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Order CRTC 2000-258
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Ottawa, 6 April 2000
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Cochrane Public Utilities Commission – Final 2000 Carrier Access Tariff
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Reference: 8695-C12-09/99
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The Commission approves for Cochrane a final 2000 contribution rate of $0.0344 per minute and a final direct toll rate of $0.0118 per minute, effective 1 January 2000. The Commission directs Cochrane to:
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implement Phase III costing as the basis for its final 2001 Carrier Access Tariff (CAT), and
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file for a local rate increase if it deems necessary.
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The Commission also directs that prior to approval of the final CAT for any calendar year, the previous year’s final CAT becomes the interim CAT for the year in question.
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Factors considered in determining Cochrane’s rates
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1.
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The Commission directed Cochrane to file evidence related to the final per-minute contribution and direct toll rates for 2000 (see Telecom Public Notice CRTC 99-20, dated 1 September 1999), considering the appropriateness of:
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- setting the contribution rate at $0.02 per minute, effective 1 January 2000,
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- applying Northern Telephone Limited’s direct toll rate as a proxy for its own company direct toll rate, and
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- allowing Cochrane to apply for a local rate increase if required.
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Parties
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2.
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Abitibi-Consolidated, Cochrane, and Ontario Northland Transportation Commission (O.N. Tel) were made party to this proceeding.
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2000 contribution rate effective 1 January 2000
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3.
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Cochrane submitted that the Commission should not implement any reduction in the contribution rate until 1 January 2001, at the earliest. It proposed that the present contribution rate of $0.0408 per minute (its 1999 approved contribution rate, set using Northern’s 1998 approved contribution rate as a proxy as determined in Regulatory Framework for Abitibi-Consolidated and Cochrane Public Utilities Commission, Telecom Decision CRTC 98-13, dated 1 September 1998), be extended for the year 2000. Cochrane was of the view that a $0.02 per minute contribution rate effective 1 January 2000 would be inappropriate, as Cochrane’s local customers would be forced to carry the burden of high local rates without the benefit of long distance competition.
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4.
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O.N. Tel supported Cochrane’s position that a final contribution rate of $0.02 per minute should not be required effective 1 January 2000. O.N. Tel’s view was that adopting a $0.02 per minute contribution rate in the absence of Phase III costs would violate the framework established in Review of contribution regime of independent telephone companies in Ontario and Quebec, Telecom Decision CRTC 99-5, dated 21 April 1999. O.N. Tel noted that in Decision 99-5, the Commission supported a flexible approach to reduce the independents’ reliance on contribution revenues and found it would be inappropriate to require all independents to reduce the contribution rate to $0.02 per minute at that time. O.N. Tel advocated continuing the CAT reduction process in a timely fashion, but noted that some lag in the development of cost-based rates for Cochrane would have limited adverse financial impact on O.N.Tel so long as the lag was not excessive.
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5.
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O.N. Tel did not agree with Cochrane that its final 2000 contribution rate should remain at its approved 1999 final contribution rate of $0.0408 per minute. O.N. Tel supported the ongoing use of the Northern CAT for a given year as the Cochrane CAT for the subsequent year, until Cochrane develops its own cost-based CAT rates. O.N. Tel suggested that Cochrane’s 2000 CAT rate should be set at Northern’s final 1999 contribution rate of $0.0344 per minute.
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6.
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The Commission considers that the final 2000 contribution rate proposed by Cochrane, being its current approved 1999 rate of $0.0408 per minute, does not reflect the goal of the Commission to reduce the independents’ contribution rate over time.
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7.
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In light of the above, the Commission considers that the use of Northern’s 1999 final contribution rate of $0.0344 per minute as a proxy for Cochrane’s final 2000 contribution rate is appropriate. The Commission also considers it appropriate for Cochrane to implement the Phase III process by the end of 2000 in order to finalize a cost-based CAT effective 1 January 2001.
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2000 Direct toll rate effective 1 January 2000
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8.
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Cochrane proposed that a direct toll rate of $0.0177 per minute is appropriate for 2000.
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9.
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O.N. Tel proposed that Cochrane should use Northern’s 1999 approved direct toll rate of $0.0145 per minute.
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10.
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O.N. Tel also noted that, upon implementation of an unbundled billing and collection tariff, Cochrane’s direct toll rate should be reduced by an amount equal to the revenues generated by the billing and collection tariff. Otherwise, O.N. Tel submitted it would be paying twice, once through the direct toll rate and once through the billing and collection rate.
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11.
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The Commission notes that a billing and collection tariff rate of $0.842 per Network Access Service (NAS) was approved for Cochrane in Telecom Order CRTC 99-1225, dated 23 December 1999 and effective 1 January 2000. The Commission estimates that this billing and collection tariff equates to a per-minute rate of $0.0027. In addition, the Commission notes that if and when O.N. Tel does its own toll billing, it will, at that point, stop paying Cochrane’s billing and collection tariff.
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12.
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The Commission considers that O.N. Tel’s proposal that Cochrane use Northern’s 1999 approved direct toll rate of $0.0145 per minute, adjusted for the billing and collectiontariff, for Cochrane’s final 2000 direct toll rate is reasonable.
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13.
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In light of the above, the Commission has determined that Cochrane’s final 2000 direct toll rate be reduced by the impact of the billing and collection tariff as mentioned above. Therefore, Cochrane’s final 2000 direct toll rate is approved at $0.0118 per minute. This consists of Northern’s 1999 approved direct toll rate of $0.0145 per minute reduced by the billing and collection tariff rate of $0.0027 per minute.
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Other issues
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14.
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Cochrane noted that it would have to apply for a local rate increase if the contribution rate were to be decreased to $0.02 per minute. Cochrane reiterated that a decrease in the contribution rate to $0.02 per minute was not appropriate and suggested that any proposed rate increases should be deferred until 1 January 2001 or later when Cochrane’s customers can select a long distance carrier.
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15.
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O.N. Tel expressed the view that even if CAT rate reductions were to result in local rate increases, such CAT rate reductions should not be deferred pending the ability of Cochrane’s customers to choose long distance service providers. O.N. Tel indicated that local rate increases have been implemented during the last few years coupled with CAT reductions. O.N. Tel believes this process is required to an even greater extent by Decision 99-5, even when no competitive toll carrier has entered an independent’s territory, and that Cochrane should not be exempted from this policy.
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16.
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The Commission notes that in the event Cochrane deems a local rate increase is necessary, Cochrane may file an application proposing local rates, effective dates, supporting detailed calculations and financial information for Commission review.
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17.
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The Commission notes that Cochrane’s 2000 CAT was made interim in Telecom Order CRTC 99-1188, dated 22 December 1999 and effective 1 January 2000. Similar to the Commission’s determinations in Regulatory framework for the independent companies in Quebec and Ontario (except Ontario Northland Transportation Commission, Québec-Téléphone and Télébec ltée) Telecom Decision CRTC 96-6, dated 7 August 1996,the Commission finds it appropriate that until the Commission approves Cochrane’s final CAT for the calendar year in question, Cochrane’s previous year’s final CAT becomes the interim CAT.
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Implementation
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18.
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In light of the above, the Commission orders the following:
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a) Cochrane is to issue forthwith revised tariff pages reflecting a final 2000 contribution rate of $0.0344 per minute and a final direct toll rate of $0.0118 per minute, resulting in a final CAT rate of $0.0462 per minute, effective 1 January 2000.
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b) Cochrane is directed to implement the Phase III process by the end of 2000 in order to finalize a cost-based CAT to be effective 1 January 2001.
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c) Cochrane is directed that, in the event Cochrane deems a local rate increase is necessary, it may file an application proposing local rates, effective dates, supporting detailed calculations and financial information for Commission review.
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d) Cochrane is directed that, until the Commission approves Cochrane’s final CAT for the calendar year in question, Cochrane’s previous year’s final CAT becomes the interim CAT.
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Secretary General
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This document is available in alternate format upon request and may also be viewed at the following Internet site: http://www.crtc.gc.ca
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