ARCHIVED -  Telecom Decision CRTC 89-6

Telecom Decision

Ottawa, 15 May 1989

Telecom Decision CRTC 89-6

BELL CANADA AND BRITISH COLUMBIA TELEPHONE COMPANY COMPETITIVE NETWORK SERVICE RATES FOR 1989

I INTRODUCTION

A. British Columbia Telephone Company

In Shortfall Forecast for 1988 for the Phase III Competitive Network category, Telecom Letter Decision CRTC 88-11, 4 October 1988 (Letter Decision 88-11), the Commission noted that British Columbia Telephone Company (B.C. Tel) had filed its preferred 1988 Phase III results in the proceeding dealing with the company's revenue requirements for the years 1988 and 1989. Those results were provided in attachment 1 of the response to interrogatory B.C.Tel (CRTC)2Sept88-4803. The results forecast a shortfall of $6.5 million in the Competitive Network (CN) category for 1988. In Letter Decision 88-11, the Commission also noted its policy that rates for services within the CN category should be compensatory and maximize contribution. The shortfall in the CN category raised concerns that this policy might have been violated. The Commission stated its view that remedial action was required in the form of CN rate increases. Over the period 19 October 1988 to 31 December 1988, the Commission estimated that the CN shortfall would be in the order of $l.3 million. Accordingly, the Commission directed B.C. Tel to file proposed tariff pages providing for interim increases of 15% in various intra and non-intra-B.C. Tel CN services, effective 19 October 1988, in order to correct for the shortfall forecast in the CN category over the remainder of 1988.

Under Tariff Notice 1805, dated 11 October 1988, B.C. Tel filed proposed tariff pages reflecting 15% increases in CN services. However, in the letter accompanying that filing, the company indicated that it would prefer that interim increases be made solely in its intra-company CN service rates. B.C. Tel stated that it intended to file, by 17 October 1988, revised rates for its intracompany CN services, providing for increases sufficient to eliminate the shortfall forecast in the CN category over the remainder of 1988. The company also stated that it would file revised proposed rates for the entire CN category for 1989.

Under Tariff Notice 1805A, dated 17 October 1988, B.C. Tel proposed an 18% interim increase in intracompany CN services. B.C. Tel also requested that Tariff Notice 1805 be withdrawn. In Telecom Order CRTC 88-553, dated 21 October 1988, the Commission approved Tariff Notice 1805A on an interim basis effective 21 October 1988, but denied the company's request to withdraw Tariff Notice 1805.

Under Tariff Notice 1805B, dated 1 November 1988, B.C. Tel proposed rate revisions for intra and non-intra CN services to take effect, on a final basis, 1 January 1989. The proposed revisions, which the company stated would maximize contribution from the CN category, were projected to increase 1989 CN revenues by $6.7 million.

Under Tariff Notices 1805C (dated 28 November 1988), 1805D (dated 27 February 1989), and 1805F (dated 27 February 1989), B.C. Tel proposed various revisions to the rates proposed under Tariff Notices 1805A and 1805B. Tariff Notice 1805D was granted interim approval in Telecom Order CRTC 89-147, dated 15 March 1989.

B. Bell Canada

In anticipation of the filing of B.C. Tel Tariff Notice 1805B, and because that application would deal with rates for TransCanada services that are also offered by Bell Canada (Bell), the Commission, by letter dated 21 October 1988, directed Bell to provide its preferred CN rate scenario for 1989 and its comments on the appropriateness of Bell implementing rate action similar to that contemplated in Letter Decision 88-11. Bell filed its comments on 4 November 1988. The company indicated that it would prefer not to implement rate action similar to that described in Letter Decision 88-11. In addition, it filed Tariff Notice 2910, proposing its preferred CN rate revisions, with an effective date of 1 January 1989. Bell requested that the proposed tariff revisions be granted either interim or final approval effective that date. In Telecom Order CRTC 88-636, dated 8 December 1988, the Commission granted interim approval, effective 1 January 1989, to only the proposed rates for intra-Bell Interexchange Voice Grade (IXVG), Telpak, Teleroute 200 and teletype-grade channels.

In CRTC Telecom Public Notice 1989-2, 17 January 1989, the Commission established a public proceeding to deal with Bell's and B.C. Tel's respective CN rate applications.

II THE APPLICATIONS

Bell's and B.C. Tel's applications proposed a variety of rate increases and decreases for their CN services. Some of the proposed revisions are described in detail in part III of this decision.

Bell submitted that its proposals maximize long-run contribution and reflect the following factors:

- the relative profitability of its services;

- the different stages of maturity of its services and their future growth and revenue potential;

- competitive alternatives;

- anticipated competitive responses to the company's rate proposals;

- the amount of time since the last rate change;

- the desire to maintain nationally uniform rates;

- the desire to minimize disruption in the marketplace; and

- the desire to manage their investment effectively.

B.C. Tel stated that its proposed rates maximize long-run contribution and reflect its overall assessment of contribution requirements, competitive alternatives, individual service characteristics, rate relationships, customer impacts and the long-term impacts of rate action. B.C. Tel submitted that rate increases in excess of those proposed in Tariff Notice 1805B would be inappropriate as they would fail to maximize long-run CN contribution.

III SELECTED SPECIFIC RATE PROPOSALS

A. Telecom Canada Services

1. Envoy 100/iNet 2000 Off-Net Access Surcharge

The current Envoy 100 and iNet 2000 tariffs permit off-net subscribers, i.e., those located outside a Datapac Serving Area (DPSA), to use 800 Service to access these services at no additional charge. Bell and B.C. Tel indicated that the extra costs associated with the use of 800 Service for this purpose have been much higher than originally forecast. The companies proposed the introduction of a $0.30 per minute surcharge applicable to off-net subscribers. The companies expect that the proposed surcharge would recover all tariffed charges associated with the use of 800 Service by off-net customers.

2. Other iNet and Envoy Rate Revisions

The companies proposed increases in the iNet 2000 Text Information Service Access charges for Canada-Canada communications of 27% during prime time (from $6.60 to $8.40 per hour) and 21% during non-prime time (from $4.95 to $6.00 per hour). They stated that these increases are intended to reflect increases in Datapac rates and to improve the contribution from this feature.

The current iNet tariff provides for discounts on the bill of an association, as defined in the tariff, whose total monthly bill exceeds $100,000, excluding voice usage charges. The companies proposed that the threshold for the discounts be reduced from $100,000 to $25,000. The current iNet tariff also provides for discounts on the monthly bill of an organization, as defined in the tariff. The companies proposed a new 2.5% discount on monthly bills exceeding $2,500, excluding voice usage charges. The companies also proposed rate increases of 14% to 28% for the Non-Interactive Option of Envoy.

3. Datapac

The companies proposed a variety of changes to Datapac rates, including a discount of 25% on the total per-call charges applicable to Datapac public dial access calls initiated and completed between the hours of 7 p.m. and 7 a.m. on weekdays or anytime during the day on weekends. The companies indicated that the rate action was designed to encourage network usage in off-peak periods, when network utilization is relatively low. The anticipated increase in revenue from new applications is expected to exceed any revenue loss due to the price reduction.

Bell and B.C. Tel also proposed a variety of increases in network usage charges, access charges, service charges and rates for optional features. The average proposed rate increase is 5.9%.

4. Dataroute

The companies proposed a variety of increases and decreases in Dataroute rates, averaging a 3.3% increase overall. The companies noted that the pricing strategy for Dataroute is based on its end- to-end rate relationship to the equivalent analogue service. Analogue rates are used to establish a Dataroute benchmark for 9.6 kbps service. Speeds above and below 9.6 kbps are priced in relation to this benchmark. The current rate relationships were established by the Commission in a letter to Bell dated 14 March 1985 concerning Bell Canada Tariff Notice 1370.

The companies indicated that the proposed rates for 24 Hour Dataroute 9.6 kbps service maintain the relationship with the equivalent analogue service that was specified in the Commission's 14 March 1985 letter.

The companies stated that the proposed rate revisions for the various Dataroute speeds above and below 9.6 kbps generally maintain the established relationships with the rates for 9.6 kbps. However, for some speeds below 9.6 kbps, the companies proposed a reduction in the price differential. This resulted in slightly larger proposed rate increases than would occur if prevailing rate relationships were maintained.

The rate relationships established by the Commission in 1985 dictate that 19.2 kbps rates be set at 1.8 times the rates for 9.6 kbps service. The proposed 19.2 kbps rates would be 1.4 to 1.7 times the proposed 9.6 kbps rates. In support of this revision, Bell and B.C. Tel submitted that the current 19.2 kbps Dataroute rates are not competitive with the analogue alternative, an IXVG channel and a customer-provided 19.2 kbps modem, due to reductions in the price of 19.2 kbps modems. The companies stated that, even with the proposed increases in IXVG rates, rates for Dataroute 19.2 kbps would remain significantly above the analogue alternative.

The companies noted that they generate significantly less revenue if a customer selects analogue service in preference to Dataroute 19.2 kbps. It was Bell's and B.C. Tel's view that it is economically advantageous for the companies to encourage customers to choose Dataroute 19.2 kbps, rather than analogue service. Bell submitted that the proposed Dataroute 19.2 kbps rates would continue to make a substantial contribution.

The companies submitted that the introduction of Telesat Canada's Anikom Services, CNCP Telecommunications' (CNCP) Mach III Services and the companies' integrated digital services have placed considerable price pressure on Dataroute 56 kbps. Bell and B.C. Tel stated that therefore the changes proposed in end-to-end rates for Dataroute 56 kbps are small.

The companies also proposed reductions in certain rates for Dataroute Access Arrangements, a reduction from 15% to 10% in the business day discount relative to 24 Hour service, increases in Dataroute service charges, and increases and decreases in the rates for Lower Speed Service Deriving Arrangements.

5. Datalink

The companies proposed increases in 2.4 kbps usage rates ranging from about 3% to 48%, with generally greater increases for the short and medium haul than for the long haul. Bell and B.C. Tel also proposed that the usage rate schedules for 4.8 kbps and 9.6 kbps services be combined and modified. This would result in increases ranging up to 43% for 4.8 kbps usage rates, and changes in 9.6 kbps usage rates ranging from increases of 15% to decreases of 23%. Bell and B.C. Tel stated that the rate revisions are steps towards rationalizing the relationship between Datalink usage rates and rates for message toll service (MTS).

Increases of 13.6% and 5.3% in Datalink access rates were proposed for 2.4 kbps and 4.8 kbps, respectively. The average proposed Datalink rate change is a 5.4% increase.

B. Intra-B.C. Tel Services

1. Voicecom I and II Usage Rates

B.C. Tel proposed reductions in intra-company Voicecom I usage charges ranging from 9.5% to 17%. B.C. Tel stated that the proposed reductions were intended to move rates towards the Voicecom I/MTS rate relationship that existed prior to 15 July 1988. B.C. Tel submitted that increases in Voicecom rates would cause excessive demand curtailment in view of rate relationships with MTS and with CNCP's Broadband Exchange Service (BES).

2. Megaroute and Megastream

B.C. Tel proposed a 10% increase in intra-company Megaroute and Megastream mileage rates. In Tariff Notice 1805C, the company proposed, among other things, increases in monthly rates and service charges for the Network Management and Control System (NMCS) feature.

3. Spacetel

Spacetel rates were increased by 18% on an interim basis in October 1988 when Tariff Notice 1805A was given interim approval. B.C. Tel proposed in Tariff Notice 1805B that Spacetel rates be reduced to pre-interim levels. B.C. Tel stated that the Spacetel Master Control Station represents a large fixed cost and that the company has not yet achieved the critical mass of business required to cover its fixed costs. B.C. Tel submitted that higher rates would lead to a loss of existing business and to significantly greater difficulty in winning new business. B.C. Tel stated that it does not expect unregulated satellite terminal equipment providers to follow any Spacetel price increases. The company submitted that, given the relatively early stage in the product's life cycle, the price sensitivity of customers and the low cost of competitive alternatives, the pre-interim rate levels would maximize contribution.

IV POSITIONS OF PARTIES

The Government of British Columbia (BCG) and Marathon Telecommunications Corp. (Marathon) filed comments concerning B.C. Tel's applications. Comments concerning Bell's application were received from the Ontario Ministry of Culture and Communications, La Corporation des Tapis Peerless (Peerless), Gesco Industries Corp. (Gesco), Guysborough County District School Board and D.H. Howden Company Ltd. (Howden). The following interveners submitted comments pertaining to both companies' applications: (CNCP), the Canadian Business Telecommunications Alliance (CBTA), the Peel Board of Education, TV Ontario, George Brown City College, Toronto Board of Education, York Region Board of Education, the New Brunswick Department of Education, the Anglican Parish of Nipigon (Nipigon), and the Ontario Ministry of Education.

A. Proposed iNet 2000 and Envoy 100 Increases

Several interveners considered the proposed iNet off-net access surcharge excessive. Many argued that it would adversely affect users, across Canada, of the educational community's iNet 2000 networks. These interveners submitted that the change from the use of 800 Service access at no charge from outside a DPSA to a $0.30 per-minute surcharge would result in iNet access becoming too expensive for some of their users.

A number of these interveners submitted that different rates should be charged for educational institutions' use of iNet for educational purposes. Others submitted that it is not appropriate for iNet and Envoy access rates to vary depending upon whether or not the user is located outside a DPSA.

Gesco considered that the proposed surcharge would be grossly unfair to companies such as itself who have invested significant resources in hardware and software systems to support programs that rely on toll-free access. Gesco noted that, under the proposed iNet rates, the hourly rate for prime-time Text Information Service Access for off-net users would increase from $6.60 per hour to $26.40 per hour, an increase of 300%.

In the event that the proposed surcharge is approved, Gesco suggested that it be compensated, either for its investment in equipment for use by off-net iNet users or for the difference between their present access charges and the ones proposed. Alternatively, Gesco proposed that access rates be grandfathered for customers who are presently receiving free off-net access.

Howden was of the view that it has a right to continuity of service without exposure to what it considers unconscionable price increases. Howden contended that increases in excess of the inflation rate should be denied. Howden submitted that its current iNet rates and those of its future customers should be grandfathered if the increases are allowed.

CNCP supported the proposed increases in iNet and Envoy rates.

In reply, Bell submitted that Envoy 100 and iNet 2000 were introduced at rates considered compensatory at the time. However, those rates were developed on the basis of demand assumptions that have not materialized. Bell stated that the use of off-net access via 800 Service has surpassed original forecasts. Bell stated that it regrets any adverse impact that the surcharge may have on educational users. However, the company contended that it should not be required to continue to provide access via 800 Service at no additional charge. Bell submitted that the costs of providing this service should be borne by those using it. Bell and B.C. Tel were of the view that special rates for educational users would be inappropriate. If this causes hardship to educational users, stated Bell, other types of public funding should perhaps be sought.

In reply to Howden, Bell noted that customers are not entitled to expect that General Tariff rates will not change.

Finally, Bell noted that the number of DPSAs is growing. It stated that it would be pleased to explore with customers opportunities for further DPSA expansion.

B. Other Comments

BCG submitted that rates for the CN category should recover all assigned costs and provide a contribution. BCG agreed in principle with B.C. Tel that the appropriate strategy for CN services is to maximize long-term contribution, but submitted that CN profitability has not been demonstrated in the 1986, 1987, 1988 or 1989 Phase III filings. BCG supported the rate action specified in Letter Decision 88-11.

CBTA was of the view that CN rates should not be set to maximize contribution in a single year, as measured by Phase III results. CBTA submitted that, in an unregulated competitive market, businesses operate to maximize the discounted present value of all future profits. CBTA submitted that, in such an environment, some firms might find it desirable to reduce profits or experience a short-term loss in order to increase future profits. CBTA submitted that an attempt to maximize short-term profits might cause permanent damage to the CN businesses of Bell and B.C. Tel.

CBTA objected to the application of the principle of maximization of contribution to CN services. CBTA submitted that it is appropriate to apply the principle in situations where the carriers face unregulated competitors, such as in the terminal equipment market. There, the competitive market will ensure that, in the long-term, prices will not significantly exceed costs plus a normal profit. CBTA submitted that, in the case of interconnected private-line and integrated digital services, no price competition exists. Therefore, the principle of maximization of contribution results in the carriers charging a "monopoly price", i.e., a price in excess of costs plus a normal profit. CBTA submitted that this is not consistent with economic efficiency.

CBTA opposed across-the-board rate increases. CBTA was of the view that such increases do not reflect the different factors affecting individual CN services. CBTA submitted that B.C. Tel Tariff Notice 1805B, which proposed a variety of rate revisions, should therefore be approved.

CBTA and Marathon submitted that their ability to participate meaningfully was unduly limited because of the carriers' claims of confidentiality.

CNCP objected to the cost studies used by the companies in determining their respective price strategies for CN services.

CNCP also objected to the proposed changes in rates for Dataroute 19.2 kbps services. CNCP contended that, even with the proposed increases, Datapac rates would still be far below the compensatory level.

CNCP stated that, in general, it supported the proposed intra-Bell rate revisions. CNCP submitted that B.C. Tel's intra and Bell's and B.C. Tel's non-intra rates, other than those for Envoy 100 and iNet 2000, should be increased by 15% across-the-board.

In reply to Bell's arguments that the implementation of the 15% non-intra rate increase would result in non-uniform rates among Telecom Canada members and in substantial billing difficulties, CNCP noted the Commission's statement in Increases and Decreases in Rates for Services and Facilities Furnished on a Canada-Wide Basis by Members of the TransCanada Telephone System, and Related Matters, Telecom Decision CRTC 81-13, 7 July 1981 (Decision 81-13), that "the fact that the member companies of [Telecom Canada] have reached unanimous agreement on the proposed rates is not, by itself, a sufficient criterion to demonstrate that the rates are just and reasonable." CNCP questioned why implementing non-uniform rates for Datapac would pose problems for Bell and B.C. Tel, given that billing procedures have been established to accommodate non-uniform rates for Dataroute.

In its reply, Bell submitted that the Commission, in attempting to assess maximization of contribution, should not rely solely on a single year's Phase III results, but should adopt a view to maximization of contribution over a longer period. Bell noted that the Commission's decision in Phase II of the Cost Inquiry established the principle of the maximization of contribution over the long term. Bell submitted that the availability of various indirect competitive alternatives limits the company's ability to introduce significant price increases while maximizing contribution over the longer term. Bell urged the Commission to resist the temptation to attempt to maximize Phase III contribution in a calendar year by introducing substantial across-the-board increases for the services in the CN category. In Bell's view, Phase III results must be viewed as only one of several tools for the analysis of appropriate rate action for competitive categories.

In response to CNCP's concerns regarding the cost studies filed in this proceeding, Bell and B.C. Tel stated that individual service cost studies were one of many factors used in the development of the companies' rate proposals. Bell submitted that the studies are useful for the purpose of planning rates.

Bell noted that uniformity of rates for Telecom Canada national services continues to be a primary marketing objective, in order that customers view Telecom Canada as a single national supplier. Current Datapac rates satisfy this objective. Bell indicated that non-uniform intra-company Dataroute schedules were introduced in order to maintain appropriate rate relationships with intracompany analogue IXVG rates, which varied among Telecom Canada member companies. Bell stated that national uniformity for Dataroute rates remains an objective and that Telecom Canada is working towards uniform national levels.

Bell also noted that Dataroute does not have a usage sensitive rate element nor does it have a centralized Telecom Canada billing system, as does Datapac. Each Telecom Canada member is responsible for performing its own Dataroute billing. This has facilitated the implementation of non-uniform rate schedules. Bell stated that the complexities of implementing non-uniform rates in the Datapac centralized billing system would be significant.

Bell submitted that, when the Commission established Dataroute rate relationships in 1985, 19.2 kbps analogue modems were not a competitive threat to Dataroute 19.2 kbps.

The company noted that there had been Datapac rate increases of 5% and 4% in 1987 and 1988, respectively. In addition, Bell noted that Datapac had been made subject to the 10% federal telecommunications tax in January 1988. Bell stated that, while these gradual rate increases have not significantly affected Datapac growth, the trend is causing major customers to consider alternatives to public packet-switched networks, such as the purchase of customer-premises packet equipment.

B.C. Tel submitted that across-the-board increases would not maximize contribution.

V CONCLUSIONS

A. Intra-Bell Services

The Commission notes that the majority of Bell's intracompany rates were given interim approval effective 1 January 1989. The remaining revisions are increases of approximately 10% in other channel services. Based on the record of this proceeding, the Commission considers that the proposed intra-Bell rates will maximize contribution and accordingly grants final approval to these rates.

With respect to CBTA's comments, the Commission notes that the principle of maximization of contribution is applied to the setting of rates for optional monopoly services, as well as to the setting of rates for competitive services. The contribution generated by the setting of rates to maximize contribution helps to keep rates for basic monopoly services as low as possible.

B. Telecom Canada and Non-intra Services

1. Proposed Envoy 100/iNet 2000 rates

In making a determination with respect to the proposed off-net access surcharge of $0.30 per minute, the Commission has considered, in particular, the factors noted below.

In Enhanced Services, Telecom Decision CRTC 84-18, 12 July 1984, the Commission determined that, for the purposes of setting rates for enhanced services, the carriers should be deemed to have acquired underlying basic services at tariffed rates. Accordingly, the costs associated with the provision of off-net access to iNet 2000 and Envoy 100 are based on the tariffed rate for 800 Service. On the basis of its original forecasts, Bell anticipated the recovery of the 800 Service tariffed rates through contribution generated by other iNet 2000/Envoy 100 rate components. Bell and B.C. Tel indicated that access via 800 Service has surpassed the levels originally forecast.

Second, iNet and Envoy are subject to facilities-based and resale competition. When competitors provide similar off-net access, they must lease 800 Service lines from the telephone companies and then recover the charges for those lines from their customers. For instance, access via 800 Service to CNCP's Dialcom Gateway Service is charged at $0.40 per minute for usage in excess of 10% of the customer's total monthly usage.

Third, the principle of applying an extra charge for off-net access is well established. Such charges are applied in both Datapac and Dataroute Services. In addition, Primary Exchange Service subscribers located outside a base rate area pay mileage rates, in addition to flat monthly rates.

Finally, the Commission notes that the number of DPSAs has more than doubled since 1 January 1984.

In light of the above, the Commission finds that an off-net access surcharge is appropriate. In determining the amount of the surcharge, the Commission considers it appropriate to balance the advantages to be derived from recovering costs from those who cause them against the advantages to be derived from company-wide rate averaging. Company-wide rate averaging increases the number of customers having access at a reasonable price, because large disparities in cost due to terrain, location, etc., are averaged out. Applying the approach noted above, the Commission finds it reasonable to approve an off-net access surcharge of $0.15 per minute.

The Commission considers the other proposed iNet and Envoy rate revisions appropriate. The increases are significant, but not unreasonable given the competitive nature of the services and recent increases in Datapac rates. The other proposed Envoy and iNet rate revisions are therefore approved.

2. Other Telecom Canada and Non-Intra Services

The Commission considers that Bell and B.C. Tel have adequately justified the remainder of the proposed Telecom Canada and non-intra rate revisions. The Commission is satisfied that the proposed rates will maximize contribution from the services in question.

The Commission therefore approves Bell Tariff Notice 2910, with the exception of the proposed $0.30 per minute off-net access surcharge for Envoy and iNet, discussed above. The Commission also approves the rates for Datapac, Datalink, Multicom and TWX proposed in B.C. Tel Tariff Notice 1805B, as amended in Tariff Notices 1805C and 1805F. In addition, B.C. Tel's proposed non-intra mileage rates for Voicecom, IXVGs, Telpak and Teletype services are approved. The Voicecom access rates proposed in Tariff Notice 1805B are approved. The Commission also approves B.C. Tel's proposed Dataroute rates, with the exception of the proposed intra-B.C. Tel mileage rates, discussed below. B.C. Tel's proposed rates for Envoy 100 and iNet 2000 are approved, except for the proposed $0.30 per minute off-net access surcharge.

The Commission notes that, during this proceeding, Bell expressed concern over the costs of implementing nonuniform rates for Telecom Canada services. The Commission has addressed the issue of non-uniform rates in previous proceedings: specifically, in Decision 8113 (as noted by CNCP) and in Bell Canada and British Columbia Telephone Company - Applications to Review Telecom Orders CRTC 83-13 and 83-14, Telecom Decision CRTC 83-12, 16 August 1983. In the latter decision, the Commission concluded that, in large measure, the delay in implementation of final rates for Datapac and Dataroute (pursuant to Telecom Orders CRTC 83-13 and 83-14) had been caused by Bell's past failure, in establishing Telecom Canada computer billing programs for Datapac and Dataroute Services, to anticipate and provide for the possibility of non-uniform rates.

The Commission approves the uniform Telecom Canada and non-intra rates proposed by Bell. However, given its earlier determinations on this matter, the Commission does not find persuasive Bell's arguments concerning the difficulties associated with billing system modifications.

C. Intra-B.C. Tel Rates

The Commission considers that the intra-B.C. Tel rates proposed in Tariff Notice 1805B will not generate adequate revenues in 1989. On the other hand, the rates proposed under Tariff Notices 1805A and 1805D, in conjunction with the other rates approved in this decision, would likely generate sufficient revenue to avoid any CN shortfall in 1989. The Commission therefore grants final approval to the rates proposed under Tariff Notices 1805A and 1805D, with the exception of the intra-B.C. Tel Dataroute and Spacetel rates. B.C. Tel is directed to file intracompany Dataroute mileage rates that maintain the end-to-end rate relationships embodied in the rates proposed under Tariff Notice 1805B between intra-B.C. Tel Dataroute 9.6 kbps and intra-B.C. Tel analogue service, and between intra-B.C. Tel Dataroute 9.6 kbps service and intra-B.C. Tel Dataroute service at other speeds.

With respect to Spacetel rates, the Commission agrees with B.C. Tel that the market for earth station equipment has grown increasingly competitive in recent years. As a result, alternatives are increasingly available to potential Spacetel customers. The 18% interim increase in Spacetel rates could, if given final approval, make the service uncompetitive. Accordingly, the Commission approves the Spacetel rates proposed under Tariff Notice 1805B, rather than those proposed in Tariff Notice 1805A.

B.C. Tel submitted that increases in Voicecom rates would result in excessive demand curtailment, in view of rate relationships with MTS and with CNCP's BES. However, in its responses to interrogatories, B.C. Tel indicated that 1989 Voicecom revenues, under interim rates, would be higher than those under rates proposed in Tariff Notice 1805B. The Commission has granted final approval to the interim rate increases. However, in view of the significant premium of Voicecom I over BES rates, the Commission would consider reductions in intra-company Voicecom I rates if the company presented satisfactory evidence that its revenue forecasts under the Voicecom rates proposed in Tariff Notice 1805A are overstated.

The Commission denies the intra-B.C. Tel Voicecom I mileage rates proposed in Tariff Notice 1805B, as well as the rates proposed in that Notice for intra-B.C. Tel IXVG, Teleroute 100, intra-B.C. Tel Telpak, Citylink, Megaroute and Wired Music Transmission Services. The rates proposed for Megastream under Tariff Notices 1805B and 1805C are denied, except for the proposed rate increases for the NMCS feature. These increases are approved. The revisions proposed in Tariff Notice 1805B for Program Transmission Service are approved, except for the proposed rates for full-time and occasional use intracompany interexchange channels. Bell and B.C. Tel are directed to issue revised tariff pages, within 10 days, with an effective date no later than 5 June 1989, giving effect to the rates approved in this decision. B.C. Tel should also file analyses similar to those in Table 4.5 of Attachment 1 to Tariff Notice 1805B and on page 11 of the response to interrogatory B.C.Tel(CRTC)16Jan89-7CN, as evidence that the intra-B.C. Tel Dataroute mileage rates filed conform to the Commission's directives regarding rate relationships.

Fernand Bélisle
Secretary General