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Ottawa, 26 June 1998
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Telecom Order CRTC 98-622
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In Tariff Notice (TN) 628 dated 8 August 1997, Northwestel Inc. (Northwestel) proposed to (a) charge 6¢ per minute for all air-time (incoming and outgoing calls both local and toll) rather than just for originating local calls per the existing tariff for its Ruraltel service, and (b) grandfather that part of Ruraltel service which is provisioned using the 800MHz radio frequency band (Ruraltel 800).
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File No.: TN 628
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1. Northwestel stated that Ruraltel service is priced significantly below cost and that, Ruraltel rates have not been increased along with rates for other basic services.
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2. Coincident with Northwestel's proposal, Northwestel Mobility Inc. (NMI) offered, as an alternative to Ruraltel, a specially priced service package using fixed radio installations and its current technology cellular system.
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3. Northwestel sent letters to all Ruraltel customers notifying them of the proposed changes. The company also sent out billing information that showed how much a particular customer would be billed under the proposed rates and also provided a more detailed description of NMI's alternate service offering. In addition, Northwestel held information meetings in various communities to explain its position and get customer feedback.
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4. In order to allow for these processes and to provide customers time to comment to the Commission, Northwestel asked for, and received, an extension to the time normally allowed for parties to respond to a Tariff Notice.
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5. The Commission received 55 letters commenting on the proposals.
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6. All of the comments opposed the rate increase and some also objected to the proposed grandfathering of the Ruraltel 800 service. In addition, most of the comments included complaints about the quality of the existing service. The majority of the complaints were symptomatic of an overloaded system. Others complained about the billing methodology, in particular, the bill is in fact received from NMI and includes non-tariffed charges. The comments stated that the customer then must calculate the correct charges and claim a credit for the difference.
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7. In its response dated 23 December 1997, Northwestel stated that the current rate structure gives rise to problems with network congestion and submitted a study that showed that the ratio of local originating to local terminating plus long distance traffic for Ruraltel was 1 to 3.14. Northwestel attributed this imbalance to customers manipulating their calling patterns to minimize air-time charges. The company stated that service problems associated with congestion are a concern to many customers as well as to the company, especially in cases of customers calling for emergency assistance when the network is congested, and that the introduction of air-time charges on incoming calls is a means to alleviate this congestion.
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8. In a response to a specific customer, the company stated that it is prepared to build landlines where feasible if customers are willing to pay construction charges per its tariff. The company also stated that under certain conditions customers can obtain special financing for these construction charges from their territorial governments.
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9. The Commission shares Northwestel's concerns regarding congestion and agrees with the company that the large imbalance of originating to terminating traffic indicates that customers are tailoring their calling to minimize charges under the existing rate structure.
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10. The Commission notes that it is common industry practice to charge for all air-time on cellular radio systems.
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11. The Commission considers that it is appropriate to apply the air-time charge to all air-time as requested by Northwestel. However, the Commission considers that, while the 6¢ per minute rate is low by industry standards, extending this rate to all air-time would lead to an excessive rate increase.
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12. The Commission considers that a 4¢ per minute rate for all air-time would be more appropriate and would still reduce congestion.
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13. The Commission notes that charging for all usage will also bring rates close to costs.
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14. The Commission is concerned about the quality of service for Ruraltel. The Commission notes that a rating change is only one step towards achieving the required service improvement. The Commission considers that an ongoing management of the number of customers and the traffic load on each of the systems is required to bring this service to acceptable standards and to then maintain it at that level.
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15. The Commission notes that the company did not comment on the complaints about the billing system. The Commission considers that the situation outlined by the complaints is onerous to customers. The Commission therefore directs the company to file a report with the Commission, within 30 days, describing its Ruraltel billing procedures together with an action plan on how the problems will be corrected.
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16. The Commission also notes that currently there are limited alternatives to Ruraltel service available. Further, based on the record of this proceeding, it would appear that at this time the alternative offering from NMI is not available in all areas now served by Ruraltel. In these circumstances, the Commission considers that grandfathering Ruraltel 800 service is not appropriate at this time.
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17. In light of the above, the Commission:
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i) approves, effective 30 days from the date of this Order, a restructured Ruraltel rating regime, consisting of $0.04 per minute for all air-time;
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ii) denies the request to grandfather Ruraltel 800 service;
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iii) directs Northwestel to file with the Commission, within 3 months, a proposal that would specify the criteria for acceptable service for Ruraltel; and
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iv) following approval of the criteria, directs the company to file a quarterly report with the Commission, listing the systems that fail the quality of service criteria, together with action plans on how to rectify the problems.
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18. Finally, the Commission notes that a non-profit organization called the "Territorial Anti-Price Increase Society" (TAPIS) requested that the Commission hold an oral hearing in either Vancouver or Whitehorse to hear interventions on Northwestel's filing. TAPIS also requested costs in connection with their participation in such an oral hearing. The Commission considers that the written process for this proceeding has provided affected persons with a full opportunity to make meaningful representations. In the circumstances, the Commission denies TAPIS' application for an oral hearing. Given this determination, TAPIS' request for costs is moot.
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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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