ARCHIVED -  Telecom Order CRTC 99-255

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Telecom Order


Ottawa, 19 March 1999


Telecom Order CRTC 99-255


On 13 December 1996, Québec-Téléphone filed an application seeking a determination by the Commission as to whether or not it was required to pay additional compensation to Sogetel inc. (Sogetel) for 1995.


File No.: 8662-C12-02/98


1.In Telecom Order CRTC 98-433, dated 5 May 1998, the Commission determined that the joint application of two settlement regimes, namely the SATAT Carrier Access Tariff (CAT) for Bell Canada (Bell) and the revenue settlement agreement for Québec-Téléphone, prevented Sogetel from achieving its authorized rate of return. The Commission then expressed the preliminary view that both Québec-Téléphone and Bell should pay Sogetel's 1995 toll revenue requirement based on a Sogetel-specific CAT, for the entire 1995 year.


2.Bell and Sogetel filed comments in support of the Commission's preliminary view while Québec-Téléphone opposed it.


3.Specifically, Québec-Téléphone submitted that a 1995 Sogetel-specific CAT could not be applied to the company prior to 1 June 1995, as this would amount to retroactive rate-making.


4.Québec-Téléphone and Sogetel were asked to comment on an alternative proposal in a letter dated 16 October 1998. Under this proposal, Sogetel would be excluded entirely from the CAT regime for 1995. Québec-Téléphone and Bell would pay Sogetel based on their respective Commission & Line Haul Agreements with Sogetel. Sogetel's remaining toll revenue requirement would be paid by Québec-Téléphone and Bell according to their respective historic traffic ratios in Sogetel's territory (72.3% and 27.7%).


5.Bell and SATAT (as agent for Sogetel) noted that the terms and conditions of the Québec-Téléphone and Sogetel and Bell and Sogetel Commission & Line Haul Agreements were not identical. Bell and SATAT stated that, in previous years, Sogetel's overall toll revenue requirement had been split between Québec-Téléphone and Bell based on their respective traffic ratios.


6.Québec-Téléphone submitted that Bell should pay the final 1995 SATAT CAT and that it should pay Sogetel according to their Commission & Line Haul agreement. Québec-Téléphone maintained that the outstanding amount of Sogetel's toll revenue requirement should be payable by itself and Bell based on their respective traffic ratios.


7.The Commission agrees with Québec-Téléphone that it would be engaging in retroactive rate-making by making the company pay a CAT prior to 1 June 1995.


8.The Commission however rejects Québec-Téléphone's proposal that Bell and the company should settle with Sogetel according to the terms of the revenue settlement agreement approved in Telecom Order CRTC 96-406, dated 3 May 1996 (Order 96-406).


9.The Commission notes that in Telecom Order CRTC 96-181, dated 26 February 1996 (Order 96-181), Sogetel and Québec-Téléphone were ordered to share revenues based on the practice established by the Régie des télécommunications du Québec (the Régie). Québec-Téléphone subsequently filed a copy of the revenue settlement agreement executed by Québec-Téléphone and Sogetel. This agreement was approved in Order 96-406.


10.The Commission considers that there is substantial doubt as to the correctness of the approval given to the revenue settlement agreement approved in Order 96-406 for the following reasons. First, it was not based on the practice established by the Régie, and therefore did not conform to Order 96-181. Secondly, it imposed obligations on Bell, despite Bell not having been a party to it. In this respect, the Commission also notes Bell's statement that it did not accept this agreement.


11.Accordingly, the Commission finds it appropriate to rescind the approval given to that agreement in Order 96-406.


12.The Commission notes that Sogetel would have been able to achieve its authorized rate of return for 1995 if settlement with both Bell and Québec-Téléphone had been according to the practices and agreements in place prior to 1995.


13.The Commission also notes that Québec-Téléphone did not dispute the statements made by SATAT and Bell in response to the letter of 16 October 1998 that, prior to 1995, Sogetel's overall toll revenue requirement was apportioned between Bell and Québec-Téléphone according to these carriers' respective historic traffic ratios.


14.The Commission finds that Sogetel's 1995 overall toll revenue requirement should be divided between Québec-Téléphone and Bell according to their respective historic traffic ratios. The Commission considers that this mechanism is equitable as the traffic ratios accurately reflect the two companies' relative usage of Sogetel's facilities. Moreover, it is consistent with the directive in Order 96-181 that the revenue settlement mechanism between Québec-Téléphone and Sogetel be based on the practice established by the Régie.


15.Consistent with this finding, the Commission concludes that Sogetel will have to be excluded from the final 1995 SATAT CAT to avoid Bell paying twice for its share of Sogetel's overall toll revenue requirement for 1995.


16.The 1995 SATAT CAT was granted final approval 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).


17.Accordingly, the Commission finds it appropriate to vary Decision 96-6 to exclude Sogetel from the final 1995 SATAT CAT.


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


a) Bell and Québec-Téléphone are directed to settle with Sogetel for 1995 according to their respective traffic ratios.


b) Québec-Téléphone is directed to pay forthwith, additional compensation in the amount of $485,142 to Sogetel for 1995.


Secretary General


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