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Telecom Order

Ottawa, 17 September 1997
Telecom Order CRTC 97-1335
On 9 May 1997, Maritime Tel & Tel Limited (MT&T) filed Tariff Notice 658 (TN 658) proposing to provide single line business and residential customers with increased local calling by providing local calling in the exchanges adjacent to the customer's home exchange at no additional charge.
File No.: Tariff Notice 658
1. MT&T requested that its proposal be effective 1 October 1997.
2. MT&T stated that its submission was in response to a letter dated 22 August 1996 from the Commission which requested MT&T to issue an Extended Area Service (EAS) implementation schedule or propose a reasonable alternative to EAS.
3. MT&T stated that this proposal would replace the EAS guidelines currently in use.
4. MT&T proposed to implement the proposal immediately in exchanges where digital equipment currently exists and in the remaining exchanges coincidentally with the implementation of the Switching Equipment Modernization program.
5. MT&T stated that both these programs would be completed by the end of 1998.
6. MT&T stated that this proposal would result in a reduction in intra-toll revenue due to the expansion of bordering exchange traffic.
7. Under Maritime Tel & Tel - Proposal to Provide Local Calling in the Exchanges Adjacent to a Customer's Home Exchange, Telecom Public Notice CRTC 97-19 dated 5 June 1997, the Commission initiated a public proceeding to allow for the examination of the proposal and the filing of comments by interested parties.
8. Letters were received from 21 customers. Most were supportive of the proposal although some expressed the view that it did not expand local calling sufficiently.
9. Comments were also received from AT&T Canada Long Distance Services Company (AT&T Canada LDS) by letters dated 29 May 1997 and 7 July 1997.
10. AT&T Canada LDS requested that the Commission deny the proposed restructuring because it is anti-competitive and inconsistent with accepted practices for expanding local service calling areas.
11. AT&T Canada LDS submitted that MT&T's proposal would increase the cost of providing local service and increase the Utility segment shortfall in 1997 thus resulting in contribution rates which would be higher than otherwise.
12. AT&T Canada LDS submitted that there are optional discount long distance services available to subscribers and they remain the most appropriate means of addressing the long distance calling needs of heavy toll users while avoiding increasing the basic local exchange rates of the general body of subscribers.
13. AT&T Canada LDS further submitted that the proposal provides no means for recovering the cost of expanding calling areas specifically from those subscribers who are the main beneficiaries. AT&T Canada LDS stated that it would appear that residential rates would increase in a manner that results in the general body of residential subscribers paying for the cost of expanding local calling areas for a portion of residential and business subscribers.
14. AT&T Canada LDS stated that, in the event that the Commission approves TN 658, it would be appropriate to treat as a toll minute any traffic, including that carried by MT&T, which extends beyond the local serving areas that existed prior to the approval of TN 658.
15. In support of its position, AT&T Canada LDS submitted that in Local Competition, Telecom Decision CRTC 97-8, 1 May 1997 (Decision 97-8), the Commission intended to maintain the present EAS boundaries as the measure of what constitutes a local call versus a toll call.
16. By letter dated 15 July 1997, MT&T filed reply comments.
17. MT&T replied that the effect of its proposal on contribution will be a minimal amount of $0.001. MT&T submitted that this would not cause any material effect on the level of contribution nor on MT&T's proposal to reduce the contribution rate to the $0.02 threshold as filed with the Commission under the process established in Telecom Public Notice CRTC 97-11, dated 25 March 1997, Implementation of Price Cap Regulation, 1997 Contribution Charges and Related Issues.
18. MT&T stated that it believes the proposal to provide local calling in the exchanges adjacent to a customer's home exchange is designed to meet customers' local calling needs.
19. MT&T replied that it believes, based on discussions with its customers, that their calling needs go beyond the traditional community of interest (COI). MT&T further believes that the COI guidelines are not the single definitive measure with respect to identifying customer demand to provide expanded local calling.
20. MT&T replied that its proposal provides a level of service equitable to that which has been provided to customers in larger centres for many years and that customers who have incurred rate increases as a result of local rate restructuring and rate rebalancing will receive additional value as a result of its proposal.
21. MT&T submitted that Decision 97-8 does not preclude MT&T from making changes to its local exchanges or local calling areas that may be necessary to meet customer expectations or to respond to changing market conditions.
22. MT&T further submitted that it was not the Commission's plan or intent to freeze the existing exchanges and local calling area boundaries of the Incumbent Local Exchange Carriers.
23. The Commission views the proposal by MT&T as an alternative to EAS and not as an extension of EAS for select communities. Accordingly, the Commission does not consider that the EAS criteria should apply to the proposal by MT&T.
24. The Commission is of the view that, in the circumstances of this application, the public interest of subscribers in Nova Scotia should outweigh any anti-competitive aspects of the proposal.
25. The Commission does not consider that Decision 97-8 intended to maintain the present EAS boundaries as the measure of what constitutes a local call versus a toll call.
26. Therefore the Commission finds that it would not be appropriate to treat as a toll minute any traffic, including that carried by MT&T, which extends beyond the local serving areas that existed prior to the approval of TN 658.
27. However, the Commission notes the increase in the 1997 contribution rate that would result from approval of the application effective 1 October 1997.
28. Accordingly, having considered the application in the light of all the comments received and MT&T's reply, the Commission approves the proposal by MT&T effective 1 January 1998.
Laura M. Talbot-Allan
Secretary General
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