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Ottawa, 1 December 1998
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Telecom Order CRTC 98-1203
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On 20 March 1998, Hurontario Telephones Limited (Hurontario) filed an application under Tariff Notice (TN) 14, amended by TN 14A dated 14 April 1998, for approval of tariff revisions to introduce Basic Access Service improvements and to restructure its local rates.
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File No.: TN 14
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1.Hurontario proposed to increase rates for a number of services including local residential and business rates across all exchanges in order to achieve local rate parity with Bell Canada (Bell) by 1 August 1999.
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2.The Basic Access Service improvements proposed by Hurontario consist of an expanded local calling area. Hurontario's expanded local calling area would introduce new Extended Area Service (EAS) links consistent with Bell's recently approved Natural Calling Centre for London.
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3.Hurontario proposed different implementation schedules for both the proposed rate increases and Basic Access Service improvements across its five exchanges.
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4.Hurontario's application (as modified by Tariff Notice 14A) includes proposals to increase local residential and business rates for the Thedford and Port Franks exchanges on 1 September 1998 with a second increase applying to these same exchanges on 1 August 1999. Hurontario's application also includes proposals to increase local residential and business rates for the Burgessville, Woodstock Independent and Norwich Independent exchanges on 1 August 1999. As a result of these proposed increases, individual line residential and business rates across all of Hurontario's exchanges would increase to $19.85 and $39.95 (including Touch-Tone service) respectively.
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5.Hurontario submitted that its proposal would reduce the company's contribution requirement from toll carriers.
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6.Hurontario also submitted that its subscribers would benefit from the proposed Basic Access Service improvements. Hurontario noted that expanded EAS would allow customers an increased choice of Internet service providers as well as an enlarged community of interest for medical services and schools.
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7.The Commission notes that Hurontario'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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8.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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9.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 97-41 proceeding, OTA proposed local rate parity between OTA members and Bell.
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10.Hurontario 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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11.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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12.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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13.The Commission also notes that the company's contribution requirement would be reduced significantly as a result of the proposed increases.
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14.The Commission further notes that Hurontario'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 Hurontario.
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15.Hurontario noted that the implementation of an individual line business rate of $45.45 reflecting Bell's Band D individual line business rate may have some merit.
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16.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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17.The Commission is of the view that the proposed Basic Access Service improvements are in the public interest.
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18.The Commission notes that the proposed local rate increases 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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19.Hurontario's application is thus consistent with the conditions for implementation of EAS approved by the Commission for the independent telephone companies.
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20.The Commission notes that the 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 Hurontario.
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21.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 rate increases submitted by Hurontario under TNs 14 and 14A are approved as modified by paragraphs (b), (c) and (d) below.
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(b) Hurontario is to implement the proposed Basic Access Service improvements and rate increases originally proposed to occur on 1 September 1998 on 1 January 1999.
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(c) With the exception of the modification to the individual line business rate outlined in (d), Hurontario is to implement the remaining Basic Access Service improvements and rate increases on 1 August 1999, as proposed.
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(d) Hurontario is to implement an individual line business rate of $45.45 (including Touch-Tone service) across all its exchanges on 1 August 1999.
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(e) Hurontario is to issue revised tariff pages to reflect the changes approved in this Order.
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Secretary General
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This document is available in alternative format upon request.
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