ARCHIVED -  Telecom Order CRTC 99-1153

Telecom Order CRTC 99-1153

Ottawa, 14 December 1999

On 28 July 1999, Maritime Tel & Tel Limited (MTT) filed two ex parte applications for approval of tariff revisions.

File Nos.: Tariff Notices 760 and 761

1. Tariff Notice (TN) 760 was approved on an interim basis on 19 August 1999 by Telecom Order CRTC 99-814. On 13 August 1999, TN 761 was approved on an interim basis by Telecom Order CRTC 99-792.

2. MTT proposed in TN 760 to introduce the Small Business/LD Promotion which offers each new Small Business Network Service customer who subscribes to MTT's long distance service two $50 MTT long distance bill credits and waives the order processing charge.

3. In TN 761, MTT proposed to introduce the Small Business Second Line Promotion which enables a MTT loyal long distance customer to subscribe to up to five additional basic fax/data Small Business Network Service accesses for each non-promotional access at a monthly rate of $39.95 per line. In addition the order processing charge would be waived.

4. On 10 September 1999, Call-Net Enterprises Inc. (Call-Net) filed comments with respect to these promotions stating that the service offerings contravene the promotion rules and, if allowed, would have a deleterious effect on competition in the local exchange market where competition is only in its initial stages.

5. Call-Net submitted that the monetary benefits associated with TN 760 are too great to qualify it as a "legitimate promotion" and that there must be a limit to the magnitude of the benefit.

6. In addition, Call-Net submitted that the promotions have combined enrollment and discounted subscription periods greater than 12 months. Call-Net submitted that the promotions should be denied.

7. On 18 October 1999, MTT replied stating that Call-Net's comments with respect to rules applying to local service promotions are a repetition of previous unsuccessful arguments.

8. MTT submitted that the monetary benefits of a promotion should not be relevant given that the Commission has not concerned itself with promotions resulting in below cost pricing. MTT submitted further that the benefit is modest for the average business customer and that the promotions meet the Commission's duration requirements.

9. In Review of regulatory framework – Targeted pricing, anti-competitive pricing and imputation test for telephone company toll filings, Telecom Decision CRTC 94-13 dated 13 July 1994, the Commission considered that below-cost pricing in the case of market trials and promotions is generally not anti-competitive and that these filings would be exempt from the imputation test on the condition that sufficient information is provided by the telephone companies to demonstrate that the offering is a legitimate market trial or promotion of legitimate duration.

10. The Commission is of the view that the promotions filed under TNs 760 and 761 are legitimate promotions of limited duration. The Commission notes in this regard that the combined enrollment and benefit periods are 12 months and hence within the Commission's duration requirements.

11. In light of the foregoing, the Commission orders that:

The proposed tariff revisions are approved on a final basis.

Secretary General

This document is available in alternative format upon request and may also be viewed at the following Internet site: www.crtc.gc.ca