ARCHIVED -  Telecom Order CRTC 99-615

Telecom Order CRTC 99-615

Ottawa, 5 July 1999

The Commission received an application from Bell Canada (Bell) dated 17 October 1998, for approval of revisions to the company’s General Tariff to simplify the current Basic Work Element rate structure for Centrex III Service, including Centrex Microlink Accesses. Bell proposed to consolidate the present rate structure of the Basic Work Element Charges from five rate elements to two rate elements.

File No.: Tariff Notice 6289

1. Bell’s existing rate structure is as follows: Service Connection and Visit ($140.00), Service Connection ($69.00), Order Processing ($35.00), Customer Visit ($35.00) and On-Site Work Activity ($36.00). Bell submitted that the current rate structure is complicated for customers and estimated that approximately 60% of customers call back for clarification on their bills regarding how the service charges are applied. Bell’s proposed structure is: Service Connection, 1 to 25 locals ($99.00 per local) or Service Connection, 26 locals and more ($50.00 per local), and Administration ($50.00 per local).

2. In denying Bell’s previous application in Tariff Notice (TN) 6199, the Commission noted in Telecom Order CRTC 98-702, 17 July 1998 (Order 98-702) that (1) Bell did not file any cost support as part of its application and (2) that the pricing actions proposed by Bell would be unjustly discriminatory against Centrex resellers as it would force them to absorb a disproportionate share of the cost for service connections.

3. In response, Bell filed a cost study with TN 6289 which provided an analysis of the costs related to the provisioning of Centrex service for both the Resale and Retail markets. Bell submitted that this cost study demonstrates that the costs of converting a Business Line to a resold Centrex Local is virtually the same as establishing a new Centrex Local, thereby demonstrating that the proposed prices are not skewed to the advantage of the company and the rates are not unjustly discriminatory against Centrex resellers. Bell added that the cost study demonstrates that the cost of provisioning service to a Carrier Services Group’s (CSG) customer is at par with the provisioning of service to one of the company’s retail customers.

4. Comments on the application were received from London Telecom Network Inc., ACC TelEnterprises Ltd., AT&T Canada Corp., MetroNet Communications Group Inc., as well as a joint submission from Telephone Savings Network Ltd., Optel Communications and Municipal Telecommunications.

5. The main issues raised by interveners were that the existing rate structure is not sufficiently complicated to warrant a rate change; the proposed rates will increase costs to Centrex resellers by some 40 percent; and the proposed rates are unjustly discriminatory towards Centrex Resellers.

6. In its reply, Bell submitted that the proposed rates appropriately reflect recovery of the service’s overall costs. Bell noted that the detailed costing information provided to the Commission clearly addresses the interveners’ concerns with respect to the visit rate that the company experiences with regards to resold and retail Centrex circuits. Bell noted that its cost study reflects that the visit rate associated with conversions is much lower than the visit rate associated with other types of orders. However, Bell also noted that the information provided to the Commission also demonstrates that the cost difference between a "conversion" and a "new establish" is minimal, that is, the cost of provisioning service to a CSG customer (a Centrex reseller) is at a par with the provisioning of service to one of the company’s retail Centrex customers. Consequently, Bell submitted that the proposed rate does not discriminate against Centrex resellers.

7. Bell submitted that the number of requests for clarification of Centrex service charges that it receives and processes provides a clear indication that the current rate must be simplified.

8. The Commission considers that the complaints suggest that some simplification may be warranted.

9. However, the Commission notes that unjust discrimination was raised in respect of this application and the application that was denied in Order 98-702. In that previous case, the Commission specifically noted the lack of cost justification in its denial. In these circumstances, the onus is on Bell to present appropriate cost justification with sufficient supporting rationale and detail to show that its proposal is not unjustly discriminatory.

10. The Commission notes that Bell provided only a one-page summary of costs to support the new rating structure. There was no discussion of the assumptions used to develop this one-page summary nor were costs desegregated by major function. The Commission finds the information provided insufficient to demonstrate that Bell is correct in its assumption that the cost of provisioning a Centrex resale customer (which generally does not require a customer visit) is essentially the same as provisioning a Centrex retail customer.

11. In light of the foregoing, the Commission denies TN 6289.

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