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Telecom Public Notice
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Ottawa, 26 July 1985
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Telecom Public Notice CRTC 1985-44
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SUPPORT STRUCTURES AND RELATED ITEMS - PUBLIC PROCEEDING ON RATES
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Background
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In Bell Canada, Tariff for the Use of Support Structures by Cable Television Licensees, Telecom Decision CRTC 77-6, 27 May 1977 (Decision 77-6) the Commission stated in regard to rates proposed by Bell Canada (Bell) for its Support Structure Offering:
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rates for services offered under this tariff should be sufficient to recover the full costs of providing
them, consisting of the causally attributable costs and an adequate contribution to the common
costs, calculated in a reasonable manner. (p.27)
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In Decision 77-6, the Commission found neither Bell's proposed costing method nor the method suggested by the Canadian Cable Television Association (CCTA) to be acceptable in developing rates and concluded as follows:
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In the long term, the Commission believes that rates for support structures can only be
established with complete confidence after fuller study based on access to appropriate data,
collected in the light of the factors set out above. (p.29)
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The factors listed in Decision 77-6 were the need for some degree of rate stability, the equivalence of pole and conduit rates, the impact on subscribers of both the telephone and cable companies, and the need to be able to monitor certain aspects of the service such as demand, revenues and costs.
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The Commission noted the interim nature of the approach to rates it adopted in Decision 77-6 as follows:
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In the absence of such data, however, and in the face of immediate requirements, the
Commission has decided to exercise its best judgement on appropriate rate levels to cover a
period of time sufficient to permit some degree of stability in the rate structure and to permit the
development of data which could be used to provide a more refined calculation in subsequent
years. (p.29)
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In British Columbia Telephone Company, Tariff For The Use Of Support Structures By Cable Television Licensees, Telecom Decision CRTC 78-6, 28 July 1978 (Decision 78-6), the Commission approved a tiered rate structure for providing support structure services depending upon the type of facility employed. However, the Commission noted:
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in approving the tier structure proposed, the Commission does so without prejudice to the rights
of interested parties to submit alternate approaches at subsequent applications. (p.19)
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Further, in Decision 78-6, the Commission noted that the principle that cable operators would be expected to cover all causally attributable costs and make an adequate contribution to the common costs was not seriously challenged by any party. Regarding the method proposed by British Columbia Telephone Company (B.C. Tel) for determining a cable licensee's share of costs for joint use poles, the Commission stated:
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In adopting the average ratio of telephone cables to coaxial cable on any given pole as the sole
criterion for determining the cable licensees' share in the annual cost of book investment, the
Commission believes that the Company placed undue reliance on one factor which, while
relevant, should not have been employed to the exclusion of all others. The Commission
accepts the submissions of the CCTA witnesses who stated that other factors, such as cable
weight, revenue potential, and proprietary interest, while not in themselves conclusive, were at
least relevant and should have been considered. (pp. 19-20)
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In February 1983, the Commission received an application from Terra Nova Telecommunications Inc. (Terra Nova) for approval of tariffs providing for the introduction of cable support structure service.
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Terra Nova's proposed rates were based on the methodology employed by Newfoundland Light and Power which is regulated by the Board of Commissioners of Public Utilities of Newfoundland and Labrador. Under this methodology rates are set on the basis of the average annual carrying costs of the plant as computed from the previous year's data. The computation of the average annual carrying costs includes rate of return, depreciation, income tax, maintenance and administrative cost components. The method used for allocating the average annual carrying cost on joint use poles is to assign it in proportion to subscriber penetration. Without addressing the appropriateness of the Terra Nova methodology in Telecom Order CRTC 84-79, the Commission imposed a rating structure incorporating rates lower than those derived from this methodology.
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Since Decision 77-6 there has remained unresolved the methodology that should be applied, in the long term, in establishing rates for support structure and related items provided to cable television licensees by the federally regulated carriers. Accordingly, the Commission has decided to conduct a proceeding on the matter, to include a public hearing in the autumn of 1985.
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In addition, this proceeding will consider two related matters:
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a) Bell Canada - Rate Increases For Repair and Maintenance of Partial Cable Distribution
Systems, Tariff Notice 1448, dated 26 November 1984; and
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b) Engineering Search Fees For Support Structures, CCTA application, dated 13
August 1984.
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Procedure
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The procedure to be followed in connection with this proceeding is as follows:
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(1) The following federally regulated carriers, which presently offer cable support structure and
related arrangements as part of their General Tariffs, will be considered parties to this
proceeding: B.C. Tel, Bell and Terra Nova (the carriers).
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(2) Persons wishing to participate in the public hearing in connection with this proceeding must
notify the Commission of their intention to do so by writing to the Secretary General, CRTC,
Ottawa, Ontario, K1A 0N2, by 16 August 1985.
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(3) The Commission will issue a list of mailing addresses of the carriers and other parties to all
parties by 30 August 1985.
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(4) The carriers, and other parties intending to present evidence at the public hearing, shall file
with the Commission memoranda consisting of the material intended to be presented as
evidence, serving a copy on other parties, by 5 September 1985. Such memoranda should, at
a minimum, address the following issues:
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a) the methodology to be used in determining the costs of arrangements for cable licensees;
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b) the criteria to be used in allocating costs for joint use facilities; and
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c) the requirement for a tiered rate structure depending upon the type of facilities employed.
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(5) Any person wishing to comment on the memoranda of evidence filed by the parties, or
otherwise to comment on the issues in this proceeding, may do so by writing to the
Commission by 27 September 1985.
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(6) Any party may address interrogatories to any other party on its memorandum of evidence, with
a copy to the Commission, by 27 September 1985.
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(7) Replies to interrogatories must be filed with the Commission and served on all parties by 25
October 1985.
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(8) Requests by parties for public disclosure of information for which confidentiality has been
claimed, and requests for further responses to their interrogatories accompanied by reasons
why each further response is both relevant and necessary, must be filed with the Commission
and served on all other parties by 5 November 1985.
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(9) The public hearing is scheduled to commence at 9:30 a.m., Tuesday, 12 November 1985, in
the Outaouais Room of the Conference Centre, Phase IV, Place du Portage, Hull, Québec.
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(10) At the outset of the public hearing, the Commission will resolve any matters relating to further
responses to interrogatories, confidentiality, and procedure for the hearing.
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Fernand Bélisle
Secretary General
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