 84-16

Telecom Decision

Ottawa, 20 June 1984

Telecom Decision CRTC 84-16

British Columbia Telephone Company General Increase in Rates

Interim Rate Increase

TABLE OF CONTENTS

I INTRODUCTION

II CONSTRUCTION PROGRAM

l. Construction Program Review

2. Capital Plan, 1984-1988

3. Capital Program Management System

4. Telephone Sets Held in Inventory

5. Utilization Indicators

6. Autotel

7. Local Measured Service

8. Conclusions

III FINANCIAL CONDITION

1. B.C. Tel's Position

2. Positions of Interveners

3. B.C. Tel's Reply

4. Conclusions

IV TARIFF REVISIONS

1. B.C. Tel's Position

2. Positions of Interveners

3. B.C. Tel's Reply

4. Conclusions

5. Tariff Filings

I INTRODUCTION

On 6 October 1983, British Columbia Telephone Company (B.C. Tel, the Company) advised the Commission of its intention to file an application for a general rate increase on 30 December 1983, anticipating a hearing in April 1984 with rates to be effective 1 July 1984. The Commission advised B.C. Tel that, due to its schedule of hearings during 1984, it would be unable to hold a hearing for the Company until February 1985. On 28 December 1983, B.C. Tel announced that it intended to file an application on 26 October 1984 requesting a general increase in rates to come into effect on 1 May 1985. At the same time, the Company applied to the Commission for interim increases in rates to come into effect on 1 July 1984.

Under the Company's proposal for interim increases, rates for residential and business exchange service would increase by approximately 6%. Service charges, such as those for installation, order processing, premise visits, line connections, as well as charges for certain other miscellaneous services, would also increase by 6%.

With respect to long distance services within British Columbia, rate increases of 6% would be implemented which would increase message toll service revenues by an estimated 4.6% in the period from 1 July 1984 to 31 December 1984.

The Company forecast that the interim rate increases would generate additional revenues of approximately $17 million if applied from 1 July 1984 to 31 December 1984.

A notice sent to subscribers in accordance with the requirements of the CRTC Telecommunications Rules of Procedure invited comments on the proposed interim rate increases, to be received by the Commission by 16 March 1984 with B.C. Tel's reply by 23 March 1984. In response to this notice, the Commission received interventions from 303 parties including the Consumers' Association of Canada (CAC), the Canadian Cable Television Association (CCTA), the Canadian Industrial Communications Assembly (CICA), the Council of Forest Industries of British Columbia (COFI) and the Federated Anti-Poverty Groups of British Columbia, the British Columbia Old Age Pensioners' Organization, Kennedy House Senior Recreation Centre, and Vancouver & District Public Housing Tenants Association (collectively known as FAPG et al).

II CONSTRUCTION PROGRAM

1. Construction Program Review (CPR)

Consistent with the process announced in CRTC Telecom Public Notice 1983-63, dated 17 October 1983, the Commission conducted a review of B.C. Tel's construction program. The CPR meeting was held on 17 and 18 January 1984 and focused on a detailed review of the Company's 1984-1988 Capital Plan. Several interveners attended the meeting, including CAC, the Federated Anti-Poverty Groups of British Columbia and the British Columbia Old Age Pensioners' Organization (FAPG), the Province of British Columbia, Ministry of Universities, Science and Communications (B.C. Government) and Radio Service Engineers Limited (RSEL).

Some interveners indicated that the CPR process could be refined further to reduce difficulties arising from the inclusion of subsequently updated information.

Given the amount of time required by the Company to assemble the basic data, prepare its Capital Plan, have it approved by its Board of Directors and submit it to the Commission, it is inevitable that certain changes will have occurred by the time the review takes place. In the Commission's view, it is preferable to take these changes into account despite the difficulties that arise. In order to minimize these difficulties, however, the Commission attempts to schedule CPR's as closely as possible to the issue date of a new Capital Plan.

2. Capital Plan, 1984-1988

B.C. Tel's Capital Plan is divided into five categories. These categories are described briefly below.

The primary telephone service category includes all capital expenditures related to growth in subscriber requirements for existing telecommunications services. Major programs in this category relate to local growth, station activity, toll growth and special services. Some 58% of total expenditures was expected to be spent on this category from 1984 to 1988.

The modernization category includes all capital expenditures for the replacement of obsolete plant with modern technology. The major program in this category is the replacement of step-by-step switches with electronic stored program control switches. Some 18% of total expenditures was expected to be spent on this category from 1984 to 1988.

The service improvement category includes capital expenditures undertaken to provide new or improved customer services. The major programs in this category relate to local value added services, satellite services, rural service, local measured service and radio-telephone automation. Some 8% of total expenditures was expected to be spent on this category from 1984 to 1988.

The operating improvements category includes all capital expenditures undertaken to improve the operating efficiency of the Company. The major programs in this category are the expansion of the serving area concept, subsurface conversion of outside plant, the introduction of common channel signalling, and regional network control centres. Some 7% of total expenditures was expected to be spent on this category from 1984 to 1988.

The administrative support category includes all capital expenditures required to support operational needs. The major programs in this category relate to motor vehicles, administrative buildings, land, tools, computer equipment, furniture and office equipment. Some 9% of total expenditures was expected to be spent on this category from 1984 to 1988.

Subsequent to the CPR meeting, B.C. Tel modified its 5-year Capital Plan by reducing its capital expenditure forecasts for 1984 from $390.9 million to $365.9 million. The Company stated that this reduction is mainly due to lower growth forecasts in customer lines and toll messages. As a result of this change, the Company's forecast of expenditures totals approximately $2,307 million for the period 1984 to 1988.

3. Capital Program Management System (CPMS)

CAC submitted that weaknesses in the Company's CPMS include inadequate control over both documentation used to update the CPMS and the unforeseen growth portion of the Company's central office growth forecasts, unforeseen growth being defined as that growth not identified with specific projects. Further, CAC stated that the Company does not have adequate written guidelines for the conduct of cost/benefit analyses of competing capital projects. RSEL added that no economic study had been conducted on a proposed $10 million expenditure for new office and warehouse space for the Business Terminal Equipment division (BTE).

B.C. Tel expressed the view that control procedures for CPMS input documentation are adequate. With respect to unforeseen growth, B.C. Tel stated that it is part of the outside plant provisioning process and is the difference between the total central office forecast and that part of the central office growth forecast which is attributable to specific addresses or sites. B.C. Tel added that since unforeseen growth is not forecast separately, it is not tracked separately. Regarding remarks on cost/benefit analysis procedures, B.C. Tel stated that it uses the guidelines contained in its Economic Evaluation Manual.

In response to RSEL's concerns, the Company stated that it will carry out a Net Present Value study before any commitment is made and that it will submit the study to the Commission.

The Commission notes that B.C. Tel's document entitled Capital Plan Planning and Methods identifies the economic evaluation of alternatives as a fundamental Component of short and long term planning in relation to the Company's provisioning process. In the Commission's view, the Company should ensure that such studies are carried out for all major capital projects before making final selections.

With respect to the CPMS input documentation and the unforeseen growth portion of its central office forecasts, the Commission is satisfied that the Company's control methods are adequate.

4. Telephone Sets Held in Inventory

At the CPR meeting, as a result of questions directed to B.C. Tel, CAC asserted that the Company's inventory of telephones held for sale is included in the same capital account as its leased telephones. CAC therefore concluded that telephones intended for sale are subject to depreciation.

B.C. Tel replied that all regular telephones are held in its capital account and that it is not known which of these telephones will be leased or sold until they are specifically requisitioned. In addition, B.C. Tel stated that it does maintain an inventory account for those telephones, such as specialty telephones, which are specifically intended for sale.

Indicating awareness of the fact that separate treatment is required for regular telephone sets which are being sold, B.C. Tel stated that action in this regard would be taken in 1984. The Company stated that, in the meantime, the effect on depreciation expense of regular telephone sets held for sale would be minimal within the current accounting cycle, because all such sets are new and therefore the length of time during which they remain in the capital account is short.

The Commission notes that B.C. Tel has been selling regular telephone sets since 1982 and considers that the proper accounting treatment for them should be implemented without delay. The Commission directs B.C. Tel to implement the necessary accounting procedures to separate the treatment of regular telephone sets intended for sale from those intended for lease within 30 days of the date of this decision. Further, at that time, the Company is directed to submit a copy of the procedures to the Commission for information.

5. Utilization Indicators

The Commission has tracked the Company's historical performance in the area of plant utilization through the use of aggregate utilization indicators since the initiation of the CPR process with B.C. Tel. These indicators, based on a ratio of assigned capacity to equipped capacity by plant category, are weighted averages, on a company or regional basis, of individual plant facility utilization.

CAC expressed the view that the indicators should consider full design capacity and not just the equipped capacity of a facility. Further, CAC argued that B.C. Tel should forecast utilization at least three years forward.

At the CPR meeting, B.C. Tel stated that it provisions on the basis of specific facilities. As a consequence, the Company concluded that, by reason of their far more general nature, the aggregate utilization indicators have no practical use for provisioning purposes. B.C. Tel also argued that utilization indicators, based on full design capacity, would be far less meaningful than the existing indicators and would result in misleading utilization indices.

The Commission is of the view that the utilization indicators should continue to be based on equipped capacity. The nature of current telecommunications facilities design, particularly in the area of digital switching, is such that basing indicators on full design capacity would provide a distorted view of the utilization of facilities.

With respect to B.C. Tel's view on the relevance of the aggregate utilization indicators in the context of its provisioning process, the Commission is of the view that they are both useful and consistent with B.C. Tel's method of provisioning in that they are computed from data on specific facilities.

The Commission agrees with CAC that utilization forecasts based on these indicators would be very useful when provided in the context of projected capital expenditures, forecast demand for the Company's services and the current utilization of B.C. Tel's facilities. In future proceedings, therefore, the Commission directs B.C. Tel to provide utilization forecasts for the current year plus two forward years.

6. Autotel

In its current Capital Plan, the Company has included expenditures of $15.7 million over the 1984-1988 period for the radio-telephone automation program called Autotel I. Autotel I includes an automated UHF system for the Vancouver area and a VHF system for the rest of B.C. Tel's territory.

CAC, B.C. Government, RSEL and FAPG argued that the introduction of cellular radio systems will make the Autotel I UHF system practically obsolete and that therefore it must be completely re-evaluated.

It was B.C. Tel's position that the Autotel I UHF system is providing badly needed relief to Vancouver's congested manual system. B.C. Tel added that if cellular radio should replace the Autotel I UHF system in Vancouver in the future, the Autotel I UHF equipment could be used elsewhere in the Autotel I system.

In response to questions during the CPR meeting, B.C. Tel confirmed that Autotel I UHF equipment is not compatible with any other automatic radio-telephone system in North America, including cellular radio and the Autotel I VHF system. The expected advent of cellular radio together with the incompatibility of the Autotel I UHF system suggests to the Commission that a review of the Autotel I UHF system by the Company is necessary.

In light of these considerations, the Commission directs B.C. Tel to submit, within 60 days of the date of this decision, an economic evaluation study of the planned expansion of the Autotel I UHF service. In addition, the Company is to identify the net book value of the investment associated with the Autotel I UHF service.

7. Local Measured Service (LMS)

In its current Capital Plan, B.C. Tel included an expenditures forecast of $19.9 million for implementation of LMS over the 1986-1988 Period.

FAPG argued that because no decision has been reached on the appropriateness of LMS, the inclusion of these expenditures is inappropriate and unreasonable.

B.C. Tel argued that it is appropriate to include this preliminary estimate in the current Capital Plan, the purpose of which is to provide the Company's best estimate of capital expenditures over a five year period and to provide interested parties with advance notice of B.C. Tel's intentions. The Company also stated that specific capital requirements and implementation schedules would await results of economic viability studies and future proceedings.

The Commission views the preliminary expenditures forecast for LMS strictly as being indicative of the Company's possible future plans. While the Commission has decided to permit the inclusion of this forecast in the Capital Plan, it emphasizes that this decision does not prejudge future determinations by the Commission on any matter concerning LMS.

8. Conclusions

Having reviewed the evidence concerning the Company's construction program, and taking into account the concerns expressed by interveners, the Commission has concluded that for the purposes of this proceeding the capital expenditures proposed for the years 1984 to 1988 are reasonable.

III FINANCIAL CONDITION

1. B.C. Tel's Position

In its application for interim rate increases, B.C. Tel stated that demand had been much lower than expected in 1983 due to lower than expected economic growth, and that similar economic circumstances are expected in 1984. B.C. Tel concluded that these factors, together with the expected lengthy delay, until May 1985, in implementing any general rate increase, would give rise to a serious deterioration in its financial condition. In support of this conclusion, B.C. Tel stated that its ordinary common shares have significantly underperformed the market including those utilities with whom we compete directly for capital . It expressed concern that a continuation of this unfavourable trend, in the absence of interim rate increases, could further reduce the ability of the Company to raise equity capital on reasonable terms. According to the Company, even with the approval of interim rate increases as proposed, the Company's financial performance would still not be restored to an adequate level but further deterioration might be avoided.

B.C. Tel's application contained details of the reduction in its forecast of demand and revenue. The Company stated that, in its April 1983 general rate increase application, the provincial economy was forecast to improve through 1983 and, for 1984, while remaining below historical average growth rates, was expected to experience the highest growth rate of any province in Canada. Based on these forecasts, moderate revenue growth was projected for B.C. Tel. The Company explained that, due to the reduction in expected economic growth and consequent demand reduction, its 1983 revenue level was $30 million short of earlier projections. In addition, the growth in 1984 long distance traffic is now forecast at 9.0%, down from the earlier forecast 11.9% contained in the April 1983 general rate increase application. In response to clarification requested by the Commission, the Company indicated that, using current forecasts, its total operating revenue for 1984 is expected to be $21.7 million less than it would be using forecasts made a year earlier. B.C. Tel added that it hopes to gain an additional $8.8 million in revenue from recently initiated advertising and marketing programs which would lessen the overall revenue reduction to $12.9 million.

The Company stated that it proposes to offset significantly the impact of the estimated reduction in its revenues by decreasing its operating costs and capital program spending to the lowest possible level commensurate with the maintenance of the quality of its services. B.C. Tel stressed that despite this, there will still be a substantial revenue shortfall which will not be balanced by an expense restraint program.

In its evidence, B.C. Tel forecast operating expense at $578 million for 1984, an increase of $49.1 million or 9.3% from actual 1983 expenses of $528.9 million. The Company indicated that inflation would account for $48.0 million of the increase, a rate of 9.1%. In addition, the Company proposed to introduce the Equal Life Group (ELG) depreciation method for its station connection accounts in 1984, which would increase 1984 depreciation expense by $13.6 million if implemented effective 1 January 1984, or $6.8 million if implemented effective 1 July 1984. The Company' justification for the change is that the current Vintage Group (VG) depreciation method provides inadequate capital recovery by comparison to the ELG depreciation method and that B.C. Tel is the only major Canadian telephone company not employing the ELG depreciation method for station connection accounts.

B.C. Tel stated that, to finance its construction program of $365.9 million, additional long-term financial commitments would be required. B.C. Tel added that for the Company to engage in such commitments, the financial community would require a reasonable degree of certainty that the Company could service the resulting financial obligations through acceptable levels of financial performance.

B.C. Tel forecast that, without interim rate increases and with the implementation of the ELG depreciation method for station connection accounts effective 1 January 1984, its return on average common equity (ROE) would decline to 11.7% in 1984, which is below the 12.75% - 13.75% range approved for 1983 in British Columbia Telephone Company, General Increase in Rates, Telecom Decision CRTC 83-8, 22 June 1983 (Decision 83-8). The Company added that the ROE of about 13.5% which would result from approval of the proposed interim increases and implementation of the ELG depreciation method on station connection accounts effective 1 July 1984, would still be less than its current cost of equity capital.

B.C. Tel viewed a 13.5% ROE as being a level which, in 1984, is less than fair relative to comparable telephone companies and utilities and that therefore the rates as requested are demonstrably just and reasonable.

2. Positions of Interveners

Interveners argued that even with the lengthy delay described in B.C. Tel's evidence, the Company has not provided sufficient evidence of serious financial deterioration within the meaning of the Commission's test enunciated in Bell Canada, General Increase in Rates, Interim Rate Increases, Telecom Decision CRTC 80-7, 25 April 1980 (Decision 80-7) to warrant approval of the proposed interim rate increases. COFI stated that, in any case, a full review of the revenue requirement is needed and suggested that, if the Commission is concerned with the effect of the delay on the Company's financial performance, it should advance the hearing date rather than award interim rate increases. Based on a comparison with previous B.C. Tel applications for interim rate increases, FAPG et al took the position that the application should be denied.

In agreeing with other interveners who expressed the view that the revenue deficiency could be rectified through means other than interim rate increases, such as further efforts to restrain costs, CAC stated that B.C. Tel has provided insufficient evidence on expenses to determine the steps taken to reduce operating expenses. In addition, CAC objected to B.C. Tel's use of a 9.1% inflation factor in calculating its operating expenses. It observed that 9.1% is inconsistent with the 4.8% inflation projection of other companies and the Economic Council of Canada and further, in CAC's view, if 4.8% were used, B.C. Tel's expenses would be reduced by $22 million, thus eliminating the need for interim rate increases. CAC also stated that the inflation factor of 6.6% in the 1984 component of the Capital Plan is inconsistent with the 9.1% factor.

Several interveners argued against the proposed introduction of the ELG depreciation method for station connection accounts. They argued that a change in depreciation procedures should not be granted during an interim rate increase application but rather deferred to the general rate increase hearing to allow interveners the opportunity to question the Company on the subject. Further, they were of the view that, in principle, interim rate increases should not be granted to compensate for a change in practices.

CICA stated that B.C. Tel's evidence is inconsistent with respect to the application of depreciation rates for station connection accounts in that the Company's "Without Rates" scenario incorporates a 1 January 1984 implementation of the ELG method of depreciation, while the "With Rates" scenario incorporates a 1 July 1984 implementation. CICA concluded that B.C. Tel had attempted to bolster its case by presenting a 'Without Rates' scenario which is unduly and artificially bleak.

CAC stated that B.C. Tel's comparison of its ROE requirement with other telephone companies is of questionable validity, because circumstances surrounding other telephone companies differ from those surrounding B.C. Tel.

Interveners questioned further the validity of a 13.5% ROE when compared to the ROE of 13.25%, within a range of 12.75% - 13.75%, approved in Decision 83-8. They argued that it should be toward the low end of the range and that the magnitude of rates needed to produce an ROE of 13.5% exceeds the intended purpose of interim increases.

3. B.C. Tel's Reply

In reply to arguments of insufficient evidence of serious financial deterioration without the interim rate increases, B.C. Tel stated that the evidence concerning the consequences of delaying the hearing without approving the proposed interim increases is clear.

With respect to arguments concerning its inflation forecast, the Company stated that it includes labour cost inflation which has already been established by labour contracts and that the 6.6% construction program inflation factor could not be compared to the 9.1% operating expense factor, as these are different elements of expenses.

The Company denied categorically that it had attempted to bolster its case with extra depreciation expenses in its "Without Rates" scenario. Arguing that the change in depreciation procedure is long overdue, B.C. Tel stated that the 1 January 1984 introduction of the change in depreciation procedures resulting in the depreciation expense estimate contained in its "Without Rates" column in evidence, "would be the correct time to introduce such a change if financially appropriate".

With respect to ROE, the Company argued that while the proposed rates would provide a level of ROE near the upper end of the range approved for 1983, the evidence shows that this range is not appropriate for 1984.

4. Conclusions

The Commission's policy concerning interim rate increases, as stated in Decision 80-7. is as follows:

The Commission considers that, as a rule, general rate increases should only be granted
following the full public process contemplated by Part III of its Telecommunications Rules of
Procedure. In the absence of such a process, general rate increases should not in the
Commission's view be granted, even on an interim basis, except where special circumstances
can be demonstrated. Such circumstances would include lengthy delays in dealing with an
application that could result in a serious deterioration in the financial condition of an applicant
absent a general rate increase.

In assessing the present application, the Commission has taken into account the fact that B.C. Tel originally requested permission to file an application for a general increase in rates on 30 December 1983, with a proposed effective date of 1 July 1984, and that the Commission's scheduling constraints have imposed a significant additional delay in the proposed effective date to 1 May 1985, a period of 10 months. In the circumstances, and on the basis of the record of this proceeding, the Commission has been persuaded that, in the absence of interim rate increases in 1984, the Company could experience a serious deterioration in its financial condition which could not be remedied by rate action in 1985.

Accordingly, the Commission has concluded that the special circumstances envisaged in its policy concerning interim rate increases exist and that interim rate increases are appropriate. In arriving at this conclusion, the Commission notes that B.C. Tel's performance with respect to quality of service in 1983 is generally satisfactory.

Having considered all the evidence in this case, the Commission is satisfied with the reasonableness of the Company's proposal that an ROE for 1984 of 13.5%, which amounts to 13.43% after regulatory adjustments, should be accepted for purposes of determining appropriate interim rate increases.

With respect to the Company's proposal to implement the ELG method of depreciation for its station connection accounts, the Commission notes that B.C. Tel is currently lagging considerably behind the industry in allowing for the depreciation of this category of plant. This has resulted not only in the Company's station connection accounts being seriously underdepreciated but also in the Company being placed at a disadvantage with respect to the settlement of toll revenues among the members of Telecom Canada. The Commission notes that until such time as the depreciation procedures for station connections are further refined, the ELG method of depreciation conforms more closely than the present VG method to the Commission's intent of matching as accurately as possible depreciation and plant consumption, as specified in the Inquiry into Telecommunications Carriers' Costing and Accounting Procedures Phase I: Accounting and Financial Matters, Telecom Decision CRTC 78-1, 13 January 1978. Further, the Commission has determined that B.C. Tel's proposal to implement the ELG method of depreciation for station connections effective 1 July 1984 will not give rise to a revenue requirement which constitutes an undue burden on B.C. Tel's subscribers. The Commission, therefore, directs the Company to implement the ELG method effective 1 July 1984.

Based on the evidence submitted in support of this application, the Commission has concluded that the Company has not adequately justified its 1984 forecast of operating expenses at $578 million. In particular, in the Commission's view, the Company's forecasts of the general inflation rate and of labour costs appear excessive and consequently the Commission, exercising its judgement, has reduced the Company's expense estimates by $6 million.

Taking all of the foregoing into account, the Commission has determined that the Company will require additional revenues of approximately $12 million for 1984. In order to permit the Commission to review the Company's 1984 revenue requirement at the February 1985 public hearing, B.C. Tel is directed to file its 26 October 1984 general rate increase application on the basis of two one-year test periods comprising 1984 and 1985.

IV TARIFF REVISIONS

1. B.C. Tel's Position

In its application, B.C. Tel requested an across-the-board 6% rate increase for most services. The Company proposed to exempt (1) services that are subject to negotiation with other carriers, (2) fixed contract special assembly services, (3) competitive services for which revenues would not be maximized by a price increase, (4) services that have recently been introduced by the Company, (5) services for which tariff applications were before the Commission, and (6) local coin telephone charges.

2. Positions of Interveners

Several interveners argued that no special circumstances exist to exclude the 4% government restraint guideline and that therefore no interim increases should exceed 4%.

To maintain rate relationships among monopoly and competitive services, and to ensure that competitive services are not excluded from making fair contribution, several interveners argued that any interim increases approved by the Commission should be equally applicable to all monopoly and competitive services. These interveners stated that despite B.C. Tel's allegation of urgent need, its evidence does not clearly show that the proposed rate increases are in fact to be applied to competitive services.

CCTA argued that no increases should be approved for cable television support structure services because the public process promised by the Commission on support structure rates in Telecom Order CRTC 83-266, dated 29 April 1983, has not occurred; there is no evidence to support the material change in the economies of providing support structure services required by the Commission in British Columbia Telephone Company - Tariff For The Use of Underground Ducts By Cable Television Licencees, Telecom Decision CRTC 82-6, 26 July 1982 for rate increases; and the Company has already been granted rate increases in support structure rates without a public process or evidence of a material change in the economies of the support structure services.

3. B.C. Tel's Reply

Concerning the effect of the government's 4% restraint guideline, B.C. Tel expressed the view that the Commission must make its decision within the boundaries of its legislative mandate which takes no account of the guidelines. The Company added that the Commission has the flexibility to permit rate adjustments with any frequency if conditions warrant.

Replying to concerns expressed regarding competitive services, B.C. Tel stated that exemptions were requested for competitive services because raising rates would result in revenue decreases.

In reply to CCTA's view of a commitment by the Commission to a public process on cable television support structure services, B.C. Tel stated that the Commission's commitment referred to Bell Canada (Bell) support structure services and that, because B.C. Tel's and Bell's costing and pricing methods differ, the Commission's intent should not disallow B.C. Tel's application for interim rate increases. In addition, B.C. Tel noted that the support structure services are included in the General Tariff and therefore are entirely appropriate for inclusion in the application.

4. Conclusions

With respect to cable television support structure services, the Commission is of the view that it is appropriate that they bear a portion of the Company's additional revenue requirement. Moreover, the Commission accepts the Company's proposal to increase the rates for support structure services by the same percentage as those for other monopoly services.

To meet the revenue requirement identified in Section III, the Commission approves, except as specified below, increases of 4% for all services in respect of which rate increases were requested in the Company's application.

With respect to basic exchange services, in light of Bell Canada and British Columbia Telephone Company - Implementation of Decision Permitting Attachment of Subscriber-Provided Terminal Equipment, Telecom Decision CRTC 84-11, 30 March 1984, which unbundled basic exchange rates into a set component and a line component, the interim rate increase of 4% will be applicable to both the network access charge and the set lease rates.

With respect to the proposed rate increases for telephone network access on the part of competitive paging services, the Commission notes that these rates were increased effective 1 November 1983. The Commission also notes that this service is similar to a component of the Company's Pagecall service for which rates were exempted from increases in this proceeding. Rates for the Pagecall service were revised in February 1984, taking into account the rates charged for telephone network access for competitors' paging services. In light of these factors, the Commission does not consider further increases for telephone network access to be appropriate at this time and, accordingly, exempts these rates from increases.

B.C. Tel proposed not to increase rates for its intraprovincial services including interexchange line mileage, interexchange private line and Telpak. The Commission has not been persuaded that the rate relationship of these services with message toll service should be changed at this time and accordingly directs that the associated rates are to be increased by 4%.

5. Tariff Filings

B.C. Tel is directed to file revised tariff filings to implement the rate changes approved in this decision on not less than three days notice with an effective date not earlier than 1 July 1984.

Fernand Bélisle
Secretary General