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Ottawa, 12 May 1998
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Telecom Order CRTC 98-464
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On 30 March 1998, Bell Canada (Bell) filed an application proposing tariff changes further to Price Cap Regulation and Related Issues, Telecom Decision CRTC 97-9, 1 May 1997 (Decision 97-9).
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File No.: Tariff Notice 6206
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1. Bell filed its Price Cap Index (PCI) and respective Service Band Limits (SBLs) as at 1 January 1998 incorporating an adjustment to the PCI and Basic Residential Local Service sub-basket SBL to reflect the amount of the residual shortfall not recovered through rates. The Commission considers that this is in compliance with Implementation of Price Cap Regulation and Related Issues, Telecom Decision CRTC 98-2, 5 March 1998.
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2. Bell proposed to restructure the rates for Megalink and Digital Exchange Access Public Switched Telephone Network (PSTN) Connectivity and to reduce the monthly rate for basic business service in all rate bands to $39.95. The company noted that the proposal to decrease the business line rate in Band D from $45.45 to $39.95 does not meet the current imputation test. However, the proposed price would exceed incremental costs in that band.
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3. Bell submitted that the introduction at this time of lower prices in Bands A, B and C relative to Band D would raise serious customer and political issues. Bell stated that the solution likely encompasses some optional retail pricing plans, but will almost certainly include as well some exchange reclassification and/or other changes to the existing banding structure. Further, the company argued that the imputation test is intended to ensure competitive equity between competitors who use Bell's unbundled loops and Bell itself. The company indicated that it does not expect competitors to use unbundled loops in Band D at least for some years. Bell concluded that the proposed rate for Band D would therefore not have anti-competitive consequences.
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4. The Commission received comments from a number of parties. Those opposing the company's application generally did so on the grounds that the proposed rate of $39.95 does not meet the imputation test, reduced rates for business lines would negatively impact the Centrex resale market or that the proposed rate would negatively impact independent telephone company operations. A number of parties supported Bell's proposal to reduce business line rates in Band D.
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5. The Commission notes that, consistent with the Stentor Resource Centre Inc. member companies' position, in Decision 97-9 it determined that the imputation test established in Local Competition, Telecom Decision CRTC 97-8, 1 May 1997 (Decision 97-8) would be employed as the price floor for capped services. Decision 97-8 determined that, for the purposes of costing the resources employed to provide local exchange services, the imputation test is to only include essential facilities at tariff rates (cost plus 25%). In addition, the imputation test is to be applied on a service specific basis and at the rate band level.
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6. As indicated by Bell, the proposed business line rate of $39.95 in Band D would not pass the imputation test. The Commission considers that approval of the company's Band D proposal would inhibit local competition in those areas.
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7. The Commission is satisfied that, on the basis of the imputation test information required by Decision 97-8, the proposed business line rate for Bands A, B and C will not be anti-competitive.
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8. In light of the foregoing, the Commission orders that:
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a) The proposed business line rate of $39.95 is approved for Bands A, B and C, effective 19 May 1998. The proposed business line rate of $39.95 for Band D is denied.
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b) The proposed rates for Megalink Service and Digital Exchange Access Service are approved effective 19 May 1998.
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c) The company is to file, by 19 May 1998, proposed rate revisions that result in its Actual Price Index (API) not exceeding the level of its PCI.
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d) The company is directed to file by 19 May 1998 the calculation of its API and Service Band Indices reflecting the foregoing determinations.
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e) Bell is to issue Tariff pages by 19 May 1998 reflecting the foregoing approved rates.
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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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