ARCHIVED -  Telecom Order CRTC 97-991

Telecom Order

Ottawa, 17 July 1997

Telecom Order CRTC 97-991

In its Phase III Manual Update Report dated 31 October 1996, NewTel Communications Inc. (NewTel), proposed among other things, to reassign Centrex consoles and proprietary sets from the Access category (Utility segment) to the Competitive Terminal (Multiline & Data) category (Competitive segment). In keeping with this proposed reclassification, NewTel also filed on 29 November 1996, Tariff Notice 497 (TN 497) which proposed to remove reference to this equipment from its General Tariff.

File Nos.: 97-8654-N2-01 and NewTel Tariff Notice 497

1. In its Phase III filing NewTel stated that because of successful bids for Centrex terminal sales by other vendors, a fully competitive Centrex terminal market now exists in its territory.

2. On 27 January 1997 the Commission issued Telecom Public Notice CRTC 97-3 (PN 97-3) on the above subject making the rest of the federally regulated Stentor companies (the other telephone companies) parties to the proceeding and directed them to file submissions on the appropriateness of reassigning Centrex consoles and proprietary sets to the Competitive Terminal (Multiline & Data) (Competitive segment) in the procedures contained in their own Phase III Manuals, similar to NewTel's proposal.

3. Stentor Resource Centre Inc. (Stentor) commented on 13 March 1997 on behalf of the other telephone companies, with the exception of TELUS Communications Inc. (TCI), and supported NewTel's proposal. Stentor stated among other things, that while the sets provided by the other telephone companies are considered proprietary to Centrex, the other telephone companies are not the only suppliers of these sets and consoles.

4. TCI filed its comments on 13 March 1997. In addition to agreeing with Stentor's comments, it stated that its Centrex service, in total, should be reassigned to the company's Competitive segment and that the company intended to file an application requesting forbearance from regulation of its Centrex service.

5. AT&T Canada Long Distance Services Company (AT&T Canada LDS), Call-Net Enterprises Inc. (Call-Net), and Canadian Cable Television Association (CCTA) filed comments on 1 April 1997, submitting that NewTel's application was effectively an application for forbearance from regulation and that NewTel had not addressed or met the requirements for forbearance. They also expressed concern that the proposed reassignment would increase NewTel's Utility segment shortfall and thus increase its contribution requirement and that this should not be permitted at this time, prior to setting going-in rates for price cap regulation.

6. AT&T Canada LDS and Call-Net also submitted that NewTel had contravened the directives set out in Review of Phase III of the Cost Inquiry, Telecom Decision CRTC 94-24, 18 November 1994, by failing to submit a supplementary discussion paper identifying all significant changes along with the proposed Phase III revisions. AT&T Canada LDS also stated that TCI was attempting to broaden this proceeding and that this should be disallowed by the Commission.

7. NewTel, Stentor, and TCI filed reply comments on 14 April 1997.

8. NewTel submitted that the reassignment of Centrex consoles and proprietary sets to the Competitive segment does not constitute a modification to category definitions, nor does it have a significant impact on contribution rates, the assignment of investment, revenues or costs, or the split rate base results, and therefore does not need to be supported by a supplementary discussion paper. Furthermore, NewTel submitted that in Telecom Decision CRTC 94-19, the Commission forbore from regulating all terminal equipment in the two Competitive Terminal categories rather than the individual terminals in these categories, and that therefore, if the Centrex terminals are reassigned to the Competitive terminal category, it is appropriate to assume that these Centrex consoles and proprietary sets would be considered terminal equipment that is already subject to the Commission's forbearance Order.

9. The Commission notes that Stentor and TCI supported NewTel's application.

10. The Commission notes that none of the interveners disputed that the Centrex terminal market is competitive in NewTel's territory.

11. On the basis of the record of this proceeding, the Commission accepts NewTel's assertion that a competitive Centrex terminal market exists in its territory.

12. The Commission considers that the costs and revenues proposed to be reassigned are small and that the impact on contribution rates will be insignificant.

13. In view of the above, the Commission approves the reassignment of Centrex consoles and proprietary sets to the Competitive Terminal (Multiline & Data) Phase III category for NewTel and the associated TN 497.

14. The Commission invites other telephone companies to file for similar reassignment, provided that the other telephone companies can demonstrate that the market for this equipment is competitive in their respective territories.

Laura M. Talbot-Allan
Secretary General

This document is available in alternative format upon request.