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Ottawa, 24 November 1998
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Telecom Order CRTC 98-1168
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On 6 March 1998, Westport Telephone Company Limited (Westport) filed an application under Tariff Notice (TN) 13, for approval of tariff revisions to introduce Basic Access Service improvements and to restructure its local rates in two stages. On 13 April 1998, the company amended its application under TN 13A.
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File No.: TN 13
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1.Westport proposed to increase local residential and business rates in order to achieve local rate parity with Bell Canada (Bell). The first increase was proposed to be effective 1 November 1998 and the second, on 1 January 2000.
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2.Westport's application (as modified by TN 13A) included proposals to increase: (1) local monthly individual line residential rates by $3.13 on 1 November 1998 and again by $3.12 on 1 January 2000 for a total increase of $6.25; and (2) individual line business rates by $12.90 on 1 November 1998 and again by $7.35 on 1 January 2000 for a total increase of $20.25. Individual line residential and business rates (excluding Touch-Tone service) would increase to $17.30 and $37.35 respectively.
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3.The Basic Access Service improvements proposed by Westport consist of an expanded local calling area. Westport's expanded local calling area would introduce new Extended Area Service (EAS) links consistent with Bell's recently approved Natural Calling Centre for Kingston.
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4.Westport submitted that its proposal would reduce the company's contribution requirement from toll carriers.
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5.Westport also submitted that its subscribers would benefit from the proposed Basic Access Service improvements. Westport noted that expanded EAS would allow customers a choice of Internet service providers and allow toll free calling within the community of interest, including calls to schools, hospitals and recreation services.
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6.The Commission notes that Westport's application is consistent with the objectives put forward by the Ontario Telephone Association (OTA) in its initial submission in the proceeding initiated by Review of the Contribution Regime of Independent Telephone Companies in Ontario and Quebec, Telecom Public Notice CRTC 97-41,18 December 1997 (PN 97-41).
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7.One of the OTA's primary objectives is "to ensure that customer expectations regarding service access, quality and innovation are met in a manner and at rates that correspond to customer offerings available in urban areas".
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8.In its initial submission to PN 97-41, the OTA argued that the needs of OTA-member customers are the same as those of Bell's customers and noted that Bell had introduced a number of service improvements which were approved by the Commission in Implementation of Price Cap Regulation - Decision Regarding Interim Local Rate Increases and Other Matters, Telecom Decision CRTC 97-18, 18 December 1997. In the PN 97-41 proceeding, the OTA proposed local rate parity between its members and Bell.
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9.Westport notified its subscribers of the proposal through a billing insert. The Commission notes that a majority of responding subscribers favoured the application.
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10.The Commission is of the view that the rate increases proposed in this application are consistent with the Commission policy enunciated in Regulatory Framework for the Independent Telephone Companies in Quebec and Ontario (Except Ontario Northland Transportation Commission, Québec-Téléphone and Télébec ltée), Telecom Decision CRTC 96-6, 7 August 1996 (Decision 96-6) that rates for local service should move closer to the cost of providing service.
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11.In Decision 96-6, the Commission noted that independent telephone companies rates for primary exchange service do not reflect the cost of providing that service. The Commission stated that local rates will need to be more reflective of underlying costs, particularly if there is to be effective local competition.
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12.The Commission also notes that the company's contribution requirement will be reduced significantly as a result of the proposed increases.
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13.The Commission further notes that Westport's proposed individual line business rate reflects Bell's current Bands A to C business rates. The Commission is of the view that Bell's current Band D business rates are the appropriate benchmark for Westport.
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14.Westport noted that the implementation of an individual line business rate of $42.40 reflecting Bell's Band D individual line business rate may have some merit.
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15.The Commission notes that the implementation of business rates reflective of Bell's Band D business rates would further reduce the contribution requirement of the company.
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16.The Commission is of the view that the proposed Basic Access Service improvements are in the public interest.
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17.The Commission notes that the proposed local rate increase would recover the costs associated with the Basic Access Service improvements concurrent with their implementation, as well as the originating minute contribution revenue forgone as a result of expanded EAS.
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18.The Commission notes that the above criteria are consistent with the conditions for implementation of EAS approved by the Commission for the independent telephone companies.
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19.The Commission notes that this application is related to issues being addressed in the PN 97-41 proceeding. The issues being addressed include the appropriateness of further rate rebalancing as well as the level and implementation time frame of such rate rebalancing. Accordingly, the Commission will be examining, in that proceeding, the appropriateness of additional rate rebalancing with respect to the independent telephone companies, including Westport.
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20.In light of the foregoing, the Commission orders that:
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(a) the proposed tariff revisions introducing the Basic Access Service improvements and the two-phase rate increases submitted by Westport under TNs 13 and 13A are approved as modified by paragraphs (b), (c) and (d) below;
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(b) Westport is to implement the proposed Basic Access Service improvements in conjunction with the first phase of the proposed local residential and business rate increases on 1 January 1999;
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(c) Westport is to implement the second phase of the proposed local residential rate increases as proposed on 1 January 2000;
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(d) Westport is to implement the second phase of the proposed local business rate increases along with an individual line business rate of $42.40 on 1 January 2000; and
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(e) Westport is to issue revised tariff pages to reflect the above revisions.
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Secretary General
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This document is available in alternative format upon request.
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