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Order CRTC 2000-1091
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Ottawa, 4 December 2000
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North Renfrew Telephone Company Limited - Local rate increases to reduce the reliance on subsidies
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Reference: Tariff Notice 17
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The Commission approves rate increases to local residential services effective 1 January 2001 in order to bring local rates closer to costs and reduce the independents' reliance on subsidies from long distance service providers.
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1.
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In Review of contribution regime of independent telephone companies in Ontario and Quebec, Telecom Decision CRTC 99-5, dated 21 April 1999, the Commission directed the independent companies whose contribution requirement exceeded 25% of their total revenue requirement to file proposals detailing how they intended to reduce their subsidy requirement to no more than 25% by the year 2002.
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2.
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On 1 March 2000, North Renfrew filed its proposal as well as Tariff Notice 17. In TN 17, North Renfrew requested increases to monthly residential service rates of $2 effective 1 July 2000 and $3 effective 1 December 2000 in order to reduce its subsidy requirement towards the 25% contribution objective.
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3.
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North Renfrew also planned to request an additional $1 increase to monthly residential service rates effective 31 December 2001.
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Comments
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4.
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North Renfrew issued billing inserts informing residential customers of the proposed rate increases. The billing insert notified customers of their right to provide comments on the company's proposal.
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5.
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All comments received from customers opposed the proposed rate increases. Customers noted that local rates had been increased on many occasions in the past few years. Customers also noted that they did not benefit from the same choice of toll providers and toll rate options available to customers in more urban areas.
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Commission determinations
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Local rate increases
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6.
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Decision 99-5 noted that reliance on high levels of toll contribution by the independents is generally due to residential and, in some cases, business local access rates that do not recover their costs.
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7.
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Decision 99-5 stated, among other things, that the independents should consider increasing local rates to bring rates closer to costs and reduce their reliance on contribution subsidies.
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8.
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To encourage the independents to increase their revenues from sources other than residential local rates, Decision 99-5 capped proposed increases to monthly local residential service rates at $5 in 2000 and an additional $5 in 2001.
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9.
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The Commission is of the view that services that are below costs should share the burden of attaining the contribution objective set out in Decision 99-5.
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10.
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Based on the evidence provided by North Renfrew, the Commission considers that the proposed increase of $5 to monthly residential service rates is appropriate. North Renfrew's business service is compensatory and should therefore not be subject to a rate increase at this time.
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11.
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The Commission notes that the proposed effective dates for North Renfrew's proposed rate increases have passed. The Commission is of the view that rate increases should be implemented as soon as practically possible.
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12.
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The Commission directs North Renfrew to increase monthly local residential service rates by $5 effective 1 January 2001.
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13.
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The Commission directs North Renfrew to file forthwith, revised tariff pages that reflect the determinations made above.
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Changes to the contribution regime
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14.
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The Commission notes that Changes to the contribution regime, Decision CRTC 2000-745, dated 30 November 2000, changes the subsidy requirement calculation for the small independent telephone companies. Starting in 2002, the subsidy requirement will no longer be calculated on a Phase III basis. Decision 2000-745 will target subsidies to the high-cost serving areas based on Phase II costing principles.
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15.
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The Commission nevertheless considers that the independents should continue to bring rates closer to cost and reduce their reliance on subsidies.
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16.
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The Commission will consider what further local rate increases, if any, are needed to reduce subsidy requirements for the independents in the context of the proceeding to implement the new contribution collection regime for such companies.
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Secretary General
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This document is available in alternative format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca
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