ARCHIVED -  Telecom Order CRTC 99-842

Telecom Order

Ottawa, 30 August 1999

Telecom Order CRTC 99-842

On 26 May 1997, the Société d'administration des tarifs d'accès des télécommunicateurs (SATAT) filed, on behalf of its members, a proposed 1996 final Carrier Access Tariff (CAT) under Tariff Notice (TN) 2, which was amended on 22 July 1997 in TN 2A.

File No.: TN 2

Background

1.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 (Decision 96-6), the Commission granted final approval to SATAT's 1995 CAT and interim approval to SATAT's 1996 CAT.

2.On 18 July 1997, SATAT requested that the Commission review and vary that part of Decision 96-6 with respect to SATAT's final 1995 CAT in order to allow the SATAT members to recover their 1995 actual shortfall through the final 1995 CAT and to apply this same methodology in determining the final 1996 CAT.

3.In Telecom Order CRTC 99-391, 29 April 1999 (Order 99-391), the Commission found that there was substantial doubt as to the correctness of the final 1995 CAT approved in Decision 96-6 and varied the 1995 CAT by basing the calculation on actual 1995 Phase III results, with some adjustments.

4.In Order 99-391, the Commission established a process to finalize SATAT's 1996 CAT.

5.SATAT's proposed final 1996 CAT is:

· $0.1035 per toll minute
· $2.7555 per quarter mile
· $0.0711 per equivalent minute

Positions of Parties

6.Comments were received from Québec-Téléphone and Bell Canada (Bell), neither of whom opposed SATAT's application. However, Bell noted that the contribution requirement of Le Téléphone de St-Liboire de Bagot Inc. (St-Liboire) had increased by 36% over 1995 and that its CAT rate had increased from $0.0935 to $0.1088, an increase of 16%.

7.SATAT replied that the CAT increase of 16% for St-Liboire is essentially due to revised depreciation rates which the Commission approved in Telecom Order CRTC 97-1026 and that the 36% increase in the contribution requirement is due to a revision in the depreciation rates as well as approved changes to SATAT's Phase III cost allocation procedures.

Commission Determinations

8.The Commission considers that the proposed final 1996 CAT is calculated generally in accordance with: (1) the methodology outlined in Order 99-391, and (2) the Interconnection Agreement between Bell and l'Association des compagnies de téléphone du Québec (the Agreement). However, the Commission finds that the adjustments as described in detail below are required.

9.The Commission notes that SATAT has made a Phase III classification error in the 1996 contribution calculation. In its submission, SATAT included the net shortfall from the Terminal Broad Service Category (BSC) and Other BSC of $81,161 in calculating the 1996 contribution requirement for La Compagnie de Téléphone Upton Inc. (Upton). The Commission finds, as in Order 99-391, with respect to a similar classification error made by Upton, that this is inconsistent with the Agreement. The Agreement contemplates that the combined net shortfall of these two BSCs should be excluded from calculating the contribution requirement. Accordingly, a downward adjustment to SATAT's 1996 contribution requirement is necessary.

10.By letter dated 15 July 1998, CoopTel requested that for 1996 onwards, the patronage dividend that it pays its members be treated as a deductible expense in calculating its return on equity. The Commission is of the view that in the particular circumstances of this case, CoopTel's patronage dividend is similar to an ordinary dividend. The Commission notes that a dividend is a return on capital and not an expense. As a result, CoopTel's request to expense the patronage dividend is denied and SATAT's 1996 CAT is adjusted accordingly.

11.The Commission notes that there was a significant year-over-year increase in the depreciation expense allocated to the Network BSC for Telephone Milot inc. (Milot). SATAT stated that this increase was due to an error in the allocation of depreciation expense between Milot's Toll BSC and Network BSC. The Commission accepts this explanation and has adjusted both the SATAT 1996 CAT per toll minute and the CAT per quarter mile accordingly.

12.The Commission is satisfied with SATAT's explanation, in response to Bell's comment, for St-Liboire's year-over-year increase in its contribution requirement and CAT rate.

Order

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

(1) The final 1996 CAT for SATAT members be revised as follows:

·$0.1034 per toll minute

·$2.56000 per quarter mile

·$0.0704 per equivalent minute,

effective 1 January 1996 to 31 December 1996; and

(2) SATAT issue forthwith, revised tariff pages to reflect the final 1996 CAT shown above.

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