ARCHIVED -  Telecom Order CRTC 97-513

 Telecom Order

 Ottawa, 15 April 1997

 Telecom Order CRTC 97-513

 The Commission has received an application from BC TEL under Tariff Notice 3542 dated 6 November 1996, as amended by Tariff Notice 3542A dated 15 November 1996, for approval of tariff revisions providing for a rate group consolidation and the elimination of exchange line and locality rate area mileage. BC TEL also filed: Tariff Notice 3558 dated 29 November 1996 providing for rate group consolidation for Digital Exchange Access Network component rates; Tariff Notice 3559 dated 29 November 1996 providing for rate group consolidation for Megalink Access and Public Switched Telephone Network Connection rates; Tariff Notice 3561 dated 3 December 1996 providing for rate group consolidation for the Access component rates for DataDial Service; and Tariff Notice 3562 dated 4 December 1996 providing for rate group consolidation for the Access rate components for Microlink Services.

 File Numbers: Tariff Notices 3542/A, 3558, 3559, 3561 and 3562

1.  BC TEL proposed to consolidate the existing 11 rate groups into 7 rate groups and to exempt exchanges which are served by step-by-step switching equipment from rate group consolidation until such time as each switch is upgraded to digital technology.

2.  BC TEL proposed to eliminate exchange line and locality rate area mileage in exchanges that have not yet been upgraded under the Rural Upgrade Program.

3.  BC TEL requested permission to exclude exchanges not yet upgraded to the individual line standard from the reporting for Quality of Service indicator 1E.

4.  BC TEL submitted that it last filed a proposal to consolidate exchange rate groups in Tariff Notice 3413 dated 4 December 1995, which was approved in Telecom Order CRTC 95-1433.

5.  BC TEL indicated in its submission pertaining to Tariff Notice 3413 that rate group consolidation would be achieved on a gradual basis.

6.  BC TEL submitted that Tariff Notices 3542/A, 3558, 3559, 3561 and 3562 are the next step in the plan to consolidate rate groups.

7.  BC TEL submitted that, as a result of the proposed consolidation, residence rates would increase by an amount ranging from $0.05 to $1.50 and business rate changes, would range from a reduction of $15.25 to an increase of $6.80.

8.  BC TEL submitted that the business rates in the higher rate groups are already compensatory.

9.  BC TEL submitted that by eliminating the mileage charges, a more consistent rate structure would apply to all customers.

10.  BC TEL noted that, even though mileage charges would be eliminated under its proposal, the service standard for customers outside base rate areas would continue to be 4-party service until the exchange is upgraded under the Rural Upgrade Program, at which time the individual line standard would apply to the entire exchange.

11.  BC TEL submitted that if the mileage charges are eliminated, there might be an increase in requests from customers located outside of base rate areas to upgrade from 4-party line service to individual line service.

12.  BC TEL proposed to satisfy these requests for upgrading to individual line service subject to the availability of facilities.

13.  BC TEL submitted that, in many of the affected exchanges, there are insufficient facilities in place to meet the anticipated demand with the result that there might be an increase in held upgrade orders.

14.  The Commission, under Telecom Public Notice CRTC 97-2, initiated a proceeding to allow for examination and filing of comments by interested parties.

15.  The Commission received over 200 letters of comment from subscribers as well as comments from Call-Net Enterprises Inc. (Call-Net), AT&T Canada Long Distance Services Company (AT&T Canada LDS), Peace River Regional District (PRRD), The Province of British Columbia and British Columbia Old Age Pensioners' Organization et al. (BCOAPO et al.).

16.  Call-Net also filed an application dated 8 January 1997, supplemented by a submission dated 5 February 1997, requesting, among other things, deferral of certain current and any similar future tariff filings containing proposals such as rate restructuring or the expansion of free calling areas in a manner inconsistent with the Commission's existing policies and criteria, to a comprehensive general proceeding involving all Stentor companies or to the follow-up proceeding to the proceeding initiated by Telecom Public Notice CRTC 96-8 (the Call-Net application).

17.  The Call-Net application was filed on behalf of AT&T Canada LDS, Call-Net, fONOROLA, Fundy Cable Ltd/Ltée and Rogers Network Services.

18.  Call-Net submitted that, while BC TEL provided evidence indicating that, with the proposed reductions, prices for the business services in question would remain above cost, such reductions are inappropriate at this time.

19.  Call-Net submitted that the full effect of increases to residential local rates derived from rate group consolidations should be used to reduce the toll subsidy until the Commission has made its determination with respect to local contribution in the proceeding conducted pursuant to Telecom Public Notice CRTC 95-36.

20.  Call-Net also submitted that the elimination of mileage charges is inconsistent with the Commission's policy of bringing rates closer to costs and with opening the local market to competition.

21.  AT&T Canada LDS submitted that, in the case of the exchanges served by step-by-step switches and those customers whose mileage charges will be eliminated, BC TEL's proposals ignore the underlying costs of providing service and should be rejected by the Commission.

22.  The Province of British Columbia submitted that the proposal to exempt exchanges served by step-by-step switches from the rate group consolidation should be approved.

23.  PRRD and BCOAPO et al. supported the elimination of the mileage charges but opposed the elimination of service quality reporting requirements.

24.  BCOAPO et al. submitted that the Commission should allow BC TEL to report Quality of Service indicator 1E on a disaggregated basis that would enable BC TEL and the Commission to isolate the impact of any deterioration of the quality indicator in the Rural Upgrade Program exchanges and provide a clear opportunity for BC TEL to provide information on the change in the total number of upgrade requests and the extent to which BC TEL has responded to the increased demand.

25.  BC TEL replied that the need to move rates closer to costs is not incompatible with the need to take account of other equally important considerations.

26.  BC TEL submitted that to increase rates for those customers who are already inconvenienced by sub-standard service would place undue hardship on those customers.

27.  BC TEL further submitted that its proposal seeks to move prices closer to costs by addressing the Utility segment as a whole and that, as both residential rates and business rates in the lower rate groups are increased, business rates that are more than compensatory must also be allowed to move closer to the associated costs.

28.  BC TEL replied that it is requesting that only those exchanges that have not been formally upgraded under the Rural Upgrade Program be excluded from the reporting for Quality of Service indicator 1E.

29.  BC TEL submitted that it would be unfair to have the provisions of upgrades, which BC TEL is under no obligation to provide (without mileage charges) and which are constrained by an admitted absence of sufficient facilities, subject to the same service standards which govern the provision of upgrades which BC TEL is required to undertake and for which adequate facilities are in place.

30.  The Commission considers that the rate group consolidation proposed by BC TEL results in rates being moved closer to costs without undue rate shock.

31.  The Commission considers that, given the level of business rates in the higher rate groups, moving those rates closer to costs outweighs other considerations raised by interveners.

32.  The Commission considers that the proposals by BC TEL to eliminate mileage charges and to exempt exchanges served by step-by-step switches are reasonable given the level of service provided to customers in the affected exchanges.

33.  The Commission considers that it would not be appropriate for BC TEL to be subject to the same Quality of Service reporting standards for exchanges not yet included in the Rural Upgrade Program as for exchanges which have been formally upgraded.

34.  The Commission considers that it would be appropriate for BC TEL to report (1) without being subject to a standard, the number of upgrades requested in each of those exchanges not yet included in the Rural Upgrade Program and (2) the number of upgrades implemented.

35.  The Commission considers that it would be appropriate for BC TEL to report such information quarterly.

36.  In light of the foregoing, the Commission orders that:

37.  (a) The applications filed by BC TEL under Tariff Notices 3542/A, 3558, 3559, 3561 and 3562 are approved.

38.  (b) BC TEL shall report quarterly, beginning 1 July 1997, on the number of upgrades requested and the number implemented in each of those exchanges in which mileage charges have been eliminated but which are not yet included in the Rural Upgrade Program.

 Allan J. Darling
Secretary General