ARCHIVED -  Telecom Order CRTC 96-131

Telecom Order

Ottawa, 19 February 1996

Telecom Order CRTC 96-131

 IN THE MATTER OF an application by the Ontario Telephone Association (OTA) dated 23 October 1995, filed on behalf of the twenty-seven Ontario Independents (listed in the Appendix to this Order), which are participants in the OTA Carrier Access Tariff (CAT), for approval of a final CAT for 1994.

 WHEREAS the OTA CAT Agreement and a 1994 CAT rate of 12.85 cents per minute were granted interim approval in various orders by the Ontario Telephone Service Commission (OTSC) in December 1993 and subsequently ratified by the Commission in Telecom Order CRTC 94-883, 29 July 1994;

 WHEREAS the 1994 interim CAT rate was based on the preliminary 1993 Phase III results of five Ontario Independents;

 WHEREAS in its 1995 interim CAT filing of 31 October 1994, the OTA stated that, based on the latest 1994 budgets for the OTA CAT participants, the 1994 final CAT rate to be charged to Bell Canada (Bell) and Unitel Communications Inc. (Unitel) would be somewhat lower than the approved interim rate of 12.85 cents per minute;

 WHEREAS the OTA recommended that any overpayment by Bell and Unitel be paid back through the existing administration of the OTA CAT once the 1994 final OTA CAT rate was approved;

 WHEREAS in the OTA's submission of 23 October 1995 seeking final approval of a CAT rate for 1994 of 11.38 cents per minute, the OTA described the manner in which the rate was calculated;

 WHEREAS the OTA noted that, in early 1995, the OTA CAT participants had agreed to an adjustment to the 1994 final OTA CAT with respect to operating expenses;

 WHEREAS the operating expense level to be used by each CAT participant in determining the 1994 revenue requirement was to be the lowest of each company's:

 (a) updated 1994 projected operating
  expenses based on a 2% plus
  Network Access Service growth
  guideline,

 (b) budgeted 1994 operating expenses, or

 (c) actual 1994 operating expenses;

 WHEREAS the OTA, having determined that the 1994 final CAT rate should be 11.38 cents per minute rather than 12.85 cents per minute, calculated that it must remit $7.025 million to Bell and Unitel;

 WHEREAS in its 23 October 1995 application the OTA included a letter from Dryden Municipal Telephone System (Dryden) requesting an increase to its operating expense limit of about $38,000 to take into account unforeseen expenses incurred in 1994, including property taxes not previously charged by the municipality, extraordinary increases in insurance premiums, consulting costs related to a new billing system and additional costs incurred to ensure accounting conformance;

 WHEREAS the OTA stated that if Dryden's request was approved, it would make the necessary changes in the CAT filing;

 WHEREAS on 7 December 1995, the OTA submitted responses to Commission questions of 30 November 1995, seeking clarification of certain items in its application which, among other things, indicated that Dryden's request would increase the final CAT rate by 0.01 cents per minute;

 WHEREAS in its 23 October 1995 filing, the OTA included information which supported its recommendation that the current interim OTA CAT rate for 1995, approved in Telecom Order CRTC 94-1360, 17 November 1994, should remain in effect until the 1995 interim CAT is finalized;

 WHEREAS on 7 December 1995, Amtelecom Group Inc. (AGI), the holding company for Amtelecom Inc., Coldwater Communications Inc. and Manitoulin Tel. Inc., wrote to the Commission about concerns it had with the OTA's Phase III treatment of (i) Cost of Goods Sold and (ii) income taxes on excess expenses in the context of the 1994 CAT calculation;

 WHEREAS the OTA noted, in its reply of 13 December 1995, that all participants in the 1994 CAT had their toll revenue requirements calculated in a consistent manner and in accordance with the member-approved OTA guidelines, and the AGI companies approved OTA's calculation of their final 1994 toll revenue requirements without question or concern;

 WHEREAS the Commission considers that, as signatories to the OTA CAT agreement and given their approval of the final 1994 toll revenue requirement calculations, the concerns raised by AGI should be denied;

 WHEREAS the Commission notes that the determination of the 1994 OTA interim CAT rate of 12.85 cents per minute was based on a sample of only five companies, and thus limited 1993 Phase III information, and broad estimates of 1994 toll revenue requirements for each OTA CAT participant;

 WHEREAS the Commission also notes that the proposed 1994 OTA final CAT rate of 11.38 cents per minute is based on actual 1994 Phase III results, an actual toll revenue requirement for each OTA CAT participant based on these results as adjusted to reflect the allowed mid-point rate of return for each company and takes into account the OTA's cost guidelines;

 WHEREAS the Commission considers that the OTA has adhered to the provisions of the CAT Agreement and the procedures used to derive the CAT;

 WHEREAS the Commission considers that, given the unforeseen nature of the expenses incurred and their modest impact on the 1994 final CAT, Dryden's request is acceptable;

 WHEREAS the Commission notes that the amount to be remitted to Bell and Unitel has been reduced to $6.987 million as a result of finding Dryden's request acceptable; and

 WHEREAS the Commission considers that the 1995 interim CAT rate should be maintained at its existing level, pending final approval at a later date -

 IT IS ORDERED THAT:

1. The 1994 final OTA CAT, amended to include the requested expense increase in Dryden's toll revenue requirement, is approved.

2. The 1995 interim OTA CAT is to be maintained at its existing level pending final approval at a later date.

3. A GI's requests with respect to the CAT calculation are denied.

4. The OTA CAT participants are directed to:

a) submit, by 26 February 1996, revised tariff pages which reflect the final 1994 CAT rate of 11.39 cents per minute being in force from 1January to 31 December 1994; and

b) make the requisite billing adjustments expeditiously to complete the 1994 settlement between the carriers.

 Allan J. Darling
Secretary General

Appendix

Amtelecom Inc.
Brooke Telecom Co-operative Limited
Bruce Municipal Telephone System
Coldwater Communications Inc.
Durham Telephones Limited
Dryden Municipal Telephone System
Gosfield North Municipal Telephone System
Hay Communications Co-operative Limited
Huron Telecommunications Co-operative Limited
Hurontario Telephones Limited
Keewatin Municipal Telephone System
Kenora Municipal Telephone System
The Lansdowne Rural Telephone Co. Ltd.
Manitoulin Tel Inc.
Mornington Communications Co-operative Limited
North Frontenac Telephone Company Limited
North Norwich Telephones Ltd.
North Renfrew Telephone Co. Ltd.
Otonabee Telephones Ltd.
The People's Telephone Company of Forest Ltd.
Quadro Communications Co-operative Inc.
Roxborough Telephone Company Limited
South Bruce Rural Telephone Company Limited
The Corporation of the City of Thunder Bay (Telephone Division)
Tuckersmith Communications Co-operative Limited
Westport Telephone Company Limited
Wightman Telephone Limited