ARCHIVED -  Telecom Decision CRTC 96-12

Telecom Decision

Ottawa, 12 December 1996

Telecom Decision CRTC 96-12

PER-MINUTE CONTRIBUTION MECHANISM FOR LINE-SIDE CONNECTIONS

I BACKGROUND

In Revisions to the Mechanism to Recover Contribution Charges, Telecom Decision CRTC 95-23, 4 December 1995 (Decision 95-23), the Commission directed BC TEL, Bell Canada (Bell), The Island Telephone Company Limited (Island Tel), MTS NetCom Inc. (MTS), Maritime Tel & Tel Limited (MT&T), The New Brunswick Telephone Company, Limited (NBTel), NewTel Communications Inc. (NewTel) and TELUS Communications Inc. (TCI) (formerly AGT Limited) (collectively, the telephone companies) to implement, effective 1 June 1996, a de-averaged per-minute contribution mechanism applicable to traffic on trunk-side connections. In Decision 95-23, the Commission noted that, due to technical limitations, the per-minute contribution mechanism would apply only to traffic on trunk-side connections. The Commission further noted that implementation of a per-minute contribution mechanism is more effective and equitable than increasing the circuit loadings used to calculate the per-circuit contribution charges, and that given this, the Commission would consider applications to apply the per-minute mechanism to other types of connections if the technical limitations could be overcome.

Following the issuance of Decision 95-23, the telephone companies filed proposed tariff revisions which included proposed interim rates associated with the implementation of a de-averaged per-minute line-side contribution mechanism (LSCM), under BC TEL Tariff Notice 3441, Bell Tariff Notice 5689, Island Tel Tariff Notice 408, MTS Tariff Notice 192, MT&T Tariff Notice 586, NBTel Tariff Notice 515, NewTel Tariff Notice 461 and TCI Tariff Notice 738. The telephone companies requested that the rates be made effective 1 June 1996 in order to implement the LSCM coincidentally with the de-averaged per-minute trunk-side contribution mechanism approved in Decision 95-23.

By letter dated 4 March 1996, Stentor Resource Centre Inc. (Stentor), on behalf of the telephone companies, requested interim approval of their applications, effective 1 June 1996, in order to avoid temporary facilities re-arrangement by Alternative Providers of Long Distance Services (APLDS) to mitigate the impact of the move to per-minute trunk-side rates.

On 26 March 1996, the Commission issued Per-Minute Contribution Mechanism for Line-Side Connections, Telecom Public Notice CRTC 96-9 (Public Notice 96-9), establishing a proceeding to consider the above-noted applications.

Subsequently, the telephone companies filed amendments (under BC TEL Tariff Notice 3441A/B, Bell Tariff Notice 5689A, Island Tel Tariff Notice 408A, MTS Tariff Notice 192A/B/C, MT&T Tariff Notice 586A and NBTel Tariff Notice 515A) to align the proposed tariffs with revisions to Phase III forecast data filed in the proceeding leading to 1996 Contribution Charges, Telecom Decision CRTC 96-11, 10 December 1996 (Decision 96-11).

On 30 April 1996, AT&T Canada Long Distance Services Company (AT&T Canada LDS) (formerly Unitel Communications Company), Canadian Line Side Resellers Group (CLRG), fONOROLA Inc. (fONOROLA), London Telecom Network (London Telecom), Sprint Canada Inc. (Sprint) and Westel Telecommunications Company addressed interrogatories to the telephone companies. On 30 May 1996, Stentor responded to the interrogatories on behalf of the telephone companies.

By letter dated 7 May 1996, the Commission denied Stentor's request to make rates interim effective 1 June 1996.

By letter dated 12 June 1996, the Commission informed parties that those comments received prior to the issuance of the Public Notice 96-9 would be considered as comments contemplated by paragraph 7 of Public Notice 96-9. Those parties who filed earlier comments were requested to serve them on other parties to this proceeding.

ACC TelEnterprises Ltd. (ACC), AT&T Canada LDS, CLRG, fONOROLA, London Telecom and Sprint filed comments on 24 July 1996. Stentor filed reply comments on behalf of the telephone companies on 7 August 1996.

II LINE-SIDE CONTRIBUTION MECHANISM

A. Per-Minute versus Per-Circuit Mechanism

The Commission notes that in this proceeding, except for Sprint and the flat-rate resellers, no party had any objection in principle to the implementation of the LSCM as a replacement for the per-circuit charge. Moreover, the Commission considers that those parties opposing the LSCM did not offer persuasive evidence to support their concerns with respect to the negative financial consequences of its implementation. The Commission also notes that the technical limitations to the measurement of line-side traffic, which had earlier precluded the implementation of a per-minute mechanism, have now been resolved for most of the telephone companies' switches where line-side connections are currently used.

Based on the evidence submitted in this proceeding, and for the reasons given in Review of Regulatory Framework, Telecom Decision CRTC 94-19, 16 September 1994, Applications by Unitel Communications Inc. and Sprint Canada Inc. to Review and Vary Part of Decision 94-19, Telecom Decision CRTC 94-27, 29 December 1994, and Decision 95-23, the Commission considers it appropriate to implement the LSCM.

London Telecom proposed that a per-circuit contribution mechanism be made available and applied to those APLDS exclusively using line-side connections to support the existence of flat-rate services. However, while such a proposal would provide a financial means for supporting the continuation of an alternative to conventional long distance billing arrangements, the Commission considers that it could be unjustly discriminatory if a per-circuit mechanism was applicable only to those APLDS that provide flat-rate services.

B. Transition Period

With respect to the timing of the implementation of the LSCM, the Commission notes that, although Stentor requested a 30-day transition period, most interested parties requested a transition period of at least 12 months to adjust their respective systems, business plans and network configurations to the new environment.

Consistent with Decision 95-23 pertaining to the timing of implementation of a de-averaged per-minute trunk-side contribution mechanism, the Commission considers it important to avoid unnecessary delays in moving from the per-circuit mechanism to the LSCM. However, the Commission considers that a 30-day transition period as requested by Stentor is inappropriate and that competitors should have the benefit of a longer transition period. In the circumstances, the Commission directs the telephone companies to implement the LSCM on 1 July 1997.

III RELATED MATTERS

A. Technical Audits

With respect to the concerns of parties regarding the need for an independent technical audit prior to implementation of the LSCM, the Commission notes Stentor's statement that the system to be used for the LSCM generally parallels the systems currently employed for de-averaged per-minute trunk-side billing. The Commission further notes Stentor's statement that the quality assurance for the LSCM was verified by the companies through system testing, that APLDS were invited to participate in the test, that the test results were forwarded to participating APLDS and that no criticism of the quality of the information from the test of the LSCM procedures was received from participating APLDS. Therefore, the Commission considers that an audit of the billing and tracking system used in the LSCM is not required. In the Commission's view, the accuracy and reliability of the performance of the National Carrier Access Management System (which includes the Carrier Access Billing System and, in the case of NBTel, the Small Exchange Carrier Billing System), as well as the current dispute resolution mechanism, provide a sufficient basis to conclude that the current processes for de-averaged per-minute trunk-side billing are operationally sound, and, therefore, are appropriate for de-averaged per-minute line-side billing.

B. Adjusted Stimulation Factor

The Commission notes that CLRG and London Telecom argued that, if the LSCM were adopted, the Commission should include an adjusted stimulation factor in the calculation of resellers' contribution rates in order to exempt stimulated traffic associated with flat-rate services from contribution charges.

In the Commission's view, the proposed adjusted stimulation factor would result in preferential treatment for resellers offering toll services on a flat-rate basis. Further, it would effectively force non-flat-rate resellers to purchase inputs at higher prices than flat-rate resellers. Therefore, the Commission denies CLRG's and London Telecom's request.

C. Shadow Billing

With respect to the proposal to allow for shadow billing upon request by affected resellers as a means of allowing competitors to gauge the impact of the LSCM implementation, the Commission considers that mandatory shadow billing at no charge would simply increase the telephone companies' overhead which would ultimately be paid for by subscribers. In the Commission's view, subscribers should not be required to bear such expenses. Further, the Commission notes that the telephone companies generally provide their customers with an annual traffic study as part of their Private Branch Exchange trunk or Centrex services. The Commission considers that the telephone companies' commitment, made in this proceeding, to make billing information available to resellers, upon request, through its Carrier Services Group, should provide sufficient information to the APLDS to enable them to assess the impact of the LSCM implementation.

D. Notification

AT&T Canada LDS and Sprint submitted that the telephone companies should provide sufficient notice to their reseller customers as to when they intend to start charging on a per-minute basis at locations where per-minute measurement is initially unavailable. Both parties considered that a minimum of three to six months was required.

The Commission notes that the majority of the telephone companies' switch locations across Canada, where line-side connections exist, can measure line-side minutes. There are only a small number of switch locations with line-side connections in MTS' and BC TEL's territories that are incapable of line-side measurement. These companies stated that they have no current plans to upgrade these switches. In view of the above, given that the incidence of notification should be minimal and that existing systems and procedures, which will be used to bill on a per-minute basis, should be familiar to the resellers, the Commission considers that a 60-day notification period is appropriate.

E. Termination Charges

AT&T Canada LDS and Sprint requested that the Commission direct the telephone companies not to levy termination charges or any other penalties on reseller customers that convert their line-side access to trunk-side or other forms of access after adoption of the LSCM.

The Commission notes that the telephone companies' tariffs generally permit the waiving of penalties in situations where the committed revenues under a revised contract are equal to, or greater than, those remaining under the original contract. In the case of upgrades that result in at least equivalent revenues, the Commission would expect the telephone companies to waive termination charges or any other penalties, consistent with their tariffs. However, in circumstances where penalties are imposed and are disputed, parties may always apply to the Commission for relief if they consider the penalties to be inappropriate.

F. Digital Exchange Access Double Charging

With respect to AT&T Canada LDS' request that the Commission direct Bell to cease "double charging" under its Digital Exchange Access (DEA) tariff, the Commission has reviewed Bell's DEA rates and notes that the DEA tariff is made up of an Access and a Public Switched Telephone Network connection component for which there are two separate rates. The Commission notes that the charging for these two components is entirely consistent with this tariff. In the circumstances, the Commission is not persuaded by AT&T Canada LDS' submission that Bell is "double charging" under the DEA tariff and denies its request.

G. Service Support

With respect to AT&T Canada LDS' request that the telephone companies should be directed to provide the same level of support for line-side access service problems as currently provided for trunk-side access, the Commission considers that the procedures relating to trouble reporting for interconnecting circuits are not related to the implementation of the LSCM. The Commission notes that AT&T Canada LDS may pursue its concerns either by way of the competitive disputes and complaints process, or a negotiation process through the Canadian Interconnection Liaison Committee which has been in place since Competition in the Provision of Public Long Distance Voice Telephone Services and Related Resale and Sharing Issues, Telecom Decision CRTC 92-12, 12 June 1992.

IV DISPOSITION OF TARIFFS

In view of the Commission's findings set out in Parts II and III of this Decision, the telephone companies' proposed tariff revisions filed under BC TEL Tariff Notice 3441/A/B, Bell Tariff Notice 5689/A, Island Tel 408/A, MTS Tariff Notice 192/A/B/C, MT&T Tariff Notice 586/A, NBTel Tariff Notice 515/A, NewTel Tariff Notice 461 and TCI Tariff Notice 738 are denied.

BC TEL, Bell, Island Tel, MTS, MT&T, NBTel and NewTel are directed to file, on or before 1 June 1997, proposed revised tariffs with an effective date of 1 July 1997, which take into account the Commission's directives regarding interim 1997 contribution charges set out in Decision 96-11. By the same date, TCI is directed to file proposed revised tariffs also with an effective date of 1 July 1996, which take into account the Commission's directive regarding interim 1997 contribution charges in the decision to be issued with respect to TCI's general rate increase.

V LSCM FOR TELUS COMMUNICATIONS (EDMONTON) INC.

The Commission notes that it did not receive an application for approval of tariff revisions to implement the LSCM from TELUS Communications (Edmonton) Inc. (TCI Edmonton) (formerly ED TEL Communications Inc.). Accordingly, this proceeding did not consider the application of the LSCM to TCI Edmonton. TCI Edmonton is to provide comment as to why the LSCM established in this Decision should not apply to the TCI Edmonton component of the 1997 province-wide contribution rate for Alberta, serving copies on all other parties, within 30 days of this Decision. Interested parties may file comments on TCI Edmonton's submission, serving copies on all other parties, within 45 days of this Decision. TCI Edmonton may file a reply to any comments, serving copies on all other parties, within 60 days of this Decision.

Allan J. Darling
Secretary General

DEC96-12_0