ARCHIVED -  Telecom Public Notice CRTC 96-13

Telecom Public Notice

Ottawa, 17 April 1996

Telecom Public Notice CRTC 96-13

BELL CANADA - RESTRUCTURING OF RATES FOR BUSINESS LOCAL EXCHANGE SERVICES - TELECOMLINK

 Reference: Tariff Notice 5665

 The Commission has received an application under Tariff Notice No. 5665 from Bell Canada (Bell), dated 21 December 1995, proposing tariff revisions to be implemented in two phases to restructure the rates for business local exchange services. The application relates to tariff changes to replace the flat monthly rates for business individual line service and Private Branch Exchange (PBX) service with a single, lower, flat rate access component and a network component. The network component would be available at an optional flat rate or on a usage sensitive pricing basis. On 1 March 1996, Bell filed an amended proposed tariff revising certain of the rates proposed in its initial tariff filing.

 Background

 On 22 April 1991, the Commission wrote to Bell questioning the continued relevance of price differentials between business individual lines and PBX trunks, in view of the Terminal Attachment Program Advisory Committee's conclusion that PBX and key system technologies were no longer mutually exclusive. In response to the Commission's letter, Bell filed a report evaluating three different approaches for restructuring the tariffs for business primary exchange service (namely, Blended Rate, Sliding Scale and Threshold Pricing). In Bell Canada - Tariff Restructuring for Business Access Services, Telecom Letter Decision CRTC 93-18, 2 December 1993, the Commission concluded that Threshold Pricing was the most equitable of the three approaches. The Commission directed the company to file proposed tariffs, and related information, to implement Threshold Pricing.

 On 7 April 1995, Bell filed proposed tariff revisions under Tariff Notice No. 5471 to restructure business primary exchange service from the current rate group structure to access bands.

 On 31 May 1995, Bell filed proposed tariff revisions under Tariff Notice No. 5506 to replace the flat monthly rates for business individual line service and PBX service with a single, lower, flat-rate access component and a usage-sensitive rate component applicable to completed local outgoing calls.

 On 25 July 1995 and 26 September 1995, Bell requested the Commission's permission to withdraw Tariff Notices No. 5506 and 5471, respectively, and to delay the refiling until 15 December 1995 at which time the company would combine the two tariff applications. The Commission subsequently granted Bell's request and cancelled the proceeding initiated in Bell Canada - Restructuring of Rates for Business Local Exchange Services, Telecom Public Notice CRTC 95-33, 27 June 1995 (Public Notice 95-33).

 Phase 1

 In Phase 1 of Bell's restructuring proposal, which would commence 1 July 1996, Bell proposed revisions to the existing rates for business primary exchange service to bring them closer to their incremental costs while easing the transition to a common rate structure and rate levels to be implemented in Phase 2. Bell stated that Phase 1 would begin to reduce the rate differential between business individual lines and PBX trunks.

 Bell also stated that, in general, its proposed revisions would result in increases in rates for business individual line service in the lower rate groups (rate groups 3A to 10) and in decreases in rates for PBX trunks in the higher rate groups (rate groups 12 to 20). To be consistent with its proposals for business individual line and PBX trunk services, Bell proposed to include business two-party, business four-party and individual message rate services in the new rate bands. For Phase 1, the company proposed to maintain the proportional rate relationships of these services to individual line services.

 Phase 2 - TelecomLink

 In Phase 2, which would commence 1 July 1997, Bell proposed to:

 (1) eliminate the rate differential between PBX trunks and individual line service for Key Telephone Systems (KTS);

 (2) replace the existing Rate Group rate structure with Rate Bands to more accurately reflect the costs of providing service;

 (3) unbundle the primary exchange service rate into access and network components. The access component would be flat rated. The network component would be available at an optional flat rate or on a usage- sensitive pricing basis, making choice available for both higher and lower volume callers; and

 (4) eliminate two-party (except Rate Group 3A) and message rate service.

 Bell submitted that the proposed tariff revisions would provide for the conversion of the rate group structure from one that is value-of-service based to one consisting of four Rate Bands defined by market and cost considerations, such as community size and differences in underlying provisioning costs. For example, Bell submitted that larger population communities are characterized by greater numbers of network access lines (NAS), tend to have shorter serving distances (access loop lengths), and often have higher concentrations of NAS in a given area (access loop density). Bell stated that the proposed Rate Band structure is more sensitive to the pronounced effects that these factors have on local service incremental costs. The extremely high concentration of service in the downtown cores of Toronto and Montréal result in significantly lower incremental costs at the wire centre level. For this reason, Bell stated that it proposes a Rate Band, Band "A", for the dense contiguous wire centres in these areas. The other proposed Rate Bands would be based on total exchange NAS as follows: Band "B" would represent large exchanges with over 150,000 NAS; Band "C" would represent small exchanges with over 10,000 NAS; and Band "D" would represent exchanges with less than 10,000 NAS, typically towns and rural areas.

 Bell also proposed to eliminate business two-party service by upgrading its existing customers to the proposed business individual line service. Business four-party service would be retained as a flat rate service. Business message rate service would be withdrawn and customers would be converted to the proposed rate structure.

 Bell also proposed distance sensitive usage charges (based on four local distance bands) for outbound local calls. Incoming calls, long distance calls (1+), calls to the operator (0), calls to directory assistance (411), repair (611) and emergency reporting (911) would not be subject to the proposed local usage charges.

 In order to mitigate the impact on customers, Bell proposed to divide Rate Bands into sub-bands. A flat monthly rate is proposed for each of the 8 Rate Bands. The flat rate pricing option would provide for unlimited calling over the local network.

 Bell proposed to provide Touch-Tone capability on all business service lines as a basic service component effective with the implementation of Phase 2. Individual line services installed before 8 March 1993, not equipped for Touch-Tone dialing, would not be exempted.

 In order to facilitate the transition to its proposed revised rate structure, Bell proposed the use of shadow billing. Prior to the implementation of Phase 2, business customers would be presented with summary billing information based on their local calling. Shadow billing would provide customers with the information they require to select a suitable pricing option and would also facilitate their budgeting requirements prior to Phase 2 implementation. Unless otherwise notified at the time of Phase 2 implementation, Bell proposed selecting for each customer the least cost pricing option on a line by line basis, based on shadow billing data.

 Bell stated that as Information System Access Line, Business Foreign Exchange, and Microlink services are price-related to business primary exchange services, their tariffs would be adjusted to reflect the proposed tariff revisions.

 The proposed tariff revisions do not address a number of company services, such as Cellular Access, Mobile Telephone Service and Public Telephone Service, which make use of the Public Switched Telephone Network (PSTN) for call completion.

 Bell also stated that it is not proposing to introduce a usage-sensitive pricing structure for Centrex, Megalink and Digital Exchange Access services at this time. However, Bell noted that, as a result of a number of local service initiatives, proposals to restructure Centrex, Megalink and Digital Exchange Access would follow later. In this context, Bell submitted that the restructuring of Centrex Service must adequately address (1) historic rate relationships between Centrex and local service rates, while maintaining price positioning to other multi-line products, and (2) customer needs and concerns.

 Procedure

 1. The application may be examined at any of Bell's business offices or at the offices of the CRTC in the following locations:

 Central Building
Les Terrasses de la Chaudière
1 Promenade du Portage
Room 201
Hull, Quebec

 Place Montréal Trust
1800 McGill College Avenue
Suite 1920
Montréal, Quebec

 Copies of Bell's application may be obtained by any interested person upon request directed to Mr. B.A. Courtois, Vice-President, Corporate and Legal Affairs, Bell Canada, 105 Hôtel-de-Ville Street, 6th Floor, Hull, Quebec, J8X 4H7, fax: 819-778-3437.

 2. Those parties who registered to participate in the proceeding initiated by Bell Canada and British Columbia Telephone Company - Restructuring of Tariffs for PBX Trunks and Central Office Lines, Telecom Public Notice CRTC 92-72, 27 November 1992, and Public Notice 95-33 will be considered parties to this proceeding.

 3. Other persons wishing to participate in the proceeding must notify the Commission of their intention to do so by writing to Mr. Allan J. Darling, Secretary General, CRTC, Ottawa, Ontario, K1A 0N2, fax: 819-953-0795, by 17 May 1996. The Commission will issue a complete list of parties and their mailing addresses.

 4. Parties may address interrogatories to Bell. Any such interrogatories must be filed with the Commission and served on Bell by 17 May 1996.

 5. Responses to interrogatories are to be filed with the Commission and served on all parties by 28 June 1996.

 6. Requests by parties for further responses to their interrogatories, specifying in each case why a further response is both relevant and necessary, and requests for public disclosure of information for which confidentiality has been claimed, setting out the reasons for disclosure, must be filed with the Commission and served on Bell by 8 July 1996.

 7. Bell may file replies to requests for further responses and to requests for public disclosure, serving a copy on the party making the request, by 18 July 1996.

 8. The Commission will issue directions on further procedure when it issues its determination with respect to requests for further responses and for disclosure.

 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.

 10. In addition to hard copy filings, parties are encouraged to file with the Commission electronic versions of their submissions in accordance with the Commission's Interim Telecom Guidelines for the Handling of Machine-Readable Files, dated 30 November 1995. The Commission's Internet email address for electronically filed documents is public.telecom@crtc.x400.gc.ca. Electronically filed documents can be accessed at the Commission's Internet site at http://www.crtc.gc.ca.

 11. The Commission expects to render its decision with respect to this application by the fourth quarter of 1996.

 Allan J. Darling
 Secretary General

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