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ARCHIVED - Order CRTC 2000-669

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Order CRTC 2000-669

Ottawa, 19 July 2000
Télébec ltée - Local pay telephone rates
Tariff Notice 220
The Commission denies Télébec ltée's request to increase the local pay telephone rate from 25¢ to 50¢; and to decrease the local pay telephone rate from 75¢ to 50¢ for local pay telephone calls using a calling card.

1.

On 21 May 1999, Télébec ltée filed an application, under Tariff Notice 220, proposing to:
a) increase its local calling rate for its public pay telephones (payphones) from the current rate of 25¢ to 50¢, excluding those located in hospitals and local community centres; and
b) decrease the local payphone rate from 75¢ to 50¢ for local payphone calls using a calling card.
Télébec proposed that the rate changes take effect on 21 July 1999.

2.

In support of its application, Télébec indicated, among other things, that:
a) the 25¢ cash payment option rate has been in effect for over 24 years;
b) even with the rate increase the service remains non-compensatory;
c) decreasing the rate for using calling cards will stimulate their use; and
d) the increase will bring rates closer to costs.

3.

On 23 August 1999, the Commission issued Télébec ltée - Proposed modifications to local calling rates for public and semi-public pay telephones, Telecom Public Notice CRTC 99-19. On the same day, the Commission issued a press release and also distributed an information note to public interest groups and government departments.

4.

Comments were submitted by Paytel Canada, Inc. a registered competitive pay telephone service provider, the Public Interest Advocacy Centre (PIAC) on behalf of Action Réseau Consommateur, the Consumers' Association of Canada, and the National Anti-Poverty Organization (ARC/CAC/NAPO), the Grand Council of the Crees (Eeyou Istchee)/Cree Regional Authority, the James Bay Cree Communications Society, the Association coopérative d'économie familiale de l'Abitibi-Témiscamingue, the Centre de recherche et d'information en consommation, the Association coopérative d'économie familiale du Haut-Saint-Laurent, the Mouvement d'éducation populaire autonome de Lanaudière, the Centre de croissance d'Abitibi-Ouest, the Éducation populaire Rouyn-Noranda, the Regroupement des sans-emplois de l'Abitibi-Témiscamingue, the Regroupement d'entraide des personnes assistées sociales de Rouyn-Noranda, the Association coopérative d'économie familiale des Bois-Francs, the Association coopérative d'économie familiale de l'est de Montréal, the Association coopérative d'économie familiale des Basses-Laurentides, the Movement d'éducation populaire et d'action communautaire, the Regroupement éducation populaire Abitibi-Témiscamingue, the Comité de développement socio-culturel de Moffet, and the Centre amitié Témisc. Télébec filed reply comments.

5.

Regarding Télébec's proposed rate increase to its local cash payment rate, the Commission notes that, in general, all parties except Paytel opposed Télébec's application to increase the cash rate from 25¢ to 50¢ per call. Affordability concerns and the fact that payphone competition has not yet been introduced in Télébec's territory were the prime arguments cited by parties as grounds for the Commission's denial of the application.

6.

Paytel's prime arguments in support of the 50¢ rate were that:
a) rates should be cost based prior to the introduction of price caps for Télébec;
b) affordability should not be a concern since payphones are used as a matter of convenience and not as a substitute for basic telephone service; and
c) it should foster the entrance of payphone competition when it is allowed in Télébec's territory.

7.

Until payphone competition is allowed in Télébec's territory, the Commission considers it inappropriate for Télébec payphone users to have to pay a higher rate than that in most areas of Canada where there is competition and the approved tariff rate is 25¢. Accordingly, the Commission denies Télébec's request to increase the cash payment payphone rate to 50¢.

8.

Regarding Télébec's request to decrease the calling card payphone rate to 50¢ per local call, the Commission notes that all parties who filed comments on this proposal were opposed to its approval.

9.

The consumer groups' main opposing argument was that payphones are a substitute for basic telephone service for those who cannot afford basic local residential telephone service and that in order to obtain a calling card one needed a residential telephone number. In its reply comments, Télébec noted a person does not necessarily need a residential telephone number to obtain a calling card and that non-subscribers can receive a calling card, in some cases, subject to a deposit.

10.

Paytel's main opposing argument was that it would grant Télébec an undue advantage by stimulating the use of Télébec's calling cards and entrench its stronghold in the payphone market. Paytel noted that incumbent telephone companies currently refuse to give competitive pay telephone service providers (CPTSPs) access to their calling cards at CPTSPs payphones in markets where payphone competition has been allowed.

11.

The Commission notes that the majority of the independent companies (including those in the province of Quebec), where payphone competition has not yet been introduced, currently charge a rate of 75¢ when a customer places a local call at a payphone and charges it to a calling card. The Commission notes that in territories where local payphone competition is allowed, most incumbent telephone companies charge a rate of 75¢ or more to customers using a calling card to place a local call. In these circumstances, the Commission considers that it would be inappropriate to permit a reduction to the calling card rate, particularly in the absence of payphone competition in Télébec's territory.

12.

The Commission also notes that the provision of payphones falls within Télébec's Utility segment. Any reduction to the calling card revenues would increase the company's contribution requirement. This would be contrary to the Commission's past decisions attempting to reduce Télébec's contribution requirement.

13.

In light of the above, the Commission is of the view that it would be inappropriate at this time to allow Télébec a rate reduction to its calling card rate. Accordingly, the Commission denies Télébec's request to decrease its calling card rate from 75¢ to 50¢.

14.

The Commission notes that Paytel requested disclosure of the revenue impact analysis numbers filed in confidence by Télébec under attachment A. The Commission denies Paytel's request.
Secretary General
This document is available in alternate format upon request and may also be examined at the following Internet site: http://www.crtc.gc.ca
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