ARCHIVED -  Telecom Order CRTC 99-1017

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Telecom Order CRTC 99-1017

Ottawa, 22 October 1999

Pay Telephone Compensation per Call for Toll-free Calls

File No.: Bell Tariff Notice 6285


In this Order the Commission approves, with some changes, Bell Canada's application to introduce a per-call usage fee to Interexchange Carriers for toll-free calling access at the company's pay telephones.


1. On 25 September 1998, Bell Canada (Bell) filed Tariff Notice (TN) 6285, proposing to charge a per-call usage fee to Interexchange Carriers (IXCs) for toll-free access at the company's public and semi-public pay telephones. Bell proposed to charge a rate equal to the rate for local calls originating from pay telephones.

2. Interventions were received from AT&T Canada Corporation (AT&T Canada), dated 16 October 1998; Canada Payphone Corporation (CPC), dated 16 October 1998; London Telecom Network Inc. (London Telecom), dated 20 October 1998; Paytel Canada, Inc. (Paytel), dated 21 October 1998; and Call-Net Enterprises Inc. (Call-Net), dated 23 October 1998.

3. By way of Pay telephone compensation per call for toll-free calls, Telecom Public Notice CRTC 98-31, 3 November 1998 (PN 98-31), the Commission initiated a proceeding to consider TN 6285.

4. Pursuant to PN 98-31, comments were received from Goldiphones/TelD'or (Goldiphones), dated 11 February 1999; Paytel, dated 4 May 1999; London Telecom filed on behalf of itself and Primus Canada, dated 7 May 1999; Call-Net on behalf of Sprint Canada Inc. and Call-Net Technology Services Inc., dated 7 May 1999; AT&T Canada dated 7 May 1999; and the Public Interest Advocacy Centre (PIAC) dated 7 May 1999. Bell replied in a letter dated 17 May 1999.

5. The Commission notes that the principle of a compensation per call for toll-free calls from pay telephones was addressed in both the Competitive Swipe Card Access (Telecom Order CRTC 98-281) and the Local Pay Telephone Competition proceedings. In its decision on the latter proceeding (Telecom Decision CRTC 98-8), the Commission stated:

"...In principle, the Commission considers such a regime to be appropriate but is of the view that there is insufficient evidence at the present time to assess the appropriate level of this compensation. ...The Commission considers it appropriate to establish a per-call compensation regime and ILECs may file tariffs for its implementation."


6. In general interveners expressed support for the principle of a pay-per-call for toll-free calls regime.

7. Set out below are the main issues addressed during the proceeding:

Determining a Rate

8. London Telecom submitted that Bell's proposed per-call rate was too high and should be denied by the Commission. The company also submitted that there are coin-related costs in Bell's supporting economic information that should not be recovered from the alternate provider of long distance services (APLDS) through the per-call charge.

9. AT&T Canada also submitted that since placing a toll-free call from a pay telephone does not involve the use of coins, all coin-related costs must be excluded from the study supporting the per-call charge. AT&T Canada noted that Bell had excluded some of the coin-related costs from its cost study, but had included the cost of the coin mechanism itself.

10. With respect to the inclusion of compensation to location providers in establishing an appropriate rate, AT&T Canada not only disagreed with the methodology Bell used to include this cost in its study, but also submitted that this particular cost should not be recovered through the per-call charge for toll-free calls.

11. AT&T Canada submitted that, currently, the only fair method of determining the appropriate level of compensation to be applied to IXCs' toll-free calls placed at pay telephones is to start with the local coin rate and then reduce it by an amount equal to the coin specific costs less the incremental data collecting and billing costs. AT&T Canada further submitted that if the current local coin rate is not effectively recovering at least the common costs for pay telephone service, the per-call charge assessed providers of toll-free service should similarly not recover those common costs.

12. London Telecom submitted that the Commission should disregard any costs associated with location providers.

13. In reply Bell noted that the competitive pay telephone service providers (CPTSPs) in this proceeding agreed that $0.25 was an appropriate rate for the per-call charge. Bell also restated its submission that calls to toll-free numbers are similar to local calls and that therefore the same rate should apply. Bell further noted that the cost information that it had provided to the Commission, in reply to Bell(CRTC)20Nov98-3 PN 98-31, showed that a rate based on cost plus a reasonable mark-up would have been higher than the proposed rate of $0.25.

14. With respect to cost inclusions in the study, Bell noted that it had excluded all direct coin-related costs as well as the cost of specific maintenance of the coin collection mechanism. With respect to the inclusion of the initial cost of the coin mechanism, Bell submitted that the coin mechanism is an integral part of the pay telephone infrastructure and as such should be included in the costs to be recovered through the per-call rate. Bell noted that in many cases it is the combined coin and non-coin uses of the pay telephone that warrant the economic deployment of the pay telephone at a particular location. In Bell's view, this makes more pay telephone locations available to the customers of the IXCs, to the benefit of the IXCs.

15. Bell submitted that location providers play an essential role in the provisioning of pay telephones by providing the necessary floor space, power, and in some cases cleaning service, snow removal, and services to end-users. Furthermore, in many cases the space occupied by a pay telephone could be used for other commercial purposes. Bell therefore submitted that payment to location providers is a necessary cost of providing pay telephone service and should be recovered from all calls made from pay telephones.

16. In reply to interveners' submissions that the Commission should draw on the U.S. experience in this area, Bell submitted that the FCC's establishment of a rate for the compensation-per-call regime in the U.S. is irrelevant when considering an appropriate rate in Canada, because the regulatory environment, legislative parameters, market conditions with respect to payphone providers, local exchange carriers and IXCs are substantially different in Canada.

17. The Commission considers that AT&T Canada's and Call-Net's proposal that the compensation per-call should be based on the existing rate for a local coin call, with appropriate adjustments, is not appropriate given that the existing rate for local coin calls is not based on costs. Accordingly, the Commission considers that the current $0.25 rate should not be used as a starting point from which coin-related costs would be subtracted.

18. The Commission considers that it is appropriate to include payments to location providers as a cost to be recovered through the pay-per-call rate for toll-free calls and considers that Bell's methodology with respect to inclusion of this cost by estimating the incremental payment to location providers caused by the proposed charge-per-call rate, is appropriate.

19. The Commission considers that the coin mechanism is an integral part of the pay telephone sets that are equipped with this feature, and further considers that the fixed common cost of the pay telephone sets should be determined using the average cost of in-service payphones which reflects the in-service mix of pay telephones, with and without coin mechanisms.

20. The Commission considers that it is appropriate to assess toll-free calls an appropriate contribution towards the fixed common costs associated with payphones, and further, that on the basis of the incremental costs and the fixed common cost per call submitted by Bell, the proposed rate of $0.25 is appropriate.

21. The Commission notes that the proposed charge-per-call rate is supported by a cost study. Further, the Commission considers that the service to which Bell's proposed rate would apply differs substantially from local coin calls and is not persuaded that it would be appropriate to establish the rate for charge-per-call for toll-free calls by reference to the rate for local coin calls.

22. The Commission notes that Bell has indicated that it will impute the proposed pay-per-call rate for its own toll-free calls from its pay telephones towards this settlement plan for location providers. The Commission considers that Bell's payment of the charge-per-call rate should be expressly provided for in its tariffs.

Pay Telephone Revenue Loss

23. With respect to Bell's submission that revenues at pay telephones were declining due to increased use of the pay telephones for competitors' toll-free calls, AT&T Canada and London Telecom submitted that toll-free calling was not the only reason for the decline in revenues. London Telecom further submitted that there are no statistics or studies on this issue, and that the Commission should direct Bell to undertake such a study.

24. Bell replied that it had not stated or implied that competitors' toll-free calls were the sole cause of declining revenue, nor had it stated that the IXCs must be accountable for the entire amount of revenue shortfall. Bell therefore submitted that London Telecom's allegation that the record of this proceeding is not conclusive regarding declining payphone revenues is irrelevant.

25. The Commission notes that Bell's submission with respect to revenue loss due to increasing toll-free calling was intended to support its submission that a pay-per-call regime should be established, and not the magnitude of the proposed rate as such. Given this, the Commission considers that the revenue loss due to the use of the pay telephones for competitors' toll-free calling need not be quantified.

Insufficient Billing Detail

26. AT&T Canada submitted that the data that Bell proposes to provide with its bill will not be sufficient to verify the bill. AT&T Canada submitted that based on a response by Bell to a Commission interrogatory, the type of information requested by AT&T Canada (pay telephone location and/or telephone number, time of call, and length of call) would appear to be presently available and will in fact be used by Bell to create the data file sent to IXCs.

27. Bell submitted that details such as call duration, time of day and the telephone number of the originating pay telephone are irrelevant and that the proposed billing information (a list of an IXC's toll-free numbers called and the frequency of calls to each number during the billing period) is sufficient for an IXC to verify its bill for the charge-per-call service.

28. The Commission agrees with Bell that call duration, time of day, and originating telephone number are not necessary to verify the bill. However, the Commission considers that originating exchange information is important in the rating of toll calls and could therefore be useful in verifying billing statements. Accordingly, the Commission considers that Bell should, at the option of an IXC, provide the billing data desegregated by originating exchange.

29. The Commission considers that if an IXC wishes to receive any additional billing details it should negotiate with Bell to obtain such details.

Definition of a Call

30. Call-Net submitted that Bell's proposed tariff is not clear when it states "Toll-free calls are considered completed when the call is answered." Call-Net submitted that when a toll-free number is used to access an APLDS's long distance service, an end-user will first be connected to the APLDS's platform, which will prompt the end-user to enter various account information, the personal identification number, and the telephone number that they wish to call. While from a pay telephone provider's perspective the call is complete, the calling party may in fact receive a busy signal or no answer. As such, Call-Net argued that in these circumstances, the call is not terminated by the APLDS and would not be considered answered by the calling party but the per-call rate would nevertheless, under Bell's proposed tariff, be billed to the APLDS. Call-Net therefore submitted that the per-call rate should only apply when the call is in fact answered by the called party.

31. Bell replied that a call from a company's pay telephone to a toll-free service provider is considered completed when the call is delivered to the service provider. Bell further submitted that its records can only show whether a call is first answered and not whether the content is of any use to the end user or whether the service provider dialled requires further steps to route the call to its ultimate destination.

32. The Commission notes that IXCs use a toll-free number for end-users to access their networks. Since the purpose of the toll-free call is to connect an IXC's end-user to the IXC's network, the Commission considers that a call is complete when the call is delivered to an IXC's network. Given this, the Commission considers that, for the purpose of this tariff, Bell's proposed definition of a call is appropriate.

Access to the Toll-Free Numbers Database

33. AT&T Canada, Paytel, CPC and Goldiphones submitted that CPTSPs and competitive local exchange carriers (CLECs) required access to toll-free information in the Stentor 800/888 numbers database to be able to replicate the required billing information.

34. In reply, Bell restated its position that the company should not be required to provide CPTSPs and CLECs access to its toll-free numbers database and that such access was not necessary since the company was willing to negotiate the provision of this information to CPTSPs. Bell further submitted that the issues with respect to direct access to the toll-free numbers database were well documented in the CRTC Interconnection Steering Committee (CISC) Network Planning Sub-Working group dispute on CLEC direct access to the Stentor Operating Companies 800/888 numbers database. The company noted that the Commission had already determined that Bell is not obligated to provide direct access to its toll-free numbers database.

35. Consistent with its position in previous proceedings on this particular matter, the Commission is not persuaded that Bell should be directed to allow CPTSPs and CLECs access to the toll-free numbers database.

Mandated Billing and Collection Service

36. Paytel submitted that the Commission should direct Bell to offer a billing and collection service to CPTSPs because it has been unable to negotiate agreements with incumbent local exchange carriers (ILECs) and IXCs. Paytel submitted that because the ILECs have virtually 100% of the pay telephone market, they have no incentive to negotiate an agreement with a CPTSP. Paytel further submitted that Bell developed its toll-free numbers database and its billing system while it was a monopoly and hence, they were paid for by the general body of subscribers. Given this, Paytel argued that Bell should be required to make these services available to CPTSPs. Paytel further submitted that since an ILEC is in the best position to undertake billing and collection, it should be mandated to do so by the Commission in this proceeding.

37. In support of its submission, Paytel relied on the mandated billing and collection service for casual calling for IXCs and further submitted that Bell was conferring an undue preference on itself by refusing to offer a billing and collection service to CPTSPs.

38. Bell replied that it should not be mandated to perform a billing and collection function that reasonably efficient and competent CPTSPs can perform themselves or contract from third party billing service providers. Bell submitted that to require the company to perform billing and collection on behalf of CPTSPs is inconsistent with the Commission's findings in Decision 98-8, that "introducing competition in the local pay telephone market will stimulate service innovation, foster a viable domestic industry and increase total market revenues". Bell further submitted that service innovation and the development of a viable domestic payphone industry are best served by promoting the development by payphone service providers of their own billing and collection vehicles.

39. Bell submitted that, contrary to Paytel's contention, the only situations where billing and collection has been mandated by the Commission relates to the billing of retail customers. In Bell's view, there are substantial differences between the billing to be provided to support pay-per-call compensation from IXCs and situations in which the local exchange carriers (LECs) have been mandated to provide billing of their retail customers for IXC casual calling.

40. With reference to Paytel's submissions that Bell's offer to negotiate a service to provide the necessary billing information to CPTSPs, is not meaningful, Bell noted that it had made its proposal to develop a service to facilitate the billing by CPTSPs of IXCs for toll-free calls placed from such CPTSPs' payphones in November 1998, and that until April 1999, no CPTSP had contacted the company with a firm request for the development of the proposed service functionality. Bell reiterated that it is prepared to develop the service if evidence of serious customer intention is demonstrated.

41. With respect to Paytel's submission that Bell was conferring an undue advantage on itself, Bell replied that contrary to Paytel's allegations, its toll-free numbers database and billing systems were developed in response to toll competition and do not confer an undue advantage on the company.

42. The Commission considers that the circumstances with respect to billing and collection for IXC casual calling are different from those that apply in the case of the CPTSPs. IXC casual calling involves the billing of small amounts of money to a large and changing number of customers. In these circumstances, it is appropriate that the LEC bill and collect for this service. By contrast, billing for pay telephone charge-per-call service involves sending bills to a limited number of IXCs for relatively large amounts of money. Moreover, the Commission considers that CPTSPs have the capability to perform billing and collection services for themselves or through contract with a third party. In the circumstances, the Commission is not persuaded that Bell should be required to provide billing and collection services on behalf of the CPTSPs.

43. The Commission notes that Bell has offered to negotiate a service to supply a CPTSP with the same information that Bell is proposing to use to bill IXCs for the proposed compensation per-call service. The Commission further notes that a CPTSP whose pay telephones are connected to Bell and wishes to implement a similar compensation per toll-free call charge is dependent on Bell to supply it with the appropriate billing information. Accordingly, the Commission considers that Bell should make available such information.


44. Considering the above, the Commission:

a) directs Bell to file a tariff proposing to provide to CPTSPs billing information in respect to toll-free calls originating from those CPTSP's pay telephones connected to Bell's network. The billing information must be sufficient to enable such CPTSPs to provide each IXC that they bill, the equivalent billing detail that Bell is to provide to IXCs; and

b) approves TN 6285 with the following changes:

i) revise Item 43.3.(a) to replace the reference to General Tariff item 290.1, which links the pay-per-call rate to the rate for a local coin call, with a rate of $0.25;

ii) revise Item 43.2.(d) to state the billing information is available desegregated on an originating exchange basis if requested by the IXC (the desegregation to start with the first complete billing period following the request);

iii) include a statement in the tariff that the pay-per-call rate for toll-free calls will also be attributed to Bell for the company's toll-free calls routed over its network; and

c) concludes that Bell's charge-per-call tariff is to become effective on the date of approval of the tariff referred to in paragraph 44. a) above.

Secretary General

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