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Ottawa, 1 December 1998
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Telecom Order CRTC 98-1204
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On 5 March 1998, Otonabee Telephones Ltd. (Otonabee) filed an application, under Tariff Notice (TN) 15, amended by TN 15A of 9 April 1998, TN 15B of 20 April 1998 and TN 15C of 30 June 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 15
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1.Otonabee proposed to increase rates for a number of services including local residential and business rates in order to achieve local rate parity with Bell Canada (Bell) on 1 November 1998.
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2.The Basic Access Service improvements proposed by Otonabee consist of an expanded local calling area, the elimination of mileage charges and community rates and providing customers with individual or two-party line service.
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3.Otonabee's expanded local calling area would introduce new Extended Area Service (EAS) links consistent with Bell's recently approved Natural Calling Centre for Peterborough.
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4.Otonabee's application (as modified by TNs 15A, 15B and 15C) includes proposals to increase the local monthly individual line residential rates for the base rate area from $15.00 to $19.85 and increase individual line business rates from $31.65 to $39.95 on 1 November 1998 (these rates include Touch-Tone service).
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5.Otonabee submitted that its proposal would reduce the company's contribution requirement from toll carriers.
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6.Otonabee also submitted that its subscribers would benefit from the proposed Basic Access Service improvements. Otonabee 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 Otonabee'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 PN 97-41 proceeding, the OTA proposed local rate parity between its members and Bell.
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10.Otonabee notified its subscribers of the proposal through a billing insert. The Commission notes that a majority of responding subscribers favoured the application. No party, other than subscribers or local representatives, commented on 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 as a result of the proposed increases.
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14.The Commission further notes that Otonabee'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 Otonabee.
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15.Otonabee 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 notes that in Telecom Order CRTC 96-1542, 23 December 1996, it encouraged Otonabee to investigate ways to reduce or eliminate mileage charges.
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18.The Commission is of the view that the proposed Basic Access Service improvements are in the public interest.
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19.The Commission notes that the proposed 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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20.Otonabee'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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21.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 Otonabee.
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22.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 Otonabee under TNs 15, 15A, 15B and 15C are approved as modified by paragraphs (b) and (c) below.
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(b) With the exception of the modification to the individual line business rate outlined in (c), Otonabee is to implement the proposed Basic Access Service improvements and rate increases originally proposed to occur on 1 November 1998 on 1 January 1999.
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(c) Otonabee is to implement an individual line business rate of $45.45 (including Touch-Tone service) on 1 January 1999.
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(d) Otonabee 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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