ARCHIVED -  Telecom Order CRTC 97-1765

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Telecom Order

Ottawa, 27 November 1997
Telecom Order CRTC 97-1765
Following an application filed by Rogers Cantel Inc. (Cantel) to review Bell Canada's (Bell) rates for line-side wireless access service, the Commission initiated a proceeding in Telecom Order CRTC 97-83 dated 21 January 1997 (Order 97-83), to review the proposed line-side wireless access service (WAS) tariffs under Tariff Notice (TN) 5903 and the associated costing information.
File No.: Tariff Notice 5903
1. The line-side WAS tariffs are currently applicable to both line-side and trunk-side access arrangements and include rates for wireless telephone number and wireless network channel service elements.
2. Trunk-side WAS rates were granted interim approval, effective 1 July 1996, under Telecom Order CRTC 97-687 (Order 96-687) following a proceeding to review trunk-side WAS tariffs under Bell TN 5723 as modified by TN 5723A, dated 4 April 1996. These interim trunk-side WAS rates are based on the line-side WAS telephone number and network channel rates and currently apply to wireless carriers who choose not to become competitive local exchange carriers (CLECs).
3. By letters dated 6 May 1997, Cantel and Clearnet Communications Inc. (Clearnet) filed comments concerning TN 5903. By letter dated 20 May 1997, Bell filed its reply.
4. Both Cantel and Clearnet submitted that they incurred their own costs associated with Numbering Plan Area (NPA) splits, that as a result of Local Competition, Telecom Decision CRTC 97-8, 1 May 1997, carriers are required to bear their own costs and that Bell should not be allowed to off-load its costs to others.
5. Bell stated that with little or no growth being foreseen for line-side access codes, no prospective costs associated with code growth were included in the cost study associated with TN 5903.
6. The Commission agrees with Bell that little or no growth is foreseen for line-side access codes and that, accordingly, it is appropriate to exclude prospective NPA advancement costs from the cost study.
7. The Commission is of the view that prospective NPA advancement costs are likely to be incurred by Bell in provisioning trunk-side access codes and considers that such costs should be considered in establishing final trunk-side WAS rates for wireless carriers who choose not to become CLECs.
8. Bell further submitted that the costs filed to support TN 5903 only included the causal prospective incremental costs in accordance with the approved Phase II costing methodology, and did not include past costs of advancement of the 416/905 NPA split and costs for the advancement of Step-by-Step modifications, reflected in the original 1991 cost study.
9. Bell noted that these past advancement costs were caused by the offering of the wireless access service, were calculated over a ten-year study period, and have not yet been fully recovered from WAS providers.
10. With respect to past NPA advancement costs and Step-by-Step modification costs included in the original 1991 ten-year study, the Commission considers that WAS providers have benefited from the use of a ten-year recovery period to the extent that rates would have been higher, had these costs been recovered over a shorter study period.
11. Both Cantel and Clearnet submitted that the cellular busy hour traffic occurs in the evening when the wireline network is assumed to have spare capacity available.
12. Clearnet submitted that Bell's use of the wireless busy hour, rather than the wireline busy hour, overstates the incremental network resources and costs to handle wireless traffic to the extent that the wireline busy hour does not coincide with the wireless busy hour.
13. Similarly, Cantel indicated that the estimate of capacity and costs required to carry cellular traffic in Bell's busy hour would be overstated if Bell has measured cellular traffic during the cellular busy hour and assumed that this volume of traffic will be carried during Bell's busy hour, or if Bell has assumed that its busy hour and the cellular busy hour are coincident. Cantel submitted that the correct approach would be to measure cellular traffic in Bell's own busy hour.
14. In reply, Bell indicated that there remains much coincidence in the traffic between the wireless and wireline network, that the methodology used in the study is consistent with approved costing methodology, and that the wireless traffic load sampled is representative of the incremental wireless traffic load that is required to be carried by the wireline network during the wireline busy hour.
15. The Commission considers Bell's proposed approach to estimating incremental network capacity costs, based on the costs of adding incremental wireless traffic load onto its wireline network traffic load during its own wireline busy hour period, to be consistent with standard network costing methodology, and to be appropriate.
16. Cantel noted that in accordance with the costing approaches previously approved by the Commission, Bell has excluded the cost of fixed common resources in its cost study and has determined the proposed rates based on Phase II incremental costs of provisioning cellular numbers and network services plus a mark-up of 25%.
17. Cantel urged the Commission to approve the rates proposed in TN 5903 on a final basis, retrospective to the date on which the Commission first made Bell's rates interim, namely, 6 June 1996.
18. The Commission is of the view that the WAS network channel rates proposed in TN 5903, based on Phase II costs plus 25%, are consistent with previously approved WAS rates and are appropriate.
19. With respect to the telephone number rate, the Commission considers it appropriate to consider past embedded NPA advancement costs and Step-by-Step modification costs in determining revised line-side WAS rates.
20. The Commission notes that Bell's proposed line-side WAS rate per telephone number is $0.06 and that if 100% of the embedded costs associated with telephone number provisioning were included, the WAS per active telephone number rate would be approximately $0.16.
21. The Commission is of the view that, given that not all of the past embedded costs have been recovered, the interim telephone number rates set out in Order 97-83 of $0.14 per active telephone number and $0.04 per reserved number, will provide an adequate recovery of these costs.
22. Cantel submitted that this was an appropriate case for a retrospective rate adjustment since Cantel has clearly been paying too much for cellular numbers and related network services for some period of time pre-dating the Commission's interim order.
23. Cantel noted that the interim rates approved by the Commission in Order 97-83 of $0.14 per active number and $0.04 per reserved number, are higher than the rates proposed by Bell of $0.06 per active number and $0.02 per reserved number.
24. The Commission notes that the interim line-side WAS network channel rates, approved in Order 97-83, were applied retroactively to 6 June 1996, and that these rates were higher than the rates proposed by Bell in TN 5903.
25. The Commission is therefore of the view that retroactive rate adjustments using the lower TN 5903 rates should apply to the line-side WAS network channel rate elements. With respect to WAS telephone number rates, the Commission notes that the final and interim rates are the same, and therefore no retroactive rate adjustments are required.
26. The Commission notes that until trunk-side WAS rates are disposed of on a final basis, the interim WAS tariffs currently in place, as directed by Order 96-687, continue to apply for trunk-side arrangements.
27. On the basis of the foregoing, the Commission orders the following:
(a) For line-side WAS arrangements, the WAS active telephone number rate of $0.14 and reserved number rate of $0.04 and the network channel rates filed under Bell's TN 5903 are approved on a final basis, effective 6 June 1996. Bell is directed to make any necessary billing adjustments associated with line-side WAS arrangements back to 6 June 1996 forthwith.
(b) Bell's proposed line-side WAS telephone number rates under TN 5903 are denied.
(c) Bell is directed to issue, within 14 days, tariff pages incorporating the rates as set out in (a) above.
Laura M. Talbot-Allan
Secretary General
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