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ARCHIVED -  Telecom Order CRTC 99-314

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Telecom Order

Ottawa, 1 April 1999
Telecom Order CRTC 99-314
On 29 January 1999, BC TEL filed an application, under Tariff Notice (TN) 3904, amended by TN 3904A, dated 12 March 1999, for approval of tariff revisions pertaining to the introduction of General Tariff Item 280 - Business Local Savings Plan (BLS Plan). BC TEL also submitted additional information in support of TN 3904 on 16 March 1999.
File No.: Tariff Notice 3904
1.BC TEL indicated that the BLS Plan would provide customers with business exchange service and optional local services on eligible business access lines. Additional discounts would be available to customers who select BC TEL as their primary interexchange carrier for long distance services.
2.BC TEL noted that the business local exchange line services and the direct inward dial (DID) number service that are offered as part of the bundle properly belong in their respective capped services sub-baskets. BC TEL submitted that the core optional services and the reserved telephone number service that are offered as part of the bundle are properly uncapped and therefore not included in the price cap regime. BC TEL further noted that the message relay centre service element of the BLS Plan bundle is properly categorized as a service with a frozen rate.
3.To determine the implicit prices for the capped service components, BC TEL suggested that the excess of the net bundle price over the average net bundle Phase II cost be apportioned between the business local exchange service and the core optional services.
4.BC TEL submitted that, under its proposal, the introduction of the BLS Plan would result in a reduction in the average price index (API).
5.In Inquiry into Telecommunications Carriers' Costing and Accounting Procedures - Phase II: information Requirements for New Service Tariff Filings, Telecom Decision CRTC 79-16, 28 August 1979, the Commission noted that the definition of a new service includes substantial additions and alterations to existing services.
6.In Forbearance - Regulation of Toll Services Provided by Incumbent Telephone Companies, Telecom Decision CRTC 97-19, 18 December 1997 and Stentor Resource Centre Inc. - Forbearance from Regulation of Interexchange Private Line Services, Telecom Decision CRTC 97-20, 18 December 1997, the Commission described bundling as the inclusion of different services or service elements under a rate structure. The Commission noted that this rate structure might be a single rate, a set of rates for various service elements, and/or rates for one or more service elements, which are dependent on the usage of other services.
7.In light of the foregoing, the Commission finds that the proposed BLS Plan is a new bundled service offering.
8.The Commission notes that in Price Cap Regulation and Related Issues, Telecom Decision CRTC 97-9, 1 May 1997 (Decision 97-9), it agreed with Stentor Resource Centre Inc. (Stentor) and TELUS Communications Inc. (TCI) that information would need to be gathered prior to the inclusion of new services in the capped sub-baskets.
9.The Commission notes that in Telecom Order CRTC 98-470, dated 12 May 1998 (Order 98-470), it accepted the introduction of Fractional DS-1 service as contributing to the 1998 price cap obligations of TCI.
10.The Commission notes that in Telecom Order CRTC 98-1015, dated 14 October 1998 and Telecom Order CRTC 99-147, dated 23 February 1999, it did not rule on the API impact of introducing fractional DS-1 service and Internet Service Provider Connection service, respectively, as BC TEL had already met its 1998 price cap obligations.
11.The Commission considers that, consistent with Decision 97-9, and notwithstanding Order 98-470, information on demand and revenue should be gathered prior to the inclusion of new services in the capped sub-baskets.
12.The Commission notes that BC TEL's proposal to allocate some of the revenues associated with the service bundle to the capped services category requires that implicit prices be determined. The Commission considers that BC TEL's proposed method is one of many possible approaches. As such, the choice of an appropriate approach requires the exercise of judgment, and could potentially depend on the particular tariff being considered.
13.The Commission notes that the BLS Plan is a service that is very similar to Centrex service (an uncapped service) in that it offers, on a contractual basis, a local access service component and optional services to business subscribers.
14.The Commission considers that there is no need to subject the proposed BLS Plan to price cap constraints as subscribers have the option of subscribing to the capped services components on a separate basis.
15.The Commission finds that while the BLS Plan includes capped services components, the bundled service should be treated as an uncapped service.
16.The Commission notes that in the proceeding that led to Decision 97-9, Stentor and TCI stated that, under their proposals, very few new services would require price cap regulation, as they would generally be offered based on competitive need.
17.The Commission is satisfied that, on the basis of the imputation test information filed by BC TEL, the rates proposed for the BLS Plan will not be anti-competitive.
18.In view of the fact that revenue reductions stemming from the introduction of an uncapped service cannot contribute to meet the company's price cap obligations, the Commission considers that BC TEL should be provided with the option of choosing whether it still wants to introduce this service.
19.In light of the above, the Commission orders that:
The proposed tariff revisions are granted conditional approval. BC TEL is directed to advise the Commission as to whether or not it still plans to introduce the BLS Plan, in light of the Commission's finding that the BLS Plan, is a new uncapped bundled service offering that cannot be used to meet the company's price cap obligations.
This document is available in alternative format upon request and may also be viewed at the following Internet site: www.crtc.gc.ca
Secretary General

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