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Ottawa, 12 May 1998
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Telecom Order CRTC 98-469
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On 31 March 1998, NewTel Communications Inc. (NewTel) 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 573
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1. NewTel 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. NewTel noted that meeting the 1 May 1998 PCI would require significant rate reductions. NewTel submitted that the only significant service category where the current prices are above the imputation test is business access in Band A which consists of the St. John's exchange. The company stated that it had recently completed an extensive consolidation of rates for business primary exchange service, during which all the rates for business primary exchange service in Band B were increased to the rate levels in St. John's. NewTel submitted that implementing the full price cap reductions in Band A would mean very significantly reduced rates in St. John's while rates would remain at current levels everywhere else in the province. NewTel stated that such a dramatic price change would result in a competitive and political backlash everywhere outside the St. John's exchange.
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3. NewTel therefore proposed to apply the annualized reduction required by the price cap regime in roughly equal proportions to local business rates and the contribution rate. Specifically, NewTel proposed to reduce: (a) the multi-line business access rates in Bands A and B to the level of individual line business rates; (b) the Direct-in-Dial rates; and (c) the average contribution rate.
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4. Under letter dated 21 April 1998, NewTel provided responses to Commission interrogatories that requested the company to provide Phase II costs for its Single Line Business Service and Multi-line Business Service. As well, the Commission sought the company's views regarding the appropriateness of a number of rate scenarios.
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5. NewTel submitted that it would not object to implementing a company wide rate for Single and Multi-line Business Services which would provide compliance with the 1 May 1998 PCI.
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6. The Commission notes that comments were received both supporting and opposing NewTel's application.
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7. The Commission notes that, consistent with the Stentor-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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8. The Commission notes that the Multi-line Business Service rates proposed by NewTel and the company-wide Single Line and Multi-line Business Services rate scenario referred to above would not comply with the price floor for Band B adopted in Decision 97-9.
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9. The Commission notes that implementing a common rate of $34.00 for Single and Multi-line Business Services in Band A would likely result in NewTel complying with its 1 May 1998 PCI.
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10. The Commission is satisfied that, on the basis of the imputation test required by Decision 97-8, the $34.00 rate specified above will not be anti-competitive.
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11. In light of the foregoing, the Commission orders that:
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a) A rate of $34.00 for Single Line and Multi-line Business Services is approved for Band A effective 19 May 1998.
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b) The company is to file, by 19 May 1998, the calculation of its Actual Price Index and Service Band Indices reflecting the foregoing determinations.
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c) NewTel 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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