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Ottawa, 26 June 1998
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Telecom Order CRTC 98-623
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Following an application dated 5 February 1997 filed by Rogers Cantel Inc. (Cantel) to review Bell Canada's (Bell) rates for paging and telephone number access (paging/TNA) telephone numbers, the Commission ordered by letter dated 16 May 1997 that: (1) Bell's rates for paging/TNA telephone numbers be made interim, (2) paging/TNA number rates be revised to $14.00 per 100 active numbers and $4.00 per 100 reserved numbers, and (3) Bell file an updated cost study for paging/TNA telephone numbers.
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File No.: 8661-C7-01/97
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1. On 5 June 1997, Telecom Public Notice CRTC 97-20 (PN 97-20) was issued, initiating a proceeding to enable interested parties to review Bell's updated cost study.
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2. On 15 September 1997, Bell filed Tariff Notice (TN) 6096 which proposed revisions to its existing rates for paging/TNA numbers, supported by an updated cost study. Bell proposed revised paging/TNA number rates of $0.15 per active number and $0.10 per reserved number.
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3. Pursuant to the procedure established in PN 97-20, Cantel, Clearnet Communications Inc. (Clearnet) and the Canadian Wireless Telecommunications Association (CWTA) [the Interveners] filed comments concerning TN 6096 on 7 November 1997.
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4. Several interveners urged the Commission to deny approval of Bell's proposed rates for active and reserved paging/TNA numbers but to approve modified rates based on the appropriate incremental costs of provisioning numbers and local network usage plus a 25% mark-up, retroactive to the date on which the Commission first made Bell's rates interim, namely 16 May 1997.
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5. By letter dated 18 November 1997, Bell filed its reply comments.
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6. The Interveners suggested that it is inappropriate for Bell to include the 416 overlay/514 split advancement costs in the cost of provisioning a line-side telephone number as all carriers will incur costs associated with such split, and that each carrier should bear its own costs, consistent with the new regulatory environment in which each carrier bears its own costs of achieving communications with other carriers.
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7. In response, Bell submitted that the Commission has repeatedly stated in previous Decisions and Orders that the general body of subscribers should not be required to bear the costs of wireless interconnection.
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8. Bell submitted that the forecast growth in demand for paging/TNA numbers advances the timing of the 416 overlay/514 split.
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9. In estimating the cost of advancement of the 416 overlay/514 split attributable to paging/TNA numbers, Bell assumed that without the growth in demand for paging/TNA numbers, the growth in telephone number demand for all other sources could be accommodated for a longer period, and that, accordingly, the 416 overlay/514 split could be delayed.
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10. Bell submitted that its methodology properly takes into consideration the cost of advancement causally associated with the growth in demand for paging/TNA numbers.
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11. Bell further submitted that many of the service providers acquiring telephone numbers under the paging/TNA telephone number tariff are not carriers and do not incur costs as alleged by Cantel and Clearnet.
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12. Bell submitted that Cantel's proposal that each carrier should bear its own costs of achieving communications with other carriers is inapplicable to the present proceeding as the principle reflected in Cantel's proposal stems from Local Competition, Telecom Decision CRTC 97-8, 1 May 1997 (Decision 97-8), and is meant to cover the interconnection of competitive local exchange carrier (CLEC) networks. Bell argued that with respect to the proposed paging/TNA number rates, there is no interconnection of CLEC networks.
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13. The Commission is of the view that the advancement of the 416 overlay and the 514 split will, in part, be caused by the growth in demand for paging/TNA numbers and considers that any prospective numbering plan area (NPA) advancement costs incurred by Bell in provisioning paging/TNA numbers should also be borne by the service providers making use of those numbers.
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14. Cantel alleged that Bell's network usage cost estimates associated with calls placed to paging/TNA numbers has increased significantly since the last study was performed in 1991.
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15. In response, Bell submitted that Cantel's statement is incorrect and that, in fact, monthly network usage cost estimates have decreased from $0.162 to $0.043 per activated paging/TNA number, a decrease of 73%.
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16. Cantel also disputed Bell's traffic study findings, alleging that the Community Calling Service (CCS) and call attempts per paging number are inconsistent with Cantel's own experience.
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17. In response, Bell stated that paging/TNA telephone numbers are provided to approximately 250 service providers who offer a variety of services in addition to paging services, and that these companies vary significantly in size.
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18. The Commission notes that the study's incremental network capacity costs were estimated by determining the costs of adding incremental traffic load onto Bell's existing network traffic load during the network's busy hour period.
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19. The Commission considers that Bell's proposed costing approach is consistent with standard network cost methodology and is appropriate in the circumstances.
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20. Bell submitted that its proposed rates not only recovered its incremental costs but also the remaining embedded costs associated with the advancement of (1) the 416/905 NPA split, and (2) Step by Step modifications, both of which were identified in its original 1991 ten-year study and remained partially unrecovered.
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21. Several interveners submitted that the inclusion of embedded costs in the calculation of the proposed new rates for paging/TNA numbers was inappropriate, and inconsistent with what they argued is now a well established methodology for arriving at cost-based rates for paging/TNA numbers.
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22. Bell submitted that, contrary to Cantel's argument, the unrecovered embedded costs must be considered in the establishment of the new rates given that: (1) the recovery of the costs included in the initial study was spread over a ten-year period and (2) a new study limited to prospective costs was undertaken after only five years of the ten-year study period.
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23. In support of its position, Bell relied on Telecom Order CRTC 97-83, 21 January 1997, pertaining, in part, to wireless telephone numbers, and, in particular, the Commission's statement therein that it intended to ascertain whether Bell's proposed rates reflect an adequate contribution towards the associated embedded and fixed costs.
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24. The Commission notes that in Telecom Order CRTC 97-1765, 27 November 1997, (Order 97-1765) the Commission recognized the appropriateness of including unrecovered embedded costs in determining revised line-side wireless number rates.
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25. Consistent with Order 97-1765, the Commission is of the view that it is appropriate to consider unrecovered embedded costs in establishing revised paging/TNA number rates.
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26. Cantel submitted that the use of the previous per number rate of $0.36 compared to the proposed per number incremental cost plus 25% mark-up would result in a monthly overpayment of $0.274 per number.
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27. Cantel further submitted that while it is not clear when Bell's old rates became disjointed from their associated costs, even if it were assumed that this had occurred for one year only, Bell would have generated sufficient excess funds to more than offset the entire amount of its alleged embedded costs. In Cantel's view, it is therefore clear that to the extent that there are any such unrecovered embedded costs, they have long since been recovered through excessive rates for paging/TNA numbers.
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28. The Commission notes that in response to interrogatory Bell(Clearnet)6Oct97-2 TNA, Bell provided a calculation of the embedded costs associated with the advancement of the 416/905 NPA split and Step by Step modifications due to paging/TNA numbers of $0.056 per number per month.
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29. By contrast, the Commission notes that in response to interrogatory Bell(CRTC)3Feb97-5 WAS, Bell provided a calculation of the embedded costs associated with the advancement of the 416/905 NPA split and Step by Step modifications due to cellular and paging numbers of $0.103 per number per month, reflecting the embedded costs associated with the aggregate of cellular and paging/TNA telephone numbers.
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30. The Commission further notes that the previous paging/TNA number rate was based on Bell's 1991 cost study and reflected the aggregate per number cost of $0.103 associated with the advancement of the 416/905 NPA split and Step by Step modifications.
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31. The Commission considers that it would be more appropriate to use the estimate of $0.103 per number per month to reflect the embedded costs associated with the advancement of the 416/905 NPA split and Step by Step modifications due to paging/TNA numbers.
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32. Given this finding, the Commission disagrees with Cantel's submission that the unrecovered embedded costs associated with the advancement of the 416/905 NPA split and Step by Step modifications of its original 1991 ten-year study, have already been fully recovered.
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33. In the circumstances, the Commission is of the view that a paging/TNA number rate of $0.14 per active number provides for the recovery of the service's incremental costs and allows for an appropriate level of contribution towards the associated unrecovered embedded costs.
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34. The Commission further notes that some of the service providers that acquire numbers under the paging/TNA telephone number tariff are also wireless service providers that acquire telephone numbers under the wireless telephone number tariff and that in these circumstances, paging/TNA and wireless telephone numbers can be used interchangeably.
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35. In light of this, the Commission considers it appropriate that the rates for paging/TNA telephone numbers and wireless telephone numbers be the same.
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36. The Commission further notes that the large differences in the incremental costs that have supported the appropriateness of having different rates for paging/TNA numbers and wireless numbers, no longer exist.
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37. Cantel noted that at the time the Commission approved rates for Bell's paging numbers and cellular numbers in Telecom Order CRTC 92-1448, 29 October 1992, it also approved a monthly rate for reserved numbers of $0.16 for both cellular and paging numbers, reflecting the identical costs associated with provisioning and assigning telephone numbers for cellular and paging service providers.
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38. Given the above, Cantel questioned why Bell's proposed reserved paging/TNA number rate was $0.10 per month compared to the reserved wireless number rate of $0.02 per month recently proposed by Bell in its TN 5903 of 19 December 1996, which translates to an additional $0.08 per number.
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39. In response, Bell noted that the reserved wireless number rate proposed in TN 5903 did not include any 416 overlay/514 split advancement costs, due to a declining requirement for line-side wireless reserved numbers.
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40. Bell also submitted that TN 5903's proposed wireless number rates did not reflect the embedded costs associated with the advancement of the 416 overlay/514 split and the advancement of Step by Step modifications identified in the 1991 cost study.
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41. The Commission notes that the rate recently approved for reserved wireless numbers is $0.04 per number.
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42. The Commission is of the view that a rate of $0.04 per reserved paging/TNA number will allow for an appropriate level of contribution towards the associated embedded number provisioning costs and allow for a consistent set of rates for reserved telephone numbers charged for both wireless and paging/TNA service providers.
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43. With respect to the submission of several interveners that adjustments to the rates approved on a final basis should be made retroactive to 16 May 1997, the Commission notes that the rates approved in this Order are identical to the interim paging/TNA number rates approved by the Commission in its 16 May 1997 letter, and that, therefore, no retrospective rate adjustments are required.
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44. On the basis of the foregoing, the Commission gives final approval to: (a) a rate of $0.14 per active paging/TNA telephone number and (b) a rate of $0.04 per reserved paging/TNA telephone number, and directs Bell to issue tariff pages forthwith reflecting these 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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