ARCHIVED -  Telecom Order CRTC 99-123

Telecom Order

Ottawa, 11 February 1999

Telecom Order CRTC 99-123

On 12 March 1998, the Ontario Telephone Association (OTA) filed, on behalf of its members, its annual Phase III Manual update report applicable to the production of 1997 Phase III results.

File Nos.: 8654-O2-01/97 and 8640-T8-01/98

1.The report contains several proposed revisions to the OTA's Phase III Manual in accordance with the procedures specified 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.

2.The Commission notes that most of the OTA's Phase III Manual revisions include additions, deletions and changes to various revenue, investment and expense studies to reflect changes to the OTA's Accounting Manual.

3.In particular, the update reflects a revision to the OTA's Chart of Accounts to change its Internet service (IS) revenue and hardware and software investment accounts in order to discretely identify non-regulated IS.

4.In Telecom Order CRTC 97-1666, 14 November 1997 (Order 97-1666), the Commission forbore from the regulation of IS services of the following OTA members: Durham Telephones Limited (Durham), Huron Telecommunications Co-operative Limited, Lansdowne Rural Telephone Co. Ltd., Roxborough Telephone Company Limited, The South Bruce Rural Telephone Company Limited and Wightman Telephone Limited, conditional on the establishment of an approved accounting separation for IS.

5.In the follow-up to Order 97-1666, each of the OTA members noted above (except Durham, which informed the Commission that it had ceased to offer IS) provided letters of attestation to confirm that they were in compliance with the requirement to separate IS revenues, investment and expenses from the rate base and shortfall determinations as directed in that Order.

6.As part of its Phase III update submission, non-regulated IS (i.e. IS revenue, investment and expense applicable to the OTA members noted above, for which the Commission has granted conditional forbearance), will be assigned to the Competitive Terminal (CT) Broad Service Category (BSC).

7.On 20 July 1998, the Commission issued several interrogatories to the OTA primarily to clarify the accounting separations to be used to assign costs related to forborne IS.

8.On 4 September 1998, the OTA provided its responses along with an amendment to its 12 March 1998 submission to, among other things, ensure that its Phase III Manual reflected more recent changes to its Accounting Manual.

9.No comments were submitted by any interested party on either the OTA's Phase III Manual update or the attestations provided by the applicable OTA members on IS forbearance.

10.The Commission notes that the OTA's proposed revisions not related to IS are of a clerical nature, and simply add, delete or sub-divide accounts in accordance with its Accounting Manual, clarify assignment methods and update descriptions and terminology.

11.The Commission considers that the OTA's proposed revisions that are not related to IS are reasonable and acceptable for use in the production of its members' 1997 and 1998 Phase III results.

12.With respect to the IS accounting and Phase III treatment applicable to the five OTA members, the Commission notes that the OTA confirmed that it will allocate all revenues, investment and expenses associated with non-regulated IS, that are separately identified by account, to the CT BSC.

13.The Commission notes that where an IS expense cannot be separately identified by account, such as expenses of office employees who perform numerous functions, a study analysis is performed to allocate Internet costs in proportion to their corresponding job function.

14.The Commission notes that the OTA will include all forborne services in the CT BSC rather than create another reporting category.

15.The Commission is of the view that on a going forward basis, the OTA's Phase III results' schedules, applicable to the five OTA members noted earlier, should include a footnote to indicate that forborne IS revenues, investment and expenses are included in the CT BSC.

16.In light of the foregoing, the Commission orders that the proposed Phase III Manual updates filed by the OTA, as amended, that are not related to IS, are approved.

17.The Commission considers that the accounting separation for IS, applicable to the five OTA member companies, satisfies the conditions for IS forbearance set out in Order 97-1666.

18.For purposes of the production of 1999 Phase III results, the OTA is directed to add a footnote to its Phase III results schedules, pertaining to the applicable OTA members, to indicate that the CT BSC contains forborne Internet services.

19.The Commission directs the applicable OTA members to issue forthwith, tariff pages that withdraw their tariffs for IS in accordance with Order 97-1666.

20.The updates approved in this Order, other than those that are IS related are to be used, as applicable, in the production of each OTA members' 1997 and 1998 Phase III results.

21.The 1997 Phase III results are to be filed with the Commission within thirty days of the date of this Order.

Secretary General

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