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Telecom Costs Order
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Telecom Costs Order CRTC 93-11
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In re: Bell Canada - Revenue Requirements for 1993 and 1994, Telecom Decision CRTC 93-12
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Joint application for costs by the National Anti-Poverty Organization and the Consumers' Association of Canada (NAPO/CAC).
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On 10 June 1993, NAPO/CAC applied, pursuant to s. 44 of the CRTC Telecommunications Rules of Procedure (the Rules), for its costs of participation in the above-titled proceeding. In its application, which was made orally during the final week of the hearing, NAPO/CAC submitted that both organizations had long histories of interventions in telecommunications proceedings and are representative of classes of subscribers that are affected by the decisions in this proceeding. NAPO/CAC also submitted that the joint intervention of the organizations, and the focus on only those issues to which NAPO/CAC believed it could make a positive addition, were indicative of responsible participation.
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Bell Canada (Bell) gave its answer to the application orally, during final reply argument, submitting that costs relating to the applicant's expert witnesses, Drs. Booth and Berkowitz, should be denied. While Bell indicated that it did not object to an award of counsel fees to the applicant's counsel, subject to taxation, it submitted that it was doubtful that the testimony of Drs. Booth and Berkowitz could provide the Commission with a better understanding of the overall financial results facing Bell in 1993 and 1994, "given their fundamental lack of comprehension [of] the business environment in which Bell Canada operates".
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In reply, NAPO/CAC submitted that Drs. Booth and Berkowitz are financial and economic experts, not telecommunications experts, and that their perspective is one of informed investors, evaluating the market environment as potential investors would. In the submission of NAPO/CAC, the candour of Drs. Booth and Berkowitz in "acknowledging their lack of expertise in some of the more arcane or recent changes in telecommunications has no impact on the credibility of their evidence".
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1. The application of NAPO/CAC for an award of costs in respect of the above-titled proceeding is hereby approved, on the following terms.
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2. The Commission is generally in agreement with the submission of NAPO/CAC that financial witnesses are called upon as proxies for potential investors, and are therefore not expected to have a detailed grasp of the regulatory environment in which the company operates. In this regard, the Commission is of the view that many of the questions to which Drs. Booth and Berkowitz were unable to satisfactorily respond during cross-examination by the company did not affect the credibility of their evidence, but merely revealed gaps in knowledge that one could also foresee potential investors and other financial witnesses possessing.
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3. At the same time, the Commission considers that Drs. Booth and Berkowitz showed a lack of understanding about certain fundamental aspects of Bell's competitive environment. As an example, the Commission notes that the witnesses were unable to explain the difference between trunk side and line side access, and appeared to be unfamiliar with the timing of the availability of trunk side access or its competitive significance. They also seemed not to be fully aware of the level of competition that existed at the time of the last Bell rate proceeding, although they submitted in their evidence that the risks faced by the company are only moderately greater now than they were at that time.
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4. In the Commission's view, the witnesses' lack of familiarity with certain key developments in the competitive marketplace casts some doubt on the credibility of Drs. Booth and Berkowitz's assessment of the company's business risk. Accordingly, the Commission considers that the expert evidence adduced by the applicant did not fully contribute to a better understanding of the issues by the Commission, as required by subsection 44(1)(c) of the Rules.
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5. In the circumstances, NAPO/CAC is awarded 80% of its costs for fees and disbursements of its financial witnesses and all of its other costs.
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6. Costs awarded herein shall be payable to NAPO/CAC by Bell.
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7. Costs awarded herein shall be subject to taxation in accordance with subsection 44(6) of the Rules.
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8. Costs awarded herein shall be taxed by David Elder.
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9. NAPO/CAC shall, within thirty days of the issue of this order, submit a Bill of Costs and an Affidavit of Disbursements to the Taxing Officer, serving a copy on Bell.
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10. Within two weeks of receipt of these documents, Bell may file comments with the Taxing Officer with respect to the costs claimed, serving a copy on NAPO/CAC.
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11. NAPO/CAC may, within two weeks of receiving comments from Bell, file its reply, serving a copy on the company.
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12. In all cases, documents must be actually received, not merely mailed, by the dates indicated.
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Allan J. Darling
Secretary General
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