ARCHIVED -  Telecom Order CRTC 99-69

Telecom Order

Ottawa, 26 January 1999

Telecom Order CRTC 99-69

TELUS Communications (Edmonton) Inc. (TCEI) proposed in its application of 7 July 1998 to eliminate the provision of a primary telephone set to individual line subscribers. TCEI also requested forbearance from regulation for the sale, lease and maintenance of terminal equipment. The Commission notes that, on 1 January 1999, TELUS Communications Inc. became the service provider for the territory formerly served by TCEI.

File No: Tariff Notice 89

1.TCEI proposed to eliminate the provision of one standard telephone set at no additional charge to residence and business individual line subscribers (the Primary Instrument Rule). TCEI proposed to give the existing standard sets to subscribers who have them at no charge. TCEI also proposed that the Commission forbear from regulation for the sale, lease and maintenance of terminal equipment.

2.The Commission issued TELUS Communications (Edmonton) Inc. - Provision of Primary Telephone Set and Forbearance from the Regulation of Terminal Equipment, Telecom Public Notice CRTC 98-21, 18 August 1998, which directed TCEI to give notice of its application in the major Edmonton newspapers.

3.The Alberta Council of Aging (ACA) did not oppose either the elimination of the provision of standard sets or the forbearance from regulation of terminal equipment. ACA's primary concern was that any net savings to TCEI as a result of this proposal should be accounted for in TCEI's revenue requirement in the proceeding initiated by Form of Regulation for TELUS Communications (Edmonton) Inc., Telecom Public Notice CRTC 98-3, 23 February 1998 (PN 98-3).

4.The Consumers' Association of Canada, Alberta Branch (CACAlta) did not oppose the elimination of the Primary Instrument Rule. CACAlta argued, however, that the sets must have some value and that this value should be reflected in reduced rates. CACAlta did not comment on the proposed forbearance from regulation of terminal equipment.

5.The Commission notes that no comments were received from subscribers.

6.TCEI argued that the standard sets that it provides under the Primary Instrument Rule are outdated models which have little value. By refurbishing returned sets, TCEI has been able to provide the service while totally writing off the book value of the sets by the end of 1998.

7.The Commission notes that ACA and CACAlta did not oppose the transfer of ownership of the standard sets to subscribers.

8.Accordingly, the Commission approves the elimination of the Primary Instrument Rule subject to subscribers being informed of their option to receive existing standard sets as a gift, or to return them to the company at no charge.

9.The Commission notes that the standard sets had no book value at the end of 1998. The Commission is of the view that the market value of the standard sets to be offered to subscribers is minimal as they are outdated models.

10.TCEI noted in reply argument that, together with the elimination of standard sets provided under the Primary Instrument Rule, it also intended to transfer to subscribers additional standard sets that it is renting to subscribers. TCEI argued that the revenues foregone from the rental of standard sets would largely offset any savings related to reduced expenses. Consequently, TCEI submitted that the net financial impact is negligible. However, the Commission is of the view that these rental sets and associated revenues are not related to the Primary Instrument Rule.

11.The Commission estimates that the annual net savings from the elimination of the Primary Instrument Rule would be approximately $350,000. Accordingly, the Commission will take these net savings into account in determining TCEI's revenue requirement in the PN 98-3 proceeding.

12.With respect to forbearance from the regulation of terminal equipment, ACA did not oppose forbearance and no other parties commented.

13.The Commission considers that the terminal equipment market in Edmonton is at least as competitive as in the territories of other companies for which the Commission has approved terminal equipment forbearance.

14.With the establishment of a price cap regime for TCEI effective 1 January 1999, the Commission is of the view that the likelihood and incentive for TCEI to cross-subsidize terminal equipment from other services is limited.

15.The Commission finds, pursuant to subsection 34(1) of the Telecommunications Act (the Act), that to forbear from regulating with respect to the sale, lease and maintenance of TCEI terminal equipment, is consistent with Canadian telecommunications policy objectives. Further, pursuant to subsection 34(2) of the Act, the Commission finds that these services are subject to sufficient competition to protect the interest of users, so that forbearance is appropriate. Finally, with respect to subsection 34(3) of the Act, the Commission finds that forbearance is unlikely to impair unduly the continuation of a competitive market for these services.

16.Accordingly, pursuant to section 34 of the Act, the Commission hereby refrains, with respect to the sale, lease and maintenance of TCEI terminal equipment, from the exercise of powers and the performance of duties with respect to sections 24, 25 and 31, and subsections 27(1), (2), (4), (5) and (6) of the Act.

17.Pursuant to subsection 34(4), sections 24, 25 and 31 and subsections 27(1), (2), (4), (5) and (6) will not apply to the sale, lease and maintenance of TCEI terminal equipment.

18.The Commission's decision to forbear does not apply to single-line residence and business inside wiring.

19.TCEI is directed to file tariff revisions deleting reference to the sale, lease or maintenance of terminal equipment.

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