ARCHIVED -  Telecom Order CRTC 98-703

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Telecom Order

Ottawa, 17 July 1998
Telecom Order CRTC 98-703
On 15 January 1998, The Corporation of the City of Thunder Bay - Telephone Division(Thunder Bay) filed an application for approval of tariff revisions reflecting changes to its primary exchange service.
File No.: Tariff Notice 54
1.Under Tariff Notice (TN) 54, Thunder Bay is proposing to eliminate mileage charges and locality rate areas in conjunction with a $ 0.30 rate increase applied to all customers. Thunder Bay proposed to destandardize two and four party services and upgrade all current customers to individual line service by the end of 1998. Thunder Bay also proposed to expand its local free calling area to match Bell Canada's (Bell) Natural Calling Centre (NCC) for the Thunder Bay Area.
2.In support of its proposal, Thunder Bay submitted that mileage charges were a customer irritant and have deterred party line customers from upgrading to individual line service.
3.Thunder Bay proposed to recover the revenues foregone as a result of the elimination of mileage charges and locality rate areas through a $ 0.30 rate increase applied across all network access service (NAS) lines.
4.Thunder Bay's rationale for requiring the upgrade of two and four-party service to individual line service is to improve service and decrease costs.
5.Thunder Bay submitted that it intends to make individual line service available to all customers by the end of 1998. The company submitted that most party line customers will be upgraded upon approval of TN 54 while the remaining customers will be upgraded once the required facilities become available throughout their exchange.
6.Thunder Bay also proposed to harmonize its toll free calling area or extended area service (EAS) with that provided by Bell under its recently approved NCCs thus eliminating all one-way EAS arrangements.
7.Thunder Bay advised all customers of its proposal through a billing insert, and supplemented the billing insert with newspaper advertisements outlining its proposal. A total of 13 comments were received. Two customers opposed the proposal.
8.The Commission is concerned that approval of TN 54, as filed by the company, would place upward pressure on Thunder Bay's Carrier Access Tariff (CAT).
9.The Commission's concern relates to the proposed rate increase. The $ 0.30 rate increase proposed by the company is designed to recover the revenues forgone as a result of the elimination of mileage charges and locality rates only. The proposed increase does not recover the costs associated with the expansion of the free calling area.
10.In Regulatory Framework for the Independent Telephone Companies in Quebec and Ontario (Except Ontario Northland Transportation Commission, Québec-Téléphone and Télébec ltée), Telecom Decision CRTC 96-6 , 7 August 1996 (Decision 96-6), the Commission determined that "For the independents in Ontario and Quebec, the Commission will require that subscribers pay for the cost of EAS directly through higher local rates and that the CAT not be used for this purpose."
11.This approach was adopted in order that the CAT not be increased and that the subscribers benefiting from new EAS links be the ones to pay for the costs of EAS.
12.The costs of EAS include the incremental costs of establishing the EAS links and contribution revenues foregone as a result of lost toll traffic.
13.In response to Commission interrogatories, the company submitted that recovery of both the revenue forgone as a result of the elimination of mileage charges and locality rates along with the costs of the new EAS links would require a $0.50 per month per NAS rate increase.
14.Thunder Bay submitted that, in view of the Commission concerns with regard to the costs of the new EAS links, it would be reasonable for approval of TN 54 to be accompanied with a local rate increase of $0.50, rather than the $0.30 increase proposed by the company.
15.In view of the company's revised position, the comments received from subscribers and the requirements of Decision 96-6 as it relates to the recovery of the costs of new EAS links, the Commission is of the view that it would be appropriate to approve TN 54 but require a $0.50 rate increase in order to recover all forgone revenues and costs associated with the application.
16.In light of the foregoing, the Commission orders that the proposed tariff revisions are approved, with an increase of $0.50 applicable to all NAS. This approval is effective as of 1 August 1998.
Laura M. Talbot-Allan
Secretary General
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