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ARCHIVED -  Telecom Order CRTC 95-465

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Telecom Order

Ottawa, 13 April 1995
Telecom Order CRTC 95-465
IN THE MATTER OF applications by the Ontario Telephone Association (OTA), on behalf of Northern Telephone Limited (Northern), under Tariff Notice 5 and Tariff Notice 6, both dated 22 December 1994, for interim approval of a 1995 Carrier Access Tariff (Modified 1995 OTA CAT) and of an Interconnection Tariff, respectively.
WHEREAS OTA proposed that the Modified 1995 OTA CAT and the Interconnection Tariff serve, on an interim basis, as the terms and conditions under which Northern and Ontario Northland Telecommunications (Northland), a division of Ontario Northland Transportation Commission (ONTC), would interconnect and settle payments;
WHEREAS the Modified 1995 OTA CAT and the Interconnection Tariff would replace the existing Traffic Agreement, which has governed the exchange of telecommunication services between Northern and Northland since 17 November 1973;
WHEREAS, under Tariff Notice 5, Northern would become part of the 1995 OTA CAT, which was approved on an interim basis effective 1 January 1995, in Telecom Order CRTC 94-1360, 17 November 1994 (Order 94-1360), for other Ontario independent companies which are members of the OTA (the other independents);
WHEREAS the 1995 OTA CAT was developed on the basis of aggregate financial data and proxy toll minutes for the other independents;
WHEREAS the proposed Modified 1995 OTA CAT sets out a Toll Contribution Charge (Contribution rate) of $0.0863 per minute, a Direct Toll Carrier Non-Specific Service Charge (Direct Toll rate) of $0.014 per minute and an Equal Access Charge of $0.0007 per minute;
WHEREAS the Contribution rate and the Equal Access Charge in the proposed Modified 1995 OTA CAT are the same as those in the 1995 OTA CAT granted interim approval in Order 94-1360;
WHEREAS the Direct Toll rate in the proposed Modified 1995 OTA CAT is exclusive to Northern, but based on the proxy toll minutes of the 1995 OTA CAT;
WHEREAS, under Tariff Notice 6, the Interim Interconnection Tariff would be exclusive to Northern and Northland, but would conform to the interconnection agreements between the other independents and Bell Canada (Bell) and Unitel Communications Inc. (Unitel);
WHEREAS Northern noted that the interconnection agreements between the other independents and Bell and Unitel have been approved by the Commission;
WHEREAS, in Telecom Order CRTC 94-737, 30 June 1994 (Order 94-737), the Commission ordered Northern to commence negotiations with ONTC with regard to a CAT;
WHEREAS the parties have been negotiating a CAT since 8 July 1994;
WHEREAS, by letter dated 31 October 1994, Northern gave Northland 60 days notice of termination of the 1973 Traffic Agreement (i.e., termination as of 31 December 1994);
WHEREAS, as of 20 December 1994, negotiations between the parties had been unsuccessful with regard to a CAT and a new interconnection agreement;
WHEREAS, on 20 December 1994, following Northern's refusal to rescind the termination notice, Northland filed an application with the Commission requesting that the matter of termination of the 1973 Traffic Agreement be dealt with on an expedited basis;
WHEREAS Northland requested that the Commission modify section 16 of the 1973 Traffic Agreement so that neither party could terminate the 1973 Traffic Agreement unilaterally;
WHEREAS, on 22 December 1994, OTA on behalf of Northern (hereafter Northern/OTA) requested that the Commission deny Northland's application and grant interim approval to Tariff Notices 5 and 6, effective 1 January 1995;
WHEREAS, by letter dated 28 December 1994, Northland requested that the Commission reject Tariff Notices 5 and 6;
WHEREAS Northland supported the continuation of the 1973 Traffic Agreement, pending either successful negotiations with Northern or a further Commission process;
WHEREAS Northland submitted, among other things, that approval of Tariff Notices 5 and 6 would significantly alter the course of the negotiations and would bypass the requirements of Order 94-737 and Northern/OTA's commitment to negotiate a CAT;
WHEREAS Northland added that approval of Tariff Notices 5 and 6 would entrench a number of technical defects and deficiencies and would not address the unique nature of the relationship between Northland and Northern;
WHEREAS Northland submitted that charges under the Modified 1995 OTA CAT may be inflated due to the use of the proxy toll minutes of the 1995 OTA CAT;
WHEREAS Northland submitted that its method for determining proxy toll minutes was superior to Northern's, as Northland's method was based on 70% actual historical and 30% estimated toll minutes originating outside Northland's operating territory;
WHEREAS Northland also submitted that the Modified 1995 OTA CAT did not include the efficiency incentives (the Incentive Mechanism) agreed to by the parties;
WHEREAS the Incentive Mechanism agreed to by the parties would adjust Northern's estimated 1995 toll settlement requirement;
WHEREAS Northland questioned the need for a CAT since, in Northland's opinion, the settlement mechanism in the 1973 Traffic Agreement was effective;
WHEREAS Northland objected to the payment of the Equal Access Charge;
WHEREAS Northland submitted that Northern should not join the OTA CAT Settlement Fund due to the disproportionate share of the costs of the administration of the OTA Settlement Fund that Northland would have to pay;
WHEREAS Northland pointed out that the future regulatory regime for Northland had not been determined by the Commission;
WHEREAS Northland also requested mediation by Commission staff, should negotiations not succeed by 30 June 1995;
WHEREAS Northland added that, until a new agreement is reached, it would be willing to continue settling with Northern pursuant to the existing 1973 Traffic Agreement and to extend the 1994 Special Temporary Subsidiary Settlement (STSS) into 1995;
WHEREAS the STSS would make up for the difference between Northern's annual toll settlement requirement and the toll settlement provided by the 1973 Traffic Agreement;
WHEREAS the parties have not negotiated a 1995 STSS, since a negotiated CAT would have included the toll revenue shortfall corresponding to the STSS;
WHEREAS, by letter dated 29 December 1994, Northern/OTA responded that interim approval of the filed tariffs would permit the negotiation process to proceed, leading to the resolution of Northland's concerns;
WHEREAS Northern/OTA noted, among other things, that there was no intention to apply an Equal Access Tariff, that Northland would not incur costs in 1995 due to the administration of the OTA Settlement Fund, and that the issue of Northern's membership in the OTA Settlement Fund is a matter between Northern and OTA;
WHEREAS Northern/OTA requested Commission staff mediation, if negotiations did not succeed within 90 days of interim approval of Tariff Notices 5 and 6;
WHEREAS, by letter dated 30 December 1994, the Commission ordered that, pending its disposition of the matter, the 1973 Traffic Agreement continue to operate;
WHEREAS, on 5 January 1995, the Commission received from Northland copies of Appendices A and B to the 1973 Traffic Agreement;
WHEREAS Appendix A detailed the connecting points of the two systems and Appendix B established the basis of settlement respecting various toll services and the 1994 STSS;
WHEREAS, on 20 January 1995, Northern/OTA requested a deferral of the Commission's decision regarding Tariff Notices 5 and 6, until Northern/OTA was able to provide additional comments;
WHEREAS Northern/OTA submitted that "the Commission should have all the ... information relative to the file before making its determination with respect to the tariffs";
WHEREAS, on 23 January 1995, Northland requested that the Commission reject Northern's request for deferral;
WHEREAS, on 31 January 1995, Northern/OTA filed in confidence a detailed submission in support of Tariff Notices 5 and 6;
WHEREAS, on 20 February 1995, Northland filed in confidence a response to Northern/OTA's detailed submission;
WHEREAS, on 23 February 1995, Northern/OTA filed in confidence a reply to Northland's letter of 20 February 1995;
WHEREAS the Commission notes that many of the issues raised by Northern/OTA and Northland regarding the CAT and the interconnection agreement will be examined in the Independents' proceeding, initiated by Regulatory Framework for the Independent Telephone Companies in Québec and Ontario (Except Ontario Northland Transportation Commission), Telecom Public Notice CRTC 95-15, 23 March 1995;
WHEREAS, on 24 February 1995, the Commission addressed interrogatories to OTA requesting further clarification regarding the 1995 OTA CAT;
WHEREAS, after considering the information submitted by the parties, the Commission considers that, until such time as the settlement mechanism for Northern and the other independents is finalized in the Independents' proceeding, the settlement mechanism between Northern and Northland should take the form of an interim CAT exclusive to Northern (interim 1995 Northern CAT);
WHEREAS the Commission is of the view that new interconnection agreements between parties should be negotiated and signed by the respective parties, and subsequently filed for Commission approval;
WHEREAS the Commission is of the view that Tariff Notice 6 effectively constitutes a new interconnection agreement that has not been successfully negotiated and signed by the parties; and
WHEREAS the present order is issued only for the purpose of settling on an interim basis the outstanding issues between the parties, and does not constitute a precedent or predisposition on the Commission's part with respect to issues to be addressed in the Independents' proceeding -
IT IS HEREBY ORDERED THAT:
1. Tariff Notices 5 & 6 are denied.
2. Northern is to issue, by 21 April 1995, tariff pages for an interim 1995 Northern CAT rate, effective 1 May 1995.
3. Up to 30 April 1995 (inclusive), consistent with the Commission's direction of 30 December 1994, the parties will settle payments in accordance with the 1973 Traffic Agreement, excluding the STSS which expired on 20 December 1994.
4. The tariff is to state that the interim 1995 Northern CAT rate is based on Northern's estimated 1995 toll settlement requirement, adjusted by the Incentive Mechanism that was agreed to by both parties, and on Northland's methodology.
5. The tariff is to state that Northern's toll settlement requirement, to be paid by Northland for the period of 1 May 1995 to 31 December 1995, is to be calculated based on Northland's proxy 1995 toll minutes prorated for the period 1 May 1995 to 31 December 1995.
6. The tariff is to state that the interim 1995 Northern CAT rate is $0.095 per minute, with a Contribution rate of $0.0817 per minute and a Direct Toll rate of $0.0133 per minute.
7. Pursuant to section 32 of the Telecommunications Act, sections of Appendix B of 1973 Traffic Agreement that are superseded by the interim 1995 Northern CAT are to be deleted, and section 8 of the 1973 Traffic Agreement is to be amended to refer to the interim 1995 Northern CAT, where appropriate.
8. Northern is to file proposed CAT rates for the year 1996, with supporting information, by 30 November 1995.
9. The 1973 Traffic Agreement, as modified in paragraph 7 above, is given interim approval, effective 1 May 1995, without prejudice to the parties negotiating an alternate interim interconnection agreement, to which the Commission would be predisposed to give interim approval.
10. The parties are each to file with the Commission, by 1 June 1995, a copy of the 1973 Traffic Agreement, as modified by this Order.
11. Final arrangements for the exchange of traffic and settlement of payments between the parties will be considered following the Commission's decision in the Independents' proceeding.
Allan J. Darling
Secretary General

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