ARCHIVED -  Telecom Order CRTC 98-1346

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Telecom Order

Ottawa, 23 December 1998
Telecom Order CRTC 98-1346
On 11 August 1998, TELUS Communications (Edmonton) Inc. (TCEI) filed Tariff Notice 94 proposing to increase its local calling rate for its public pay telephones from the current $0.25 to $0.35 for the cash payment option, which includes the use of the company's Quickchange Prepaid Cash Card.
File No.: Tariff Notice 94
1.The company filed its application coincident with a similar application by TELUS Communications Inc. (TCI) and stated that the increase was required to bring the rate closer to cost and to maintain uniformity of rates throughout the province.
2.TCI's application was approved in Telecom Order CRTC 98-968, dated 30 September 1998.
3.The Commission received interventions from the Public Interest Advocacy Centre (PIAC) which stated that, given the importance of payphone rates to the public, it assumed that the Commission would issue a public notice on this proceeding, and from the Consumers' Association of Canada, Alberta Branch, which stated support for PIAC's intervention.
4.The Commission considered that TCEI is under rate of return regulation and that the company's proposal should receive wider public exposure than that of TCI. The Commission called for comments on TCEI's proposal in TELUS Communications (Edmonton) Inc. - Proposed Increase for Local Calling Rate for Public Pay Telephones, Telecom Public Notice CRTC 98-28, 2 October 1998.
5.On 2 November 1998, comments were received from PIAC, on behalf of the Alberta Council on Aging (ACA) stating that it is important that pay phone rates be kept as low as reasonably possible because pay phones are an important element of universal service, not only because of the convenience that they provide to individuals away from home, but also because of their critical role in providing the means for individuals to communicate in emergency situations, and in providing the only means of access to the telephone network for those individuals unable to afford basic local telephone service from their home.
6.The ACA argued that TCEI failed to justify this proposed rate increase. It stated that TCEI should not be able to use the TCI cost study as a proxy because costs in Edmonton would be significantly different from those in the rest of Alberta.
7.In reply, TCEI stated that access to emergency service via its public pay telephones is and will continue to be free of charge.
8.With respect to the ACA's submission, that TCI's cost study for pay telephone operations in its territory is not appropriate for Edmonton, TCEI stated that TCI's study is representative of the cost of TCEI's pay telephone operations in Edmonton. In particular, the company stated that the majority of the costs are related to the pay telephone terminal and that these costs are identical for TCI and TCEI because they use the same suppliers for the provisioning of the terminals.
9.With respect to ACA's submission that pay telephones are an important element of universal service, the Commission notes, as did TCEI in its reply submission, that in Local Pay Telephone Competition, Telecom Decision CRTC 98-8, 30 June 1998, the Commission stated:
In the Commission's view, there is no compelling evidence on the record to indicate that the introduction of competition in the pay telephone market warrants placing an obligation to serve, which currently does not exist, on CPTSPs [Competitive Pay Telephone Service Providers] or incumbent PTSPs at this time.
The Commission considers that the vast majority of people who use pay telephones do so as a matter of convenience or emergency, not as a substitute for basic telephone service.
10.The Commission accepts TCEI's evidence that the proposal will move the rate for local cash calls at pay telephones closer to cost.
11.The Commission considers that in the case of local pay telephone calls, which are charged on a per call basis, it is desirable to have uniform rates throughout Alberta to minimize customer confusion.
12.The Commission notes that emergency calls from pay telephones are free.
13.The Commission notes that TCEI's rate for the cash payment option at public pay telephones has been at the current $0.25 level for many years and considers that, at the rate proposed, local calls from public pay telephones will continue to be affordable.
14.The Commission notes that TCEI had proposed a phase-in period ending December 1998 to convert its telephones to the proposed rate.
15.Accordingly, the Commission approves the Tariff Notice effective the date of this Order with a phase-in period to allow for the conversion of all pay telephones by the end of February 1999.
Secretary General
This document is available in alternative format upon request.
Dissent by Commissioners Stuart Langford and Andrew Cardozo: TCEI Application, Tariff Notice 94
1.This is an application by TELUS Communications (Edmonton) Inc. (TCEI) to increase the charge for making a local pay telephone call from 25 to 35 cents. The primary purpose of the proposed service rate increase, according to the applicant, is to move the local pay telephone rate closer to its cost.
2.According to a costing study undertaken by TCEI, the 25-cent local cash pay telephone rate is not compensatory. Though, as stated in its application letter of August 5, 1998, TCEI recognises the need to subsidize its pay telephone business, it seeks to "minimize" those subsidies as much as possible and believes such a goal is compatible with regulatory objectives:
"Achieving pay telephone rates that cover the cost of providing pay telephone service is consistent with maintaining a viable, affordable and competitive service priced at market-based rates. This is consistent with the Commission's objectives to move rates closer to costs thereby encouraging competitive entry."
3.While "encouraging competitive entry" is a Commission objective, an objective drawn from those listed in section 7 of the Telecommunications Act (the Act) of 1993, it is neither the Commission's nor the Act's sole objective. Section 7 of the Act sets out nine objectives. The word competitiveness is to be found in only one of them, paragraph (c). Paragraph (a) of section 7, among other things, pledges the Act to "...safeguard, enrich and strengthen the social and economic fabric of Canada...". Paragraph (b) speaks of "...affordable telecommunications services...". Paragraph (h) pledges "to respond to the economic and social requirements of users of telecommunications services."
4.In setting out his government's intentions in introducing the 1992 amendments that eventually resulted in the Telecommunications Act of 1993, the Minister of Communications stated clearly that though one aim of the bill was to promote affordable and reliable telecommunications services through competition, competition was not intended as the sole means of attaining that end:
"Now, in addition to that (competition) the CRTC remains there. The CRTC is charged with the responsibility of ensuring the objectives of the bill are met. If competition does not enable people to receive the treatment that is mentioned in the objectives section of the bill, the CRTC has the power and the responsibility to ensure that those goals are met in the same way as they are today."
5.The "same way" the Minister referred to is through highly focused regulatory involvement. This case is an appropriate one for just such an approach.
6.Unfortunately, too many Canadians find themselves in the unenviable position of having to rely on pay telephones for what might be called basic service. The homeless, most congregating in larger urban areas and reliant on charity for survival, are the most dramatic and depressing example of this phenomenon. But, they are not the only Canadians who must look to the pay telephone for service.
7.The most recent quarterly report of the Stentor group on telephone usage in Canada (released November 4, 1998) indicates that as many as 127,000 Canadian households are without a telephone because they cannot afford phone service.
8.There may be any number of reasons for this situation - clearly, rising costs deserve investigation in any cause and effect analysis of it - but whatever the reasons, the fact remains that where people have no phone they must look either to the charity of others or to pay telephones for basic phone services. If cost is a factor, and it is hard to imagine it is not, the increase TCEI seeks of 10 cents per call becomes significant.
9.In a letter of August 25, 1998 responding to the TCEI application, the Public Interest Advocacy Centre (PIAC) stated its opposition to TCEI's rate increase request and asked for the issue to be examined in a public process:
"Given the importance of pay phone rates to the public, we assume that this matter will be made the subject of a public notice, so that the Commission may benefit from the views of Canadian consumers on the appropriateness of such a significant price increase."
10.In response to PIAC's and one other similar response from counsel for the Consumers' Association of Canada, Alberta Branch, the Commission issued a public notice (PN 98-28) on October 2, 1998. Only PIAC responded to PN 98-28, doing so on behalf of the Alberta Council on Aging (ACA) in a letter dated November 2, 1998. It asked the Commission to "...deny the application on the grounds that it has not been justified by the Company."
11."Pay phones," the PIAC letter continued, "are an important element of universal service, not just because of the convenience that they provide to individuals away from home, but also because of their critical role in providing the means for individuals to communicate in emergency situations, and in providing the only means of access to the telephone network for those individuals unable to afford basic telephone service from their home. It is therefore essential to the achievement of the Canadian telecommunications policy goals that pay phone rates be kept as low as reasonably possible, and that any increase in them be fully justified." (emphasis is added)
12.The rest of the PIAC intervention on behalf of ACA centred on the viability of TCEI's costing study on the compensatory aspects of pay phone cash charges, a study characterized by PIAC as "untenable" and "without merit". In its Reply, TCEI took exception to PIAC's assessment. Which evaluation is correct appears, at least to us, to overlook the rather more fundamental issues of access and affordability.
13.In granting TCEI's application on a compensation/subsidization basis, the Commission may very well be authorizing a new rate which constitutes a hardship for a significant number of Canadians and consequently is inequitable. Granted, the fact that only one intervener responded to PN 98-28 offers, on the face of the record and at first blush, persuasive evidence that this is not so. Arguably, if only one written intervention was filed, Canadians are not much bothered by an increase from 25 to 35 cents.
14.Perhaps. Equally viable, however, is a conclusion that those most adversely affected by such a rate increase did not respond because they did not know about the application. The homeless and the housed but desperately poor among us are occupied full-time by the challenge of survival. Their poverty, in effect, isolates them. Yet, if there are adverse side effects to the majority decision in this application, it is these same disadvantaged Canadians who will feel them most keenly.
15.Pay telephones are more than a convenience for Canadians away from home or the workplace. They are the only access the poorest among us have to the telephone network. Accordingly, anything that might sever that life line must be scrutinized minutely by the Commission. We would have denied this application.

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