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Telecom Public Notice
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Ottawa, 29 May 1998 |
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Telecom Public Notice CRTC 98-12 |
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MTS COMMUNICATIONS INC. - MECHANISM TO
RECOVER FUTURE INCOME TAX EXPENSE |
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Reference: 8678-C12-02/98 |
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I INTRODUCTION |
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1. By letter dated 31 March 1998, pursuant to
the Commission's directives in various decisions regarding the price cap
regime, MTS Communications Inc. (MTS) filed an application relating to, among
other things, proposed rate revisions and the introduction of an exogenous
factor in the company's price cap formula to meet the price cap constraints.
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2. MTS proposed that an exogenous factor be
incorporated into the Price Cap Index (PCI) for 1998 relating to future tax
expenses and that it be implemented only at the level of the total basket of
capped services. MTS further proposed the implementation of eight annual
exogenous adjustments, commencing 1 January 1999, that would provide for the
gradual recovery of future tax expenses. These exogenous adjustments would be
incorporated into the PCI, both at the level of the total basket of capped
services and at the level of the Basic Residential Local Services Sub-basket.
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3. In Telecom Order
CRTC 98-467, dated 12 May 1998,
the Commission determined that, in light of the significance of the issues
associated with MTS' proposal, it would be premature and inappropriate to
proceed with the proposed 1998 exogenous factor. The Commission stated that
it would be establishing a public process to examine MTS' proposed exogenous
adjustments for future income taxes. |
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4. Accordingly, the Commission hereby initiates
a proceeding to examine the appropriateness and timing of MTS' proposed
exogenous adjustment. |
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II ISSUES |
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5. By letter dated 27 April 1998, the Consumers
Association of Canada (Manitoba) Inc. and the Manitoba Society of Seniors
(CAC/MSOS) filed comments on MTS' 31 March 1998 application. CAC/MSOS
requested that an oral hearing be held in Manitoba in the event the
Commission decides to initiate a proceeding to consider MTS' proposal for an
exogenous adjustment. In its reply dated 6 May 1998, MTS submitted that an
expedited paper process should be considered by the Commission and that this
would be more consistent with the Commission's goal of properly streamlining
the regulatory processes and minimizing the regulatory burden on all
concerned. |
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6. The Commission notes that, in a letter dated
31 December 1997, it stated that "... exogenous factor adjustments to the
price cap index provide an appropriate mechanism by which MTS may apply to
recover present and future income taxes expenses ...". The Commission
considers that the issues under examination in this proceeding can be
adequately explored through interrogatories, comments and reply, and
accordingly, parties do not require an opportunity to cross-examine MTS at an
oral hearing. Therefore, the Commission concludes that an oral hearing is not
warranted in these circumstances. |
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7. As set out in Part III of this Public Notice,
MTS is directed to file, by 29 June 1998, its evidence regarding its proposal
for an exogenous factor adjustment to the PCI. In its evidence, MTS should
address, among other matters, the following issues and provide rationale to
support its position: |
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a) the basis of allocating the exogenous event
relating to income tax expense between capped and uncapped services; |
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b) detailed description of the mechanism, along
with supporting calculations and assumptions, to recover income tax expense
from capped services; and |
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c) the annual impact on the price cap
constraints and the potential impact on residence and business subscribers.
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III PROCEDURE |
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8. MTS is made a party to this proceeding. |
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9. Other parties wishing to participate fully in
this proceeding must notify the Commission of their intention to do so by
writing to Mrs. Laura M. Talbot-Allan, Secretary General, CRTC, Ottawa,
Ontario, K1A 0N2, fax: 819-953-0795, by 19 June 1998. Parties are to indicate
in the notice their Internet email address, if available. If parties do not
have access to the Internet, they are to indicate in their notice whether
they wish to receive disk versions of hard copy filings. The Commission will
issue a complete list of parties and their mailing addresses (including
Internet email addresses if available), identifying those parties who wish to
receive disk versions. |
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10. Any person who wishes merely to file written
comments in this proceeding, without receiving copies of the various
submissions, may do so by writing to the Commission at the address noted in
paragraph 9 by 20 November 1998. |
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11. MTS is directed to file its evidence or
submissions in this proceeding regarding its proposal for an exogenous factor
adjustment, serving copies on all parties, by 29 June 1998. |
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12. Requests by parties for public disclosure of
information in MTS' evidence or submissions for which confidentiality has
been claimed, setting out the reasons for disclosure, must be filed with the
Commission and served on MTS by 6 July 1998. |
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13. Written responses to requests for public
disclosure must be filed by MTS with the Commission and served on the party
making the request by 10 July 1998. |
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14. The Commission will issue a determination
with respect to requests for disclosure as soon as possible, and intends to
direct that any information to be provided pursuant to that determination be
filed with the Commission and served on all parties to the proceeding by 17
July 1998. |
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15. Any party may address interrogatories to
MTS. Any such interrogatories must be filed with the Commission and served on
MTS by 31 July 1998. |
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16. Responses to interrogatories addressed
pursuant to paragraph 15 are to be filed with the Commission and served on
all parties by 24 August 1998. |
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17. Requests by parties for further responses to
their interrogatories, specifying in each case why a further response is both
relevant and necessary, and requests for public disclosure of information for
which confidentiality has been claimed, setting out the reasons for
disclosure, must be filed with the Commission and served on MTS by 31 August
1998. |
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18. Written responses to requests for further
responses to interrogatories and for public disclosure must be filed by MTS
with the Commission and served on the party making the request by 8 September
1998. |
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19. The Commission will issue a determination
with respect to requests for disclosure and for further responses as soon as
possible, and intends to direct that any information to be provided pursuant
to that determination be filed with the Commission and served on all parties
to the proceeding by 18 September 1998. |
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20. Any party may address supplementary
interrogatories to MTS. Any such interrogatories must be filed with the
Commission and served on MTS by 28 September 1998. |
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21. Responses to interrogatories addressed
pursuant to paragraph 20 are to be filed with the Commission and served on
all parties by 19 October 1998. |
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22. Requests by parties for further responses to
their interrogatories, specifying in each case why a further response is both
relevant and necessary, and requests for public disclosure of information for
which confidentiality has been claimed, setting out the reasons for
disclosure, must be filed with the Commission and served on MTS by 26 October
1998. |
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23. Written responses to requests for further
responses to interrogatories and for public disclosure must be filed by MTS
with the Commission and served on the party making the request by 2 November
1998. |
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24. The Commission will issue a determination
with respect to requests for disclosure and for further responses as soon as
possible, and intends to direct that any information to be provided pursuant
to that determination be filed with the Commission and served on all parties
to the proceeding by 13 November 1998. |
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25. All parties may file comments, serving
copies on all other parties, by 20 November 1998. |
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26. All parties may file replies to any
comments, serving copies on all parties who filed comments, by 27 November
1998. |
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27. Where a document is to be filed or served by
a specific date, the document must be actually received, not merely sent, by
that date. |
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28. The record of this proceeding may be
examined at the Commission's offices in the following locations: |
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Central Building
Les Terrasses de la Chaudière
1 Promenade du Portage
Room 201
Hull, Quebec |
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275 Portage Avenue
Suite 1810
Winnipeg, Manitoba |
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29. In addition to hard copy filings, parties
are encouraged to file with the Commission electronic versions of their
submissions in accordance with the Commission's Interim Telecom Guidelines
for the Handling of Machine-Readable Files, dated 30 November 1995. The
Commission's Internet email address for electronically filed documents is
public.telecom@crtc. gc.ca. Electronically filed documents can be accessed at
the Commission's Internet site at
http://www.crtc.gc.ca . |
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This document is available in alternative
format upon request. |
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Laura M. Talbot-Allan
Secretary General |