ARCHIVED -  Telecom Order CRTC 97-88

Telecom Order

Ottawa, 23 January 1997

Telecom Order CRTC 97-88

IN THE MATTER OF Customer Account Queries, Telecom Public Notice CRTC 95-55, 19 December 1995, wherein the Commission directed BC TEL, Bell Canada (Bell), The Island Telephone Company Limited (Island Tel), MTS NetCom Inc. (MTS), Maritime Tel & Tel Limited (MT&T), The New Brunswick Telephone Company, Limited (NBTel), NewTel Communications Inc. (NewTel) and TELUS Communications Inc. (TCI) (collectively, the telephone companies) to submit, by 19 February 1996, detailed descriptions of their procedures in place or pending approval, that are used to assign the expenses related to Customer Account Queries to the Utility and Competitive segments of the split rate base of the telephone companies.

Reference: 95-1200

WHEREAS AT&T Canada Long Distance Services Company (AT&T Canada) and Westel Telecommunications Ltd. (Westel) filed comments on matters raised in this proceeding;

WHEREAS Bell and MTS provided a list of the types of customer account queries and the classification (i.e., Utility or Competitive) of those queries;

WHEREAS BC TEL, NewTel and TCI identified the general types of customer account queries, but stated that they do not presently classify queries on the basis of whether they relate to Utility or Competitive segment activities;

WHEREAS Island Tel, MT&T and NBTel did not identify the types of customer account queries;

WHEREAS BC TEL includes customer account queries of a general nature in the company's Contact-Billing activity for Broad Service Category (BSC) assignment purposes which is in turn assigned to the two segments in the same proportion as the company's Adjusted Gross Revenues;

WHEREAS BC TEL considers queries such as service charges interest rates and rate changes to be billing related and, as such, these expenses are assigned to the two segments using service order study ratios;

WHEREAS MTS assigns customer account queries expenses, captured in the phone centre and business office accounts, on the basis of service order studies;

WHEREAS NewTel assigns customer account queries expenses, the majority of which are captured in Commercial Accounts, on the basis of a monthly study of the company's Customer Account Data Base;

WHEREAS NewTel assigns customer account queries expenses handled by the company's phone centre staff using a two stage process, the first being to allocate phone centre expenses between the collection of revenues and service requests using the job function assignments and salaries of each employee;

WHEREAS NewTel, in the second stage, assigns expenses relating to collection of revenues to the two segments based on the company's Station Statistics monthly report and assigns expenses related to service requests based on the company's monthly service order study which is completed for each phone centre;

WHEREAS Island Tel and MT&T assign customer account queries expenses via a loading assignment based on the companies' other Business Office activities;

WHEREAS NBTel assigns a portion of the relevant salary accounts to the Utility segment, representing the weighted average of all business office functions (where expenses relating to customer account queries are captured);

WHEREAS NBTel assigns customer account queries expenses related to service requests based on the company's monthly service order study which is completed for each phone centre;

WHEREAS Bell assigned customer account queries expenses based on a statistical sample of Business Office work activity for 1994;

WHEREAS Bell proposed that, for 1995, expenses related to customer account queries be associated with the results of Function Code 41DX, Billing Operations;

WHEREAS Bell proposed that the company's sampling methodology, approved by the Commission for 1994, be applied to the 1995 customer account queries process, modified to assign joint use type of queries on an arbitrary 50/50 basis to the two segments;

WHEREAS TCI assigns customer account queries expenses on the same basis as the company's Call Centres total costs;

WHEREAS BC TEL conducts an annual survey in the larger business offices over a two-week period to determine the percentage of time spent on four customer account activities;

WHEREAS TCI does not conduct a sampling method, but stated that interviews with managers indicated that 10% to 15% of their time is spent on customer account queries;

WHEREAS MTS conducted a two-week time and motion study on non-service order generating customer queries in phone centres but has not conducted a similar study in the business offices;

WHEREAS NBTel and NewTel do not study or identify the time spent handling customer account queries;

WHEREAS Island Tel and MT&T do not conduct surveys but proposed to obtain certain data (such as the percentage of customer account query activity by order type) through interviews with the Business Office Managers;

WHEREAS Bell conducted a statistical sample of Business Office activity for 1994;

WHEREAS the Commission granted interim approval in Telecom Order CRTC 95-1071, 29 September 1995, in the matter of the 1994 Phase III and Access Study Manuals Update Report of Bell filed 31 March 1995, to Bell's proposal to apply the 1994 sampling methodology to the 1995 customer account query process with the exception of joint use type of queries which were discretely identified and assigned on a 50/50 basis to the two segments;

WHEREAS AT&T Canada objected to Bell allocating customer account queries expenses on the same basis as the results of Function Code 41DX, Billing Operations;

WHEREAS AT&T Canada was of the view that the methodologies utilized by BC TEL do not provide a proper link between the activities and their assignment resulting in a misallocation between the two segments;

WHEREAS AT&T Canada argued that it would be more appropriate for TCI to assign discrete account queries to each segment and only allocate those queries that are joint in nature on a 50/50 basis;

WHEREAS AT&T Canada proposed that each telco should establish discrete accounting codes similar to Bell's function code to track customer account queries expenses;

WHEREAS AT&T Canada proposed that a work sampling approach be used to identify the time and frequency of business office and phonemart/phonecentre activities related to customer account queries at a relative precision of 2% at the 95% confidence level, to be performed on an annual basis;

WHEREAS AT&T Canada proposed that queries relating to terms of service, service charges, interest rates, adjustments, rate changes, copy of bill and operator services directory assistance be classified as joint-use in nature and assigned to the two segments on a 50/50 basis;

WHEREAS AT&T Canada proposed that queries relating to customer risk, including security deposits and credit verification, be assigned to the Competitive segment as AT&T Canada does not consider these costs to be jointly related to the provision of local services;

WHEREAS Westel submitted that BC TEL should revise its annual two-week manual query tally and classification process to analyse customer account queries by product service lines in order to more directly assign costs to the two segments;

WHEREAS Westel submitted that, where a query cannot be directly assigned to a segment, the costs be assigned to the two segments on a 50/50 basis similar to the Commission's treatment of other joint billing and service order activities in Implementation of Regulatory Framework - Splitting of the Rate Base and Related Issues, Telecom Decision CRTC 95-21, 31 October 1995;

WHEREAS, in reply, the telephone companies stated that each company has developed a methodology that is appropriate to the circumstances of the individual company, reflecting the different structures and approaches to serving customers;

WHEREAS, in reply, the telephone companies stated that a comparison of the assignment ratios between companies is not relevant since each telephone company's assignment ratio applies to a different base;

WHEREAS, in reply, the telephone companies stated that it would be a burden on the companies if they are required to change their accounting systems to accommodate AT&T Canada's concerns, given that the expenses related to customer account queries is not material;

WHEREAS, in reply, the telephone companies stated that the cost of conducting an annual statistical sample would outweigh any increase in accuracy of assigning the expenses relating to customer account queries;

WHEREAS, in reply, the telephone companies stated that to assign security deposits and credit check activity totally to the Competitive segment would be incorrect as bad debt expenses are also incurred in the Utility segment;

WHEREAS the Commission is of the view that the procedures of the telephone companies with respect to tracking and assigning customer account queries expenses need to be improved for purposes of Phase III reporting; and

WHEREAS the Commission agrees that an annual statistical sample conducted in the manner suggested by AT&T Canada is not necessary given the materiality of any increased accuracy in the assignment of customer account queries expenses to the two segments -

IT IS HEREBY ORDERED THAT:

1. The telephone companies are to conduct an annual in-house survey to record the type of customer account query (at the level of detail indicated in Appendix A to this Order) and the amount of time spent handling each query, to the closest ten minutes.

2. The telephone companies are to include in their respective 31 October 1998 Phase III update reports proposed procedures for conducting in-house surveys, subject to determinations with respect to Phase III requirements in the proceeding initiated in Price Cap Regulation and Related Issues, Telecom Public Notice CRTC 96-8, 12 March 1996.

3. The telephone companies' 1997 in-house surveys are to cover a minimum of two weeks and are to be representative of the following: a billing cycle, the company's normal activities, the company's subscribers; and of each company's rate bands.

4. The telephone companies are to assign customer account queries of a joint Utility/Competitive nature on either a 50/50 basis or on the basis of the company's market share, defined as the proportion of subscribers in each segment,

5. The Commission grants final approval to Bell's proposed methodology of assigning customer account queries expenses in 1995, which is also to be applied in 1996.

Allan J. Darling
Secretary General