ARCHIVED -  Telecom Order CRTC 99-1059

Telecom Order

Ottawa, 8 November 1999

Telecom Order CRTC 99-1059

AT&T Canada Long Distance Services Company (now AT&T Canada Corp.) (AT&T Canada) requested the Commission to rule that Bell Canada's (Bell) Direct Connection (DC) component of its switching and aggregation rate is inappropriate in circumstances where AT&T Canada is also being charged for DC functionality through an independent company's Carrier Access Tariff (CAT).

File No.: 8622-A4-15/98

1.Interexchange Carriers (IXCs) use Bell's services to handle some of their long distance traffic destined for the independent companies. For this traffic, the Commission, by Telecom Order CRTC 97-1097 dated 11 August 1997 (Order 97-1097), allowed Bell to flow the CAT rates of independent companies through to IXCs, less Bell's average contribution amount. AT&T Canada noted that the independent companies charge, either as a component of their CATs or separately, for the switching and aggregation DC function at their local switches. Where Bell also charges its switching and aggregation rate, including access tandem (AT) and DC components, AT&T Canada argued that the DC component is recovered by both Bell and the independent company.

2.AT&T Canada's application under Part VII of the CRTC Telecommunications Rules of Procedure was received on 11 September 1998.

3.AT&T Canada argued that the principle established by the Commission to charge only one contribution rate for traffic terminating in independent company territories, the independent CAT should also apply to switching and aggregation charges. Where the independent company charges for the DC function at its class 5 switch, AT&T Canada argued that Bell should not charge its DC rate.

4.Bell acknowledged that IXC traffic going to the territories of independent companies is routed from the Bell AT switch to the independent local switch without involving DC functionality at the Bell local class 5 switch. However, Bell argued that the AT rate was not designed to be charged separately. Bell noted that the switching and aggregation tariff does not provide for the AT rate to be charged in isolation. Bell further argued that some common functions, such as billing, were allocated to the DC rate and would not be fully recovered if only the AT rate were applied.

5.Bell also submitted that the service it is providing to handle traffic going to independent companies is not an essential service. The IXCs can interconnect directly with the independent companies. Bell therefore argued that an appropriate mark-up should be allowed for its handling of traffic for IXCs.

6.Bell argued that by charging the DC component, even though this function is not provided by Bell, the amount recovered could be viewed as appropriate compensation for the extra billing and handling costs, and mark-up, associated with the traffic which it carries for the IXCs.

7.In its reply comments, AT&T Canada argued that Bell's proposal to charge the DC component as a means to recover certain other costs is arbitrary and inequitable since Bell did not provide a cost study. AT&T Canada refuted Bell's argument that the DC charge is an "appropriate proxy" for the costs in handling the traffic.

8.AT&T Canada requested that the Commission order Bell to immediately cease charging the DC component of its switching and aggregation charge where AT&T Canada pays the independent companies for the DC functionality. AT&T Canada further requested that Bell be directed to refund the DC component of its switching and aggregation charge retroactive to 14 March 1997, the date when Bell commenced the flowthrough of the independent CAT amounts as specified in Order 97-1097.

9.The Commission considers that there is a duplication in the recovery of costs for DC functionality where it is included in both the independent CAT, or billed separately by the independent, and is also recovered by Bell through the DC component of its switching and aggregation rate.

10.Moreover, the Commission does not find it appropriate to view the DC component as a reasonable rate for compensation for billing and handling costs. The Commission notes that Bell did not provide a cost study to support its position that the DC rate is a suitable proxy for the recovery, with a mark-up, of any additional costs it may incur.

11.The Commission directs Bell to cease charging the DC component of its switching and aggregation rate, effective the date of this Order, for traffic which the company carries for IXCs which is also subject to the payment of a DC component through an independent company flowthrough CAT, or other independent company DC payment.

12.Bell is to issue forthwith revised tariff pages to modify its switching and aggregation tariff to give effect to this determination.

13.Bell's switching and aggregation tariff in effect during the retroactive period did not make provision for the separate charging of the AT and DC components. In the circumstances, the Commission denies AT&T Canada's request for a retroactive refund of the DC component of Bell's switching and aggregation rate.

14.The Commission considers that if Bell wishes to recover any billing or other costs causal to the flowthrough of independent CATs, which are not otherwise recovered following this Order, it may submit a tariff application supported by an appropriate cost study.

Secretary General

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