ARCHIVED -  Telecom Order CRTC 97-1070

Telecom Order

Ottawa, 7 August 1997

Telecom Order CRTC 97-1070

On 30 April 1997, The New Brunswick Telephone Company, Limited (NBTel) filed proposed tariff revisions under Tariff Notice (TN) 635 to include Direct-Inward-Dialing (DID) as part of the basic service package for Exchange - Business Communication Service (Exchange BCS).

File No.: Tariff Notice 635

1. In Telecom Order CRTC 96-1315, dated 21 November 1996 (Order 96-1315), NBTel was directed to file an affidavit attesting that NBTel was, among other things, charging the optional $3.90 per month, per line, DID tariffed rate, whenever that feature was used with BCS lines. In the covering letter to the TN 635 filing, NBTel stated that, as a result of past provisioning procedures, it would be difficult to determine the number of lines on which each BCS customer was using DID, and therefore proposed to change the basic Exchange BCS to include DID as a standard feature. NBTel proposed that the monthly rate of all Exchange BCS lines would increase by $1.35 for this added feature. The proposed effective date was 1 January 1998. The filing was accompanied by a cost study that showed that the service is compensatory.

2. Comments were filed by SCL Atlantic (SCL) on 27 May 1997, the Canadian Cable Television Association on 30 May 1997, and Fundy Cable Ltd./Ltée. on 30 May 1997. Generally, the interveners characterized the proposal as anti-competitive.

3. SCL submitted that with TN 635, NBTel proposed further changes to the BCS rates that will, in fact, make an already underpriced and anti-competitive service offering even more attractive to potential customers through bundled DID functionality at the expense of competitors who are forced to obtain overpriced Business Multi-line Access Service (BMAS) from the company. SCL submitted that in filing TN 635, NBTel has reopened the pricing of BCS in a manner that may also affect the Commission's conclusion in Order 96-1315, that NBTel's proposed rate changes in its earlier BCS tariff filing (TN 541) and BMAS tariff filing (TN 564), taken together, satisfy the rating criterion that NBTel's BCS rates should be on average at least 50% of its BMAS rates.

4. NBTel responded on 9 June 1997, submitting that the purpose of TN 635 was to ensure that the company would be in compliance with the directives concerning DID in Order 96-1315. NBTel further submitted that the proposed rate increase of $1.35 per line for the added DID functionality was calculated to be revenue neutral and that the rate relationship of Exchange BCS and BMAS would therefore remain unchanged, and thereby continue to meet the Commission's criterion.

5. The Commission has a number of concerns regarding NBTel's proposal.

6. As stated in paragraph 1, NBTel submitted a cost study showing the BCS to be compensatory. NBTel's submission was filed on 30 April 1997, prior to the issuance of Local Competition, Telecom Decision CRTC 97-8, 1 May 1997 (Decision 97-8). In this Decision, the Commission concluded that in order to prevent anti-competitive pricing, an imputation test is required to provide for a price floor. The Commission notes that the methodology for the imputation test is the subject of a proceeding initiated by the Commission by letter dated 19 June 1997. The imputation test required by Decision 97-8 differs from the methodology employed by NBTel in the cost study submitted on 30 April 1997. For example, Decision 97-8 requires that essential services required in the provision of Exchange BCS be costed at tariffed rates.

7. The Commission notes that the imputation test required by Decision 97-8 would likely increase the price floor for Exchange BCS given the requirement to price essential services at tariffed rates. The Commission considers that any change made to the rates approved in Order 96-1315 should be subject to the imputation test.

8. Under NBTel's proposal, the DID feature, when used with Exchange BCS, is priced implicitly at $1.35 per line. However, the Commission notes that when used with BMAS, this feature is priced at $3.90 per line. In the Commission's view, there is nothing on the record of this proceeding to justify a different pricing of this feature.

9. The Commission further notes that under NBTel's proposal, Exchange BCS customers who are also users of DID, would experience a rate reduction of $2.55 per line per month. The Commission notes that increases to the price of Exchange BCS have recently been approved in an extensive proceeding leading to Order 96-1315. The Commission considers that a rate decrease is inconsistent with Order 96-1315.

10. The Commission considers that the Exchange BCS rates approved in Order 96-1315 remain appropriate, and if DID is to be bundled in as a basic feature with Exchange BCS, it should be bundled in at the existing tariffed rate of $3.90 per line.

11. The Commission considers that customers should be paying for the DID feature as soon as possible, whenever that feature is provisioned.

12. In view of the above, and having considered the comments received, the Commission denies TN 635 and directs NBTel to implement within 60 days one of the following two options:

a) charge the current approved rate of $3.90 per month for each line for which DID is provisioned, or

b) include DID as a basic feature of Exchange BCS and increase the monthly rate of all Exchange BCS lines by $3.90.

13. NBTel is directed to notify the Commission within 15 days of which option it chooses. If NBTel chooses option (a), the company is further directed to inform the Commission, within 60 days of this Order, that it is in compliance with its tariff. If option (b) is chosen, NBTel is directed to issue tariff pages, within 30 days of this Order, reflecting the additional $3.90 for all BCS lines, with an effective date within 60 days of the date of this Order.

Laura M. Talbot-Allan
Secretary General

This document is available in alternative format upon request.