ARCHIVED - Decision CRTC 2001-610

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Decision CRTC 2001-610

Reference: 8678-C12-11/01

Ottawa, 28 September 2001

Mr. Robert F. Farmer
Vice-President Regulatory Matters
Bell Canada
105 Hotel de Ville, 5th Floor
Hull, Quebec J8X 4H7

Dear Mr. Farmer:

Subject: Public Notice CRTC 2001-37 - "Price cap review and related issues" - procedural matters

This letter provides the Commission determinations concerning the request made by Bell Canada (Bell) in its 13 August 2001 letter that the revised primary exchange service (PES) costs filed by the company be considered in this proceeding. In the alternative, Bell requested that the Commission consider its application pursuant to Part VII of the CRTC Telecommunications Rules of Procedure to determine Bell's PES costs, on a going forward basis, for any and all purposes. According to the company, there is substantial doubt as to the ongoing correctness of Restructured bands, revised loop rates and related issues, Decision CRTC 2001-238, 27 April 2001 (Decision 2001-238) to revise Bell's PES costs for such purposes. In the further alternative, Bell suggested that the Commission treat its application as one to review and vary Decision 2001-238.

Bell requested that the application, either as a new Part VII application or as a review and vary application, be incorporated and addressed in the price cap review proceeding. Alternatively, such application could be dealt with in parallel with the price cap review proceeding on the understanding that a decision on the application would be rendered in time and in such manner as to enable its results to be reflected to the extent necessary in the price cap review decision. Bell submitted that the level of PES costs are relevant to the appropriate subsidy calculation for high cost areas, to the determinations of the productivity offset to be used in the subsidy calculation and to the determinations of appropriate pricing parameters.

Comments were received from Saskatchewan Telecommunications (SaskTel), AT&T Canada Corp. and AT&T Canada Telecom Services Company (collectively, AT&T Canada), GT Group Telecom Services Corp. (GT) and Call-Net Enterprises (Call-Net). Bell filed a reply. In arriving at its determinations herein, the Commission has carefully considered all submissions filed.

Prior to the initiation of the price cap review proceeding, the Commission established significant modifications to the contribution collection and subsidy calculation for the ILECs in Changes to the contribution regime, Decision CRTC 2000-745, 30 November 2000. The Commission set out a common costing methodology for all ILECs for residential service in high cost bands and determined the average cost per band for each ILEC territory in Decision 2001-238. The Commission specifically directed that the companies were to use the base costs set out in Decision 2001-238 in the calculation of the subsidy requirement in the context of the price cap review proceeding.

The Commission considers that the revision of PES costs is not integral to the price cap review proceeding. The Commission considers that the major policy issues that are the subject of the price cap review proceeding can be determined independent of the revised costs estimated by Bell. Any subsequent change to the ILEC PES costs can be incorporated into the price cap framework at a later stage. In addition, the Commission considers that, it would be inappropriate for the Commission to consider Bell's revised PES costs information without affording the other ILECs an opportunity to conduct a similar costing analysis. In light of the national nature of the subsidy scheme, the process established should allow for the examination of a reasonably common approach to costing assumptions across all companies. Moreover, the Commission concludes that Bell's application cannot fairly be considered as an additional matter in the proceeding due to the need for more detailed evidence from Bell, the complexity associated with the review of the revised cost study and the time necessary to conduct that examination. In light of the above, the Commission has determined that it would not be in the public interest to add the issue of Bell's revised PES cost estimates to the price cap review proceeding.

In determining whether Bell's application should be examined as a new application or as a review and vary application, the Commission has had regard of the factors identified in Guidelines for Review and Vary Applications, Telecom Public Notice CRTC 98-6, 20 March 1998. The Commission notes that the application in question does not question the original correctness of the decision and seeks relief on a forward-going basis. Moreover, the revised study adopts a new methodology that was not at issue and was not subject to examination in that proceeding.

In light of the considerations noted above, the Commission has decided that it would be most equitable for all parties and in the public interest to deal with Bell's revised PES costs filing as a new application in the context of a separate proceeding that will consider all aspects of the revised capital-related PES costs including Bell's new loop make-up characteristics and methodology and whether this new proposed costing approach could be adopted by the other ILECs. The Commission is inviting each of the companies who was made party to Decision 2001-238 to submit its comments and/or evidence regarding new methodologies and estimates of capital PES costs that might improve the accuracy of the PES cost studies. As noted above, given the need to obtain more detailed evidence from Bell and from other ILECs to the extent they choose to file such evidence, and in order to permit the Commission and interested parties to properly examine such evidence, the Commission considers that this matter cannot be adequately dealt with within the timing of the price cap review decision.

The Commission hereby invites the companies who were made party to Decision 2001-238 to respond by 15 October 2001 as to whether they intend to submit new estimates of PES costs based on revised loop make-up methodologies and assumptions in a proceeding to be initiated shortly. If a company does so intend, it is requested to provide an estimate of the amount of time required to prepare such submissions. The Commission will then issue a public notice outlining the issues to be addressed along with procedural directions, based on the responses received.

Yours sincerely,

Ursula Menke
Secretary General

c.c.: Parties to Public Notice 2000-27
Parties to Public Notice 2001-37
Lesley Elmas, CRTC, (819) 953-3361

Date Modified: 2001-09-28

Date modified: