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ARCHIVED -  Telecom Order CRTC 98-1342

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Telecom Order

Ottawa, 23 December 1998
Telecom Order CRTC 98-1342
On 1 October 1998, Stentor Resource Centre Inc. (Stentor) filed, on behalf of and with the concurrence of all federally regulated Stentor operating companies, with the exception of TELUS Communications Inc., an application proposing rate reductions for DS-3 access service.
File No.: Tariff Notice 684
1.DS-3 access service rates are grouped into three bands which differ by serving wire centre. Stentor proposed to introduce a new band and to lower the rate for an existing band.
2.MetroNet Communications Group Inc. (MetroNet) intervened requesting that the filing be denied. MetroNet stated that the rate reductions are targeted and therefore inappropriate and anti-competitive at this introductory stage of local competition. MetroNet stated that the Stentor members are the only market participants in a position to use excess revenue derived from the higher bands to cross-subsidize below cost pricing in the lower bands. MetroNet also submitted that by reducing the rates on long-term contracts, Stentor is trying to lock-up the entire market and foreclose local competition.
3.Stentor stated that MetroNet's references to the state of local competition are irrelevant to Tariff Notice 684, because DS-3 access service is not primary exchange service (PES), is not a substitute for PES, and is very rarely used in conjunction with PES. Therefore, the state of competition in the PES market has no bearing on the appropriateness of the application. Stentor stated that the relevant market is the market for high-speed digital access and that this market has been competitive for many years.
4.Stentor stated that all the proposed rates pass the imputation test. Stentor also stated that the use of long-term contracts is a normal characteristic of a competitive market.
5.The Commission notes that all the proposed rate changes pass the imputation test, therefore there is no cross-subsidy issue. The Commission considers that this test provides an appropriate safeguard against cross-subsidy concerns.
6.In light of the above, the Commission finds the proposed rate changes appropriate. The application is therefore approved.
Secretary General
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