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Telecom Public Notice
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Ottawa, 29 August 1989
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Telecom Public Notice CRTC 1989-42
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BELL CANADA AND BRITISH COLUMBIA TELEPHONE COMPANY - IMPROVING THE MATCH BETWEEN REVENUES AND COSTS ASSOCIATED WITH THE PHASE III COMPETITIVE NETWORK AND ACCESS CATEGORIES
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In Order and Guidelines for the Filing of Phase III Manuals by Bell Canada and British Columbia Telephone Company, Telecom Order CRTC 86-516, 28 August 1986, the Commission recognized that the current bundled rate structures for some services prevent the identification of the rate components that correspond to the costs involved in providing the services. The Commission also recognized that, as a result, mismatches between certain revenues and costs would exist in the Phase III study results. In light of these mismatches, the Commission directed Bell Canada (Bell) and British Columbia Telephone Company (B.C. Tel) to assign revenues from bundled tariffs to the Phase III broad service category (BSC) that reflects the major assignment of costs or, where this is impossible, to the BSC that best reflects the nature of the service.
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In Bell Canada and British Columbia Telephone Company - Phase III Manuals: Compliance with CRTC Telecom Public Notice 1986-54 and Telecom Order CRTC 86-516, Telecom Decision CRTC 88-7, 6 July 1988 (Decision 88-7), the Commission recognized and shared the concerns of carriers and interested parties that mismatches in the assignment of revenues and costs detract from the usefulness of the Phase III study results. Bell and B.C. Tel were directed to submit, within six months, a report identifying and describing alternative approaches for improving the match between revenues and costs associated with the Phase III Competitive Network (CN) and Access categories.
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On 6 January 1989, Bell and B.C. Tel submitted their reports. The Commission hereby announces a proceeding to consider those reports, as well as the issues described below.
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By letter dated 15 December 1988, B.C. Tel filed, among other items, 1988 and 1989 projected Phase III study results. B.C. Tel's submission of 6 January 1989 makes reference to that letter. The letter (including attachments), as it relates to the issues outlined in this public notice, will form part of the record of this proceeding.
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A. Approaches for Improving the Match between the Revenues and Costs Associated with the CN and Access Categories
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In its 6 January 1989 submission, Bell identified specific services for which revenue/cost mismatches exist. The company outlined four possible methods for improving the matching of revenues and costs for these services. Two of the methods are based on a restructuring of the existing tariffs. The other two propose particular study processes for identifying the amount of revenue from bundled rates associated with the Access category. The remainder of the revenue derived from the bundled rates would be assigned to the CN category.
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B.C. Tel's submission of 6 January 1989 also outlined four methods for improving the matching of revenues and costs associated with the CN and Access categories. One of these involves a restructuring of existing tariffs. The other three outline study processes for identifying the CN and Access components of revenues derived from bundled rates.
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The Commission invites comments on the methods proposed by Bell and B.C. Tel for improving the match between the revenues and costs associated with the CN and Access categories.
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B. Local Private Line Services - B.C. Tel
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In the proceeding leading to British Columbia Telephone Company - Revenue Requirement for the Years 1988 and 1989 and Revised Criteria for Extended Area Service, Telecom Decision CRTC 88-21, 19 December 1988 (Decision 88-21), B.C. Tel stated that local private line services within an Extended Area Service (EAS) area generate a significant amount of CN revenues that have been inappropriately allocated under the current Phase III methodology. B.C. Tel proposed to restructure its local private line services to achieve a better match between revenues and costs and to establish a consistent unbundled rate structure. However, in Decision 88-21, the Commission concluded that it was premature to consider a proposal for a partial unbundling of revenues without consideration of the reports to be submitted by Bell and B.C. Tel pursuant to Decision 88-7.
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B.C. Tel reiterated its concerns with respect to this issue in its submissions of 15 December 1988 and of 6 January 1989. B.C. Tel stated that revenues generated by local private line services within an EAS area are mainly assigned to the Access category. While costs associated with local loops are also assigned to the Access category, those associated with interoffice trunking are assigned to the CN category.
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The Commission invites comments with respect to the appropriate Phase III categorization for the interoffice facilities associated with local private line services within B.C. Tel's EAS areas and the appropriate approach for improving the matching of the associated revenues and costs.
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The record of the proceeding leading to Decision 88-21, as it pertains to these issues, will form part of the record of this proceeding.
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C. Intraexchange Interoffice Facilities - Bell
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In its 6 January 1989 submission, Bell identified certain mismatches arising from the current Phase III classification of its intraexchange interoffice facilities related to Tariff Item 950, Local Channels. In Attachment 1 of its submission, Bell indicated that revenues from local channels are associated with the Access category, while intraexchange interoffice facility costs associated with these services are assigned to the CN category. Bell noted that the Phase III classification of intraexchange interoffice facilities for single end-to-end private line type services is inconsistent with the Phase III classification of the corresponding facilities provided with services such as Datapac.
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The Commission invites comments on the appropriate Phase III categorization of Bell's intraexchange interoffice facilities and the appropriate approach for improving the matching of the associated revenues and costs.
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In Bell Canada - Local Channel Rate Increases, CRTC Telecom Public Notice 1989-20, 1 May 1989, the Commission announced a proceeding to consider an application from Bell to increase the rates for local channels. Portions of the record of that proceeding, in the Commission's view, may be relevant to these issues and will form part of the record of this proceeding.
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PROCEDURE
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(1) Bell and B.C. Tel are made parties to this proceeding.
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(2) Interested persons wishing to participate in this proceeding (interveners) must notify the Commission of their intention to do so by writingto the Secretary General by 28 September 1989. Copies of that notice are to be served on Bell and B.C. Tel by the same date. The Commission will issue a complete list of parties and interveners and their mailing addresses.
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(3) By 10 October 1989, Bell and B.C. Tel are to serve interveners with copies of their respective 6 January 1989 submissions. In addition, B.C. Tel is to serve interveners with a copy of its submission of 15 December 1988.
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(4) The Commission has addressed interrogatories to Bell and B.C. Tel. Bell and B.C. Tel are to file responses to these interrogatories with the Commission and serve copies on each other and on interveners by 10 October 1989.
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(5) Interveners may address interrogatories to Bell and B.C. Tel. Any such interrogatories must be filed with the Commission and served on Bell and B.C. Tel by 7 November 1989.
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(6) Bell and B.C. Tel are to file responses to the 7 November 1989 interrogatories with the Commission and serve copies on each other and on interveners by 5 December 1989.
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(7) Interveners may file comments with the Commission, serving copies on Bell and B.C. Tel and on other interveners, by 2 January 1990.
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(8) Bell and B.C. Tel may file replies with the Commission, serving copies on each other and on interveners, by 23 January 1990.
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(9) Where a document is to be filed or served by a specific date, the document must be actually received, not merely mailed, by that date.
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(10) The addresses to be used in connection with notification with respect to this proceeding are:
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Mr. Fernand Bélisle
Secretary General
CRTC
Ottawa, Ontario
K1A 0N2
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Mr. Peter J. Knowlton
Assistant General Counsel
Bell Canada
25 Eddy Street
4th Floor
Hull, Quebec
J8X 4B5
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and
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Ms. D.E. Byrne
Vice-President
Regulatory Matters and Corporate Secretary
British Columbia Telephone Company
21 - 3777 Kingsway
Burnaby, British Columbia
V5H 3Z7
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Fernand Bélisle
Secretary General
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