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Ottawa, 9 February 1998
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Telecom Order CRTC 98-125
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By letter dated 16 May 1997, BC TEL filed an application for approval of revisions to BC TEL's criteria for the provision of one-way extended area service (EAS).
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File No.: 8632-B1-01/97
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1. In its application, BC TEL stated that its proposed revisions are intended to address the needs of customers who do not qualify for extended local calling under the criteria for the provision of one-way EAS which were established in British Columbia Telephone Company - Revenue Requirement for the Years 1988 and 1989 and Revised Criteria for Extended Area Service, Telecom Decision CRTC 88-21, 19 December 1988 and amended in the Commission's letter decision of 24 April 1991 to BC TEL.
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2. In order to receive one-way EAS under those criteria:
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(i) at least 60% of subscribers in one exchange must call the other exchange at least once a month during three out of four study months (Community of Interest (COI));
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(ii) the distance between the exchanges' rate centres (normally the main switching centre in an exchange) must not exceed 40 miles, unless no accessible exchange rate centre exists within 40 miles, in which case the limit is extended to 60 miles; and
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(iii) a simple majority (over 50% of subscribers who vote) of subscribers whose basic local rates would be increased must approve of the new service.
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3. Under BC TEL's proposal, in cases where:
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(1) either criteria (i) or (ii) or both are not met;
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(2) a local or regional government makes a request for a specific EAS route;
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(3) the requested EAS route involves exchange rate centres that are within 60 miles of each other; and
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(4) the implementation of the route would result in monthly rate increases due to upgrouping, BC TEL would conduct a referendum ballot consistent with established procedures subject to the requesting party paying for all the costs associated with the balloting procedure.
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4. In support of its application, BC TEL submitted in confidence, with an abridged version for the public record, an overview of the financial impact of a sample of potential EAS routes recently requested by local governments.
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5. In BC TEL - Revisions to Criteria for the Provision of One-Way Extended Area Service, Telecom Public Notice CRTC 97-27, 10 July 1997, the Commission invited comments on BC TEL's application.
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6. Comments supporting the application were received from the Corporation of the Village of Silverton and two individuals, Anne Marie Mol and Brenda Adams, and opposing the application from The British Columbia Public Interest Advocacy Centre on behalf of BCOAPO et al. (BCOAPO et al.), The Tatlayoko Think Tank (TTT), AT&T Canada Long Distance Services Company (AT&T Canada LDS), Westel Communications Ltd. (Westel) and Janice Kacznmar.
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7. AT&T Canada LDS and Westel expressed concern that an increase in the Utility segment shortfall would impact negatively on the alternate providers of long distance service (APLDS). AT&T Canada LDS submitted that the application does nothing to ensure that the Utility shortfall would not increase, even if there were a coincident increase in rates due to upgrouping. Westel noted that BC TEL had not filed any revenue impact studies regarding the impact on its general body of subscribers.
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8. Regarding the potential impact on APLDS, BC TEL submitted that its proposed additional EAS criteria upholds the same principles underlying the current EAS regime and effectively maintains the balance of the competing interests of the company and the APLDS.
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9. BC TEL submitted that the potential impact on subscribers would be mitigated for the following reasons:
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(a) the two rate group consolidations that BC TEL has implemented have resulted in considerable movement of local service rates toward the cost of service provisioning;
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(b) BC TEL's proposed criterion (4) requires that the requested route must result in an increase in local rates due to upgrouping;
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(c) the cost of the requested referendum would be borne by the requesting local or regional government; and
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(d) the data filed by BC TEL indicates that there would not be a substantial impact on the overall cost of EAS provisioning.
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10. AT&T Canada LDS and Westel expressed concern regarding large areas being converted from toll routes to local calling.
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11. BC TEL submitted that the conversion of large areas from toll routes to local calling would be unlikely to occur for the following reasons:
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(a) with regard to the Lower Mainland, many of the exchanges would not be eligible for EAS expansion because these exchanges would not result in an upgrouping; and
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(b) in the Greater Vancouver area, few local or regional governments would be willing to undertake on their own the significant cost of conducting a plebiscite.
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12. BC TEL submitted that the interests of the APLDS must be weighed against other equally valid interests, including those of particular communities that have a need and desire for specific EAS routes.
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13. AT&T Canada LDS and Westel argued that a request by a local or regional government does not constitute a strong COI between two exchanges and should not be accepted in lieu of the existing COI criterion.
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14. In reply, BC TEL submitted that a request from a local or regional government is evidence of a strong COI and is a viable alternative to the current 60% COI criterion. BC TEL further submitted that the existing COI criterion is a regulatory construct which is not the only measure of a valid COI, and that a request from a local or regional government constitutes a reasonable alternative indication of a strong COI.
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15. BCOAPO et al. submitted that the application fails to take account of the potential impact of the proposed "rate bands" whose approval is pending before the Commission. BCOAPO et al. further submitted that this means that consumers in affected areas could be asked to determine by referendum whether or not they wish to receive EAS without any way of knowing the longer term rate impact. BCOAPO et al. submitted that the Commission should require BC TEL to file supplementary material indicating how it proposes to determine rate impacts of EAS in the event that the proposed "rate bands" regime is approved, prior to consideration of this application.
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16. In reply, BC TEL submitted that the issue raised by BCOAPO et al. is not relevant to the application and is an issue to be considered following the disposition of Implementation of Price Cap Regulation, 1997 Contribution Charges and Related Issues, Telecom Public Notice CRTC 97-11, 25 March 1997. BC TEL noted that under its proposal, it must continue to use the existing rate group structure and cannot increase local rates for the EAS-affected subscribers through an arbitrary formula.
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17. BC TEL further submitted that: (a) the proposed criterion that a local or regional government makes a request for a specific EAS route, represents a reasonable attempt to address the needs of communities where telephone exchanges do not always coincide with communities; and (b) there are a number of safeguards against the local government making a request in order to meet the perceived needs of a specific subset of residents of the community, namely, elected government officials would be subsequently accountable at election time, the cost of the referendum would be borne by the local government, and the referendum process provides the ultimate test of COI. BC TEL noted that its proposal would continue to place the final disposition of a proposed EAS route in the hands of subscribers who would be affected.
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18. With respect to the potential for increasing BC TEL's Utility segment shortfall, the Commission notes that in Bell Canada - Neighbourhood Calling Plan, 9 December 1992, Telecom Decision CRTC 92-22 (Decision 92-22), the Commission expressed the view that it would be prepared to consider departures from the EAS criteria for the creation of toll-free calling areas provided, among other considerations, the incremental costs of any such departures were to be borne primarily by subscribers within the affected regions and that subscribers faced with a local rate increase had the opportunity, through some form of vote, to express their views.
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19. As well, the Commission stated in Decision 92-22 that it may be appropriate for the region or municipality affected by the proposal, rather than the general body of subscribers, to bear some of the costs of a vote when the EAS criteria are not met.
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20. The Commission considers that the criterion that the incremental costs be borne primarily by subscribers within the affected regions continues to be important as a means of addressing the potential shortfall in BC TEL's Utility segment.
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21. The Commission considers that the potential for diminishing the toll market available for competitors is outweighed by the benefit to consumers in having a choice of either selecting EAS or remaining with toll service providers.
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22. The Commission agrees with BC TEL's submission that the issue raised by BCOAPO et al. pertaining to the potential impact of "rate bands" is not relevant to this Application. Accordingly, the Commission does not consider that the filing of supplementary material as requested by BCOAPO et al. is necessary or appropriate.
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23. The Commission is concerned that, under BC TEL's proposal, subscribers in exchanges where rates have reached the highest rate group would not be able to take advantage of BC TEL's proposal given that there would be no opportunity for rate upgrouping. The Commission further considers that with the trend to rate group compression, BC TEL's proposal would likely have limited application. In addition, the Commission is of the view that BC TEL's proposal that a request for a specific EAS route be made by a local or regional government is unduly restrictive. The Commission considers that it should be open to any subscriber or group of subscribers to request a specific EAS route.
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24. In light of the above, the Commission denies BC TEL's application.
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25. The Commission notes that it would be favourably disposed to considering tariff applications from BC TEL for new toll-free calling areas, on an exchange by exchange basis, which reflect the principles of Decision 92-22. The Commission further notes that where as a result of a local rate increase a proposed EAS link would be compensatory, there would be no need for any additional charges.
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Laura M. Talbot-Allan
Secretary General
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This document is available in alternative format upon request.
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